SAP Financial Accounting (SAP FI) Certified Application Associate Practice Exam

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Which of the following functionalities allows SAP to automatically update tax rates based on changes by tax authorities?

Adjusting tax codes
Automatic tax calculations
Tax amount postings
Performing tax adjustments

The correct answer is: Adjusting tax codes

The functionality that allows SAP to automatically update tax rates based on changes by tax authorities is automatic tax calculations. This feature ensures that any modifications made by tax authorities regarding tax rates are reflected in the system without requiring manual updates. When tax rates change, automatic tax calculations pull the updated rates and apply them to transactions, ensuring compliance with the latest regulations. Adjusting tax codes may involve manual intervention where a finance user needs to edit existing tax codes to reflect new rates, rather than being an automatic process. Tax amount postings and performing tax adjustments are related to handling tax amounts and rectifying discrepancies rather than the automatic updating of tax rates in response to external changes. Thus, the correct understanding of automatic tax calculations is crucial for efficient and compliant financial operations in SAP.