I only have a fuzzy mug shot of Mike but hope you can tell he's wise and experienced beyond his years.

I've summarized his response below for your reading pleasure.

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Generally, the functional and reporting currencies are the same. However, if you have a situation where the functional currency is USD, but the reporting currency is Z-$C implies that you have a Canadian company that reports in Canadian dollars (generally for financial reporting), but conducts most and/or all of its business in the US dollar.

This setup is most evident in the ability to toggle between the functional, originating and the reporting currencies when viewing inquiries and reports. Additionally, you can set the conversion factor to the current exchange rate difference between the functional and reporting currencies. This gives the user the ability to very quickly view their accounts and transactions in their reporting currency even though all or most of the transactions are in the functional currency.

Reporting Currency (Canadian dollar) at .9 conversion

Thanks for the explaination Mike.