SAP: Theoritical

Company: Smallest organizational unit for which individual financial statements can be drawn up according to the relevant commercial law. A company can consist of one or more company codes. All company codes within a company must use the same transaction chart of accounts and the same fiscal year breakdown. The company code currencies, on the other hand, can be different. A company code has one local currency in which its transaction figures are recorded.
Company Code: The smallest organizational unit for which a complete self-contained set of accounts can be drawn up for the purposes of external reporting. The process of external reporting involves recording all relevant transactions and generating all supporting documents required for financial statements (balance sheets, profit and loss statements and so on.)
Business Area: Organizational unit of financial accounting that represents a separate area of operations or responsibilities within an organization and to which value changes recorded in Financial Accounting can be allocated. Business areas are used in external segment reporting (over and above company codes) based on the significant areas of operation (for example, product lines) of a business enterprise. A segment is an isolated area of activity.
All essential balance sheet items, such as fixed assets, receivables, payables, and inventories, and all items of the profit and loss statement can be assigned directly to a business area. The balance sheet items for banks, capital, and taxes, however, cannot be directly assigned to business areas. They need to be assigned manually. This means that business area financial statements cannot be drawn up for commercial and tax law. Business area balance sheets and income statements are used only for internal reporting purposes.
The system determines the appropriate business area from information such as the material, plant, or cost center we enter in a business transaction like a goods movement. Assignments we make (between cost centers and business areas for example) or the combination of information we specify (a plant and a particular division for example) are the basis on which the system determines the appropriate business area.

Variant Principle:

The variant principle is a three step method used in R/3 to assign special properties to one or more R/3 objects. The three steps are: 1. Define the variant, 2. Populate the variant with values, 3. Assign the variant to R/3 objects. The principle is used for Field status, Posting periods, fiscal years etc.

Fiscal year variant:

To separate business transactions into different periods, a fiscal year with posting periods has to be defined. The fiscal year is defined as a variant which is assigned to the company code. The fiscal year variant specifies the number of posting periods and special periods in a fiscal year and how the system is to determine the assigned posting periods.

Types of Fiscal Years:

1. Year Dependent:

Periods can vary from year to year. A fiscal year variant has to be defined as ‘year dependent’ if the start and the end date of the posting periods of some fiscal years are different from the dates of other fiscal years, or if some fiscal years shall use a different number of posting periods.

Shortened Fiscal Year: A shortened fiscal year arises through a shift in the end of the fiscal year. The shortened fiscal year covers the period between the end of the last fiscal year in the old cycle and the beginning of the next fiscal year in the new cycle.

Instances: Company changing the beginning of the fiscal year or if the company was sold.

2. Year independent (Fiscal Year same as Calendar Year & Fiscal Year not same as Calendar Year):

If each fiscal year of a fiscal year variant uses the same number of periods, and the posting periods always start and end at the same day of the year, the variant is called ‘year independent’.

If the fiscal year is defined as the calendar year, the posting periods are equal to the months of the year. Therefore a calendar year variant must have 12 posting periods.

If the fiscal year differs from the calendar year, we must specify the number of posting periods we want to use & how the fiscal year is to be determined from the posting date. To do this, we specify the displacement for each period compared to the year of the posting date by using the annual displacement indicators -1, +1. Using these indicators, the system determines the fiscal year.

Chart of Accounts: The chart of accounts is a variant which contains the structure and the basic information about general ledger accounts.

Information to be given in Chart of Accounts: Maintenance Language, Length of GL Account Number, Manual or automatic creation of cost elements, Group chart of accounts etc.

Operative Chart of Accounts:

The operating chart of accounts contains the G/L accounts that you use for posting in your company code during daily activities. Financial Accounting and Controlling both use this chart of accounts.

Country Specific Chart of Accounts:

These are structured in accordance with legal requirements of the country in question

Group Chart of Accounts:

This is structured in accordance with requirements pertaining to Consolidation.

The account group determines:

The data that is relevant for the master record
A number range from which numbers are selected for the master records.

An account group must be assigned to each master record.

Retained Earnings Account: The difference in Profit and Loss account is transferred to Reserves & Surplus

Posting Period Variant: A variant which contains posting periods. A Posting Period is a period within a fiscal year for which transaction figures are updated. Every transaction that is posted is assigned to a particular posting period. The transaction figures are then updated for this period. During the time of the closing procedure, 2 period ranges have to be open at the same time.

Open and Close Posting Periods: To define the periods those are open for postings.

Document Type: Key that distinguishes the business transactions to be posted. The document type determines where the document is stored, as well as the account types to be posted. The Document Type controls the header which is valid for an entire document.

Number Range: Defines the allowable range in which a document number must be positioned and cannot overlap. (Internal Numbering & External Numbering)

Tolerances: Rules that define acceptable differences during Posting of transactions. Allowed Payment differences will be specified in Tolerance Group for GL Accounts.

Tolerance Group for Employees is used to control the Upper Limits for Transactions & Allowed Payment Differences.

Field Status Variant: The Field Status Variant contains various Field Status Groups. In a Field Status Group each field is defined whether it is ‘Required’, ‘Optional’ or ‘Suppressed’.

Master Data:

The Data which remains unchanged for long periods of time and which is often referred to by other data. This data is called Master Data.

Chart of Accounts segment:

The COA contains basic information about the accounts. Information per account is bundled into what is called the COA segment.

Contents: Account Group, P&L account type or Bal Sheet account type, Description of the account Short text as well as long text and Consolidation in COA like Trading partner and Group Account Number.

Company Code Segment:

Information in this segment is specific for this company code. This information controls entry of accounting documents and management of accounting data.

Contents: Control Data, Bank/Interest, Information Tabs, under these we specify currency, tax, reconciliation account, sort key, field status group, house bank, interest calculation information etc.,

Reconciliation accounts (Sub ledger open item function):

Are General Ledger accounts assigned to the business partner master records to record all transactions in the sub ledger. Any postings to the sub ledger accounts automatically update the balances of the assigned reconciliation accounts.

Methods for creating GL Accounts:

Manual: one step and two step

Copying: Copy an individual GL account with reference to another GL account, Copy the entire company code segment, copy the entire chart of accounts segment.

Data transfer: Upload a new chart of accounts from an external system e.g. flat file.

Document:

The R/3 system uses the document principle: Postings are always stored in document form. The document remains as a complete unit in the system until it is archived.

A document is identified by the combination of

Document number
Company code
Fiscal year

The R/3 FI document consists of

A document header (information which applies to the entire document & the important control key is ‘document type’ for the header)
2 to 999 line items (information which is specific to that line item & the important control key is ‘posting key’ for the line item).

When a document is displayed, the first screen we see is an overview screen containing the most important information from the document header and the line items. We have a display line for each line item.

We can decide what data is displayed in this line by specifying the line layout. We can define several variants for line layout. When displaying a document, we can switch between the variants. We can define our own variant by selecting from Current Display Variant.

GL Account Blocking:

Blocked for Creation

Blocked for Posting

Blocked for Planning

Blocked for Posting (in Company Code)

Hold Documents: (System will prompt for a temporary document number to be given by the user)

We can enter incomplete documents by using the Hold function. If we do this, the system does not update any account balances.

Sample Documents: Sample Document is a special type of reference document. Data from this document is used to create default entries on the accounting document entry screen. A sample document does not update transaction figures but merely serves as a data source for an accounting document.

Steps:

Creation of Number Range Group X2 and Numbers for Sample Document Template
Creation of Sample Document Template
Posting of Entries by using Sample Document as reference

Recurring Documents: A periodical recurring posting made by the recurring entry program on the basis of recurring entry original document. The procedure is comparable with a standing order by which, banks are authorized to debit rent payments, payment contributions or loan repayments.

Steps:

Creation of Number Range Group X1 and Numbers for Recurring Document Template
Creation of Recurring Document Template
Posting of Documents by using Recurring Document Template by way of Batch Input

Accrual/Deferral Documents: To ensure that expenses and incomes are posted to the correct period, we enter accrual/deferral documents.

Accruals: An accrual is any expenditure before the closing key date which represents an expense for any period after this date.

Deferral: Deferred income is any receipt before the closing key date which represents revenue for any period after this date.

Steps:

Creation of Reversal Reason which will allow reversing on any day
Posting of Accrual/Deferral Document
Reversal of Accrual/Deferral Document

Open item management:

GL accounts should be administered with open item management when we need to check whether there is an offsetting posting for a given business transaction. Open and cleared items can be displayed separately, and therefore it is easy to see which business transactions still need to be cleared.

Examples: GR/IR Clearing A/c., Cash Discount Clearing A/c., Bank Clearing A/cs. etc.

Note: Reconciliation accounts are managed implicitly using Sub Ledger Open Item Function.

Clearings:

Full Payment Clearing
Partial Payment Clearing
Residual Clearing

Document Reversal:

Reversal of a posting by entering an identical amount to the opposite side of the account, thereby offsetting the original amount.

Individual Reversal
Reversal of Reversal
Mass Reversal
Cleared Item Reversal
Accrual/Deferral Reversal

Currencies:

In Financial Accounting, we have to specify for each of the company codes, in which currency ledgers should be managed. This currency is the national currency of the company code, that is, the local currency (or company code currency). From a company code view, all other currencies are then foreign currencies.

The ledgers can be managed in two parallel currencies in addition to the local currency, for example, group currency or hard currency. Group currency is used in the consolidated financial statements. Hard Currency or Country-specific second currency is used in countries with high rates of inflation.

Global company Currency: Currency used for an internal trading partner. Global company currency is defined when defining the company that is assigned to the company code.

Exchange Rate Type: - Key used to define exchange rates in the system.

For each currency pair we can define different exchange rates.

The different exchange rates are used for the purposes of Valuation, Conversion, Translation, Planning etc.

Standard Translation at Bank Buying rate – G Type

Standard Translation at Bank selling rate – B Type

Average rate – M Type

Historical exchange rate - 1003

Translation Ratio: The (consistent) relationship between the monetary units of two foreign currencies.

Foreign Exchange Revaluation

G Type – Bank Buying

Open Item
Non Open Item

B Type – Bank Selling

Open Item
Non Open Item

We can create different valuation methods for valuing foreign currency. For each valuation method, we have to define:

Parameters for the valuation procedure
Parameters for exchange rate determination

Valuation Method: A unique key determining foreign currency valuation method.

Interest Calculations

S Type – Balance Interest Calculation (for GL Accounts)

Is applied to the entire balance of a GL or Customer Account, applying a particular interest rate for a specified period of time

P Type – Item Interest Calculation (for Customers & Vendors)

Interest on arrears is applied to individual items in accounts receivable or accounts payable. A certain interest rate is applied to the items that are still open or unpaid at a specified date.

Interest calculation configuration:

· Interest calculation Indicator

Interest calculation types set basic parameters used in calculation. To calculate interest for an account (GL, Customer, Vendor), the master data for that account must include the interest calculation indicator that applies. Each interest ID must be assigned an interest calculation type, indicating whether it is used for balance interest calculation or item interest calculation.

· General terms

General terms specify further parameters about how each interest calculation indicator works.
Here we specify interest calculation ID, interest calculation frequency, settlement day, calendar type (G type for rupee loans & F type for FC loans).

· Define reference interest rates

Define reference interest rate ID, ‘effect from date’ and ‘currency’

· Time dependent terms

Time-based terms set validity dates and relationships to interest rates. Here we specify interest calculation ID, currency, valid from, sequence number(1&2 - credit interest balance interest calculation for 1 & debit interest balance interest calculation for 2), term and reference interest rate ID.

· Interest rates

Interest rates establish reference interest rates that interest calculations can be tied to. Here we specify Reference interest rate ID, valid from and interest rate.

· Account determination

Account determination establishes which accounts the results of an interest calculation will be posted to.

Accounts Payable

Reconciliation accounts:

Reconciliation accounts are managed implicitly using Sub Ledger Open Item function.

Posting Keys

Vendor Debit: 25

Vendor Credit: 31

Document Types

KR – Vendor Invoice

KZ – Vendor Payment

KA – Vendor Document (Transfers/Reversals)

AP (Vendor Accounts) is a Subsidiary Ledger of Sundry Creditors & Sundry Creditors is a Reconciliation Account under Current Liabilities.

Steps:

Creation of Vendor Account Groups like FI Vendors (Services), MM Vendors (Materials) and One-time Vendors with Reconciliation Account Field mandatory.
Creation of Number Range Groups and Numbers for Vendors.
Assignment of Number Range Group to Vendor Account Group
Define Tolerance Groups for Vendors.
Creation of Vendor Master.
Document Types and Number Ranges for KR, KZ and KA.

The Vendor Account Group controls à

The number ranges of the accounts, the status of the fields in the master record and whether the account is a one time vendor

One-time Vendor:

Vendors who have a business transaction only once are called one-time vendors. We create collective master record for one-time vendors. The complete details of the Vendor will be given at the time of Invoice Posting. (While creating the group a ‘One-time Vendor Group’ should be selected.)

Tolerances: Rules that define acceptable differences during posting

Tolerance Groups for Vendors:

The tolerances are used for differences in payment and residual items which can occur during payment settlement. We can specify the tolerances under one or more tolerance groups. Allocate a Tolerance Group to each Vendor via the master record. For each Tolerance Group we specify:

Tolerances upto which differences in payment are posted automatically to expense or revenue account when clearing open items.
The handling of the terms of payment for residual items, if they are to be posted during clearing.

Employee Tolerances also can be specified. Employee Tolerance is used to control the Upper limits for posting procedures (Posting Authorizations) and Permitted Payment Differences. While clearing, the lower limit of the 2 will be taken.

Vendor Master:

The account group is entered on the initial create screen. In FI, once the vendor account is created, its account group cannot be changed.

Give Reconciliation Account Number, Sort Key 012 Vendor Name, Payment Terms, Tolerance Group & Select ‘Check Double Invoicing’.

Line item display and open item management are always preset to “on” for every vendor account.

A complete Vendor Account consists of 3 segments – 1. General Data at the client level 2. Company code segment and 3. Purchasing Organization segment

General data consists Address, Control data, Payment transactions etc. The account number is assigned to the Vendor at the client level. This ensures that the account number for a Vendor is the same for all company codes and sales areas.

Company data consists of Accounting information, Payment transactions, Correspondence, Insurance, Withholding tax etc.

Note: If MM creates their segment of the master record and then FI creates their segments of the master record, there is the risk of creating incomplete or duplicate master records. To find and correct these incomplete accounts, we can run report RFKKAG00 and make the necessary corrections.

Creation of duplicate accounts can be prevented by:

Using the matchcode before creating a new account
Switching on automatic duplication check

Important Fields

Search Item: Should be filled with a short version of the vendor name according to company rules/desires. An additional search field also can be filled up.
Group Key: Vendors who belong to one corporate group can be bundled together by a user-defined group key. This group key can be used for running reports, transaction processing or for matchcodes.
Accounting clerk: The accounting clerk’s name has to be stored under an ID and this ID can be entered in the vendor master record of the account he or she is responsible for. The accounting clerk’s name is then printed on correspondence and this ID is used to sort dunning and payment proposal lists.

Down Payments to Vendors

Create Special GL Account ‘Advance to Vendors (Reconciliation Account)’ under Current Assets
Create Link between ‘S/Creditors’ and ‘Advance to Vendors’ (Special GL Indicator: A)
Down Payment Posting
Purchase Invoice Posting
Transfer of Down Payment from Special GL to Normal item by clearing Special GL Account
Clearing of Normal Item

Extended Withholding Tax (TDS)

In Accounts Payable, the vendor is the person subject to tax, and the company code is obligated to deduct withholding tax and pay this over to the tax authorities on their (the vendor’s) behalf.

At the time of Invoice Posting

Service Charges A/c. Dr. 100000

To Contractors A/c. 98000

To TDS A/c. 2000

At the time of Advance Payment Posting

Contractors A/c. Dr. 100000

To Bank A/c. 98000

To TDS A/c. 2000

Terms of payment

Terms of payment are conditions established between business partners to settle the payment of invoices. The conditions define the invoice payment, due date and the cash discount offered for early settlement of the invoice.

Automatic Payment Program (FBZP)

Every company needs some way to pay their vendors. The automatic payment program is a tool that will help users manage payables. Accounts payable invoices have to be paid on time to receive possible discounts.

The settings are divided into the following categories:

All company codes

Inter-company payment relationships
The company code(s) that process payments
Cash discounts
Tolerance days for payments
The customer and vendor transactions to be processed

Paying company codes

Minimum amounts for incoming and outgoing payments
Forms for payment advice and EDI (Electronic Data Interchange)
Bill of Exchange parameters

Payment methods / country

Methods of payments such as Cheque, Bank Transfer etc.
Define the basic requirements and specifications for each payment method
Create a Cheque, bank transfer, bill of exchange, etc.
Master record requirements, i.e. address required
Document types for postings
Print programs
Permitted currencies

Payment methods / company code

Define for each payment method and company code

Minimum and maximum payment amounts
Whether payments abroad and foreign currencies are allowed
Grouping options
Bank optimization
Forms for payment media

Bank Determination

These components need to be taken into consideration when selecting the paying house bank …

Ranking order (per pmt method, define, 1. which house bank should be considered for payment first, second, third, etc., 2. Currency, 3. Bill of exchange)

Accounts & Amounts (per house bank and payment method combination, define, 1. The offset account to the sub-ledger posting, 2. Clearing accounts for bills of exchange 3. The available amount of funds in each bank)
Charges (Assess additional bank charges for incoming and outgoing payments, Used with bills of exchange, Additional automatic posting configuration)
Value date (per house bank and payment method combination, value date is … 1. Used with cash management and forecast 2. The number of “days until value date” plus the posting date)

Payment Run (F110)

Parameters: In this step, the following questions are asked and answered

Who is going to be paid?
What payment methods will be used?
When will they be paid?
Which company codes will be considered?
How are they going to be paid?

Proposal: Once the parameters have been specified, the proposal run is scheduled and it produces a list of business partners and open invoices that are due for payment. Invoices can be blocked or unblocked for payment.

Program: Once the payment list has been verified, the payment run is scheduled. A payment document is created and the general ledger and sub-ledger accounts are updated.

Print: The accounting functions are completed and a separate print program is scheduled to generate the payment media.

Accounts Receivable

Posting Keys

Customer Debit: 01

Customer Credit: 15

S/Debtors Bill of Exchange Debit: 09

S/Debtors Bill of Exchange Credit: 19

Document Types

DR – Customer Invoice

DZ – Customer Payment

DA – Customer Document (Transfers/Reversals)

AR (Customer Accounts) is a Subsidiary Ledger & Sundry Debtors is a Reconciliation Account under Current Assets.

Steps:

Creation of Customer Account Groups like FI Customers and SD Customers with Reconciliation Account Field mandatory.
Creation of Number Range Groups and Numbers for Customers.
Assignment of Number Range Group to Customer Account Group.
Creation of Customer Master.
Document Types and Number Ranges for KR, KZ and KA.

The Customer Account Group controls à

The number ranges of the accounts, the status of the fields in the master record and whether the account is a one time customer.

Customer Master

The account group is entered on the initial create screen. In FI, once the customer account is created, its account group cannot be changed.

Select Company Code Data Button - Give Reconciliation Account Number, Sort Key 012 Vendor Name, Payment Terms, Tolerance Group & Select ‘Check Double Invoicing’.

Line item display and open item management are always preset to “on” for every customer account.

A complete Customer Account consists of 3 segments – 1. General Data at the client level 2. Company code segment and 3. Sales Area segment

General data consists Address, Control data, Payment transactions etc. The account number is assigned to the Customer at the client level. This ensures that the account number for a customer is the same for all company codes and sales areas.

Company data consists Accounting information, Payment transactions, Correspondence, Insurance, Withholding tax etc.

Note: If SD creates their segment of the master record and then FI creates their segments of the master record, there is the risk of creating incomplete or duplicate master records. To find and correct these incomplete accounts, we can run report RFDKAG00 and make the necessary corrections.

Creation of duplicate accounts can be prevented by:

Using the matchcode before creating a new account
Switching on automatic duplication check

Important Fields

Search Item: Should be filled with a short version of the customer name according to company rules/desires. An additional search field also can be filled up.
Group Key: Customers who belong to one corporate group can be bundled together by a user-defined group key. This group key can be used for running reports, transaction processing or for matchcodes.
Accounting clerk: The accounting clerk’s name has to be stored under an ID and this ID can be entered in the customer master record of the account he or she is responsible for. The accounting clerk’s name is then printed on correspondence and this ID is used to sort dunning and payment proposal lists.

Down Payments from Customers

Create Special GL Account ‘Advances from Customers (Reconciliation Account)’ under Current Liabilities
Create Link between ‘S/Debtors’ and ‘Advances from Customers’ (Special GL Indicator: A)
Down Payment Receipt Posting
Sale Invoice Posting
Transfer of Down Payment from Special GL to Normal item by clearing Special GL Account
Clearing of Normal Item

Bills of Exchange

LC (Letter of Credit – 30/60/90 days sight)
Contingent Liability
Bills Discounted with Bank
‘W’ is the Special GL Indicator (‘W’ stands for ‘Bill of Exchange Bankable’)

Bills of Exchange Transaction

Normal Accounting	SAP Accounting
Customer A/c. Dr. To Sales A/c.	Customer A/c. Dr. (S/Debtors Debit) To Sales A/c.
Bill of Exchange Receipt – No Entry	Bill of Exchange Receipt – Customer (W) A/c. Dr. (S/Drs. BExchnge A/c. Debit) To Customer A/c. (S/Drs. With clearing)
Discounting – Bank A/c. Dr. Interest A/c. Dr. To Bill Discounting A/c.	Discounting – Bank A/c. Dr. Interest A/c. Dr. To Bank Bill Discounting A/c.
Reversal of Contingent Liability Bill Discounting A/c. Dr. To Customer A/c.	Reversal of Contingent Liability - Bank Bill Discounting A/c. Dr. To Customer (W) A/c. (S/Drs. Bill of Exchange with clearing)
Reports – Customer wise, Due Date wise, Bill wise outside the system	Reports within the system – Customer wise, Due Date wise, Bill wise within the system

Dunning

System defined reminder letters

Dunning Area: South, North, East, West

Dunning Levels: 4 (Maximum levels 9)

Dunning Frequency: 10/20/30 days

Grace Period: 3/4/5 days

The Dunning Program settings are divided into the following categories:

Dunning Procedure

Define the key for the dunning procedure to be used
Give a description for the dunning procedure
Define dunning interval in days
Specify minimum days in arrears after which a dunning notice will be sent
Grace period per line item
Interest calculation indicator for calculation of dunning interest

Dunning levels (Each item to be dunned gets a dunning level according to its days in arrears)

Define minimum number of days, referring to the due date of net payment, to reach a certain dunning level
Define whether interest is to be calculated
Define print parameters

Charges

Define dunning charges, depending on the dunning level
Dunning charges can be either a fixed amount or a percentage of the dunned amount
A minimum amount for the dunning charges can be set

Minimum amounts

Define minimum amount or percentage of the overdue items to reach a dunning level
Minimum amount to be reached in order to calculate interest per dunning level

Dunning texts

Define the name of the form that will be used at each dunning level

Environment

Company code data
Sort fields
Sender details
Dunning areas
Dunning keys (A dunning key determines that the line item can only be dunned with restrictions or is to be displayed separately on the dunning notice. By assigning dunning keys to certain items we can prevent these items from exceeding a certain dunning level.)
Dunning block reasons ( A dunning block prevents accounts and items to be dunned)
Interest
Dunning grouping

Steps in Dunning Run

Maintain Parameters (specify the accounts and documents that are to be considered in the dunning run)
Proposal Run
Editing Proposal
Printing Dunning Notices

Sales Tax

Input Tax or Purchase Tax

Base 100

2% Tax 2

----

Inventory RM 102

----

Output Tax or Sales Tax

Base Price 100 Sales Account

4% ST 4 ST Payable Account

----

104

----

Assets

Subsidiary Ledger
Chart of Depreciation – Copy Germany Chart of Depreciation
Depreciation Areas – Book, Tax, Consolidated and Costing
Depreciation Methods – Straight Line Method and Written Down Value Method
Depreciation Keys – Rate + Method

5% SLM, 5%WDV etc.

Rules:

Sub Asset Master is to be created WRT Main Asset Master
Main Asset Master is to be created WRT Asset Class
In Asset Class we mention Account Determination
For Account Determination we assign Accounts on the basis of Transaction like Purchase, Sale, Profit, Loss, Scrapping, Depreciation, Accumulated Depreciation etc.

Transaction	Account Determination	Asset Class	Asset Masters	Sub Asset Masters
Purchase, Sale, Profit, Loss, Scrapping, Depreciation, Accumulated Depreciation etc.	Land	Free Hold Land Lease Hold Land
	Buildings	Factory Buildings Non Factory Bldgs.
	Plant & Machinery	Department A Department B Department C	Machine No.1	Motor
	Furniture & Fixtures	Furniture & Fixtures Office Equipment
	Vehicles	Indigenous Vehicles Imported Vehicles
	Capital Work in Progress	Expansion 1 Expansion 2 Expansion 3

System defined Account Determinations and Screen Layout Rules:

Description	Account Determination	Screen Layout Rule
Real Estate and Similar Rights	10000	1000
Buildings	11000	1100
Machinery and Equipment	20000	2000
Furniture & Fixtures	30000	3000
Vehicles	31000	3100
Hardware (IT)	32000	3200
Down Payments paid and Assets under Construction	40000	4000
Low Value Assets	50000	5000
Leasing	60000	6000
Objects of Art	80000	8000

Depreciation Keys

Define Base Method (SLM 0014)
Define Declining Balance Method (WDV 001)
Define Multi Level Method
Define Period Control Method
Define Depreciation Key

Financial Statement Version (FSV)

Summary, Schedules and Accounts

We define a financial statement version in 2 steps:

Enter in the directory of financial statement versions
Define hierarchy levels and assign accounts

Each version must have the following special items:

Assets
Liabilities
Profit
Loss
Profit and Loss results
Accounts not assigned

The ABAP/4 program RFBILA00 calculates the balance sheet profit/loss from the assets and liabilities totals and enters the result in the “Balance sheet results profit/loss” item. The profit and loss statement results are determined from all accounts not assigned to either assets or liabilities, and are entered in the proper item.

A financial statement version consists of a maximum of 10 hierarchy levels

Assign items to each level. The system calculates a total/subtotal for each item which is then displayed when the program is run.
Assign texts to each item.
Assign the accounts whose balance and account name are to be listed to the lowest levels.

Closing Procedure

Month-end closing activities (Preparatory activities)

HR – Payroll posting

MM – Maintain GR/IR clearing account

Material valuations

Close material ledger

Close material master

SD - Goods issues/invoices (Verify that all postings for the period have been generated)

FI – Accrual/Deferral postings

Recurring Entries

Depreciation posting

Interest

AuC settlement

Close old period & open new period

CO - Cost Centers:

- Imputed costs, Distribution and assessment, indirect activity allocation, Calculate actual activity prices and update allocations

Internal Orders:

- Overheads

- Settlement (For external settlement to AA or FI, re-open appropriate GL A/cs)

Production orders:

- Overheads

- WIP calculation

- Variance calculation

- Settlement

Profitability Analysis:

- Cost center assessments

- Activity based costing

- Allocations

Lock old posting period for Controlling transactions

Month-end closing activities (Financial closing)

FI - Re-open periods for adjustments

CO/FI reconciliation postings (Cross-company code, cross-business area and cross-functional area flows within CO are posted to FI)

Foreign currency open item valuation

Accounting > Financial Accounting > Accounts receivable > Periodic Processing > Closing > Valuate > Valuation of Open Items in Foreign Currency

Foreign currency balance sheet account valuation

Accounting > Financial Accounting > GL Accounts > Periodic Processing > Closing > Valuate > Valuation of Open Items in Foreign Currency

FI/PCA Balance sheet adjustment

FI/CO-PA Profit and loss adjustment

Final closing of posting periods

Final Reporting:

- Compact document journal

- Financial statements

- Taxes on sales/purchases

- Balance audit trial

Year-end closing activities (Preparatory activities)

In addition to the regular month-end closing activities for the final period of the fiscal year to be closed, the activities to be performed for year-end closing process include:

MM - Physical inventory procedure (Year-end or as required)

Inventory valuations – lowest value determination, LIFO, FIFO (After closing the postings in MM for the fiscal year)

CO - PP – Material valuation from new material cost estimates

FI - FI - Open new fiscal year

AR/AP – Balance confirmations

AA – Fiscal year change

FI – Balance carryforward

AA – Valuations & Capital investment subsidies (after AA postings completed for fiscal year)

AA – Year-end closing

AR/AP – Close fiscal year

Year-end closing activities (Financial closing)

FI - Analyze GR/IR postings

Regroup receivables/payables

General adjustments

Final fiscal year closing

GL – Account balances – old fiscal year to new fiscal year (Reconcile carry forward balances with prior year final balances)

FI/CO/AA – Final reporting (same as monthly + Account balances year-end)

AA – Asset history sheet

Accumulated balance audit trial

Cross Company Code Transactions

A cross company code transaction involves 2 or more company codes in one business transaction. For a cross company code transaction, the system will post a separate document in each of the company codes involved.

Examples for cross company code transactions are:

One company code makes purchases for other company codes (Central Procurement)
One company code pays for other company codes (Central Payment)
One company code sells goods to other company code

Steps:

Create Clearing Accounts in each of the company codes. The Clearing Accounts may be GL Accounts, Customer or Vendor Accounts.
Configure the Automatic Postings for Cross Company Code Transactions by assigning Clearing Accounts for both the company codes.

Creation of Clearing Accounts in both the Company Codes (FS00)

	In Company Code # 1	In Company Code # 2
Account Group	Current Assets	Current Liabilities
	Balance Sheet Account	Balance Sheet Account
Short Text	Clearing with CC2	Clearing with CC1
Long Text	Clearing with Company Code 2	Clearing with Company Code 1
Account Currency	INR	INR
	Only Bal in Local Currency	Only Bal in Local Currency
	Line Item Display	Line Item Display
Sort Key	001	001
Field Status Group	G001	G001
	Post Automatically Only	Post Automatically Only

Cash Journal

The Cash Journal is a Bank Accounting subledger for the management of cash in a business. It can be used independently of other posting transactions.
Cash journal entries are saved locally in the cash journal subledger. All balances are automatically calculated and displayed.
The cash journal entries saved are posted to the GL.

Integration

MM FI Integration

Material Types

ROH	Raw Material
ERSA	Stores & Spares
VERP	Packaging Material
FERT	Finished Goods
HALB	Semi Finished Goods
HAWA	Traded Goods
DIEN	Services

Views

Basic View, Purchase View, Production View, Sales View, Quality View, Accounting View, Costing View, MRP View, Plant View etc.

Creation of Material Master (MM01)

Logistics > Material Management > Material Master > Material > Create General > Immediately

Accounting Views (MM03)

Fields: 1) Valuation Category 2) Valuation Class 3) Price Control

Valuation Category: Batch Classification & Average

Valuation Class: For Raw Material à Indigenous and Imported

Rules:

The Material Master is to be created wrt Material Type
In the Material Master we assign the Valuation Class
For Valuation Class we assign the GL Masters based on the type of Transaction

Price Control

SPRO > Material Management > Valuation & Account Assignment > Define Price Control for Material Types

S – ‘Standard Price’, will be used for ‘Finished Goods’

V – ‘Moving Average’, will be used for ‘other than Finished Goods’

MM FLOW

1. Purchase Requisition – No FI Entry

2. Enquiry, Quotation and Price Comparison – No FI Entry

3. Purchase Order – No FI Entry

4. Purchase Order Release Procedure – No FI Entry

5. Goods Receipt (Will be taken wrt PO) -

Inventory RM Local A/c. Dr (BS – CA) BSX

To GR/IR Clearing A/c. (BS – CL) WRX

6. Invoice Verification –

GR/IR Clearing A/c. Dr (BS – CL) WRX

To Vendor A/c. (BS – CL) P.O.

7. Consumption –

RM Consumption Local A/c. Dr (P&L Dr) GBB-VBR

To Inventory RM Local A/c. (BS – CA) BSX

8. Production Receipt –

Inventory FG A/c. Dr (BS – CA) BSX

To Increase/Decrease in Stocks FG (P&L Cr) GBB-ZOB

9. FG Delivery –

Increase/Decrease in Stocks FG Dr (P&L Cr) GBB-VAX

To Inventory FG (BS – CA) BSX

10. Billing – SD Area

FI MM Integration Settings (OBYC)

SPRO > Material Management > Valuation and Account Assignment > Account Determination > Account Determination without Wizard > Configure Automatic Postings (OMWB)

Cancel the existing Plant

Select ‘Account Assignment’ Button (OBYC)

SD FI Integration

SD FLOW

1. Enquiry/Quotation – No FI Entry

2. Sales Order – No FI Entry

3. Delivery – Without PGI & With PGI

Increase/Decrease in Stocks A/c. Dr GBB – VAX

To Inventory FG BSX

4. Billing -

Party A/c. Dr SO

Commission A/c. Dr ERS

To Sales – Export A/c. ERL

To Freight Collection A/c. ERF

Pricing Procedure VK11 Condition Type: KOFI

Material ERS

Region to Region ERL

Tax Code ERF

SD FI Integration (VKOA)

SPRO > Financial Accounting > General Ledger Accounting > Business Transactions > Integration > Sales and Distribution > Prepare Revenue Account Determination

Double Click 003 Material Group Account Key

Application Area: V Sales/Distribution

Condition Type: KOFI

Account Assignment Goods Account Key

Trading Goods ERL Revenue

Finished Goods ERS Sales Deductions

Services ERF Freight Revenue

SAP

SAP

Friday 24 February 2012

Theoritical

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