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About This Module This module aims to provide an understanding of how SAP ERP supports an organization’s Financial Accounting processes and integration of processes related to Material Management, Production, Sales and Distribution, Management Accounting etc. with Financial Accounting. The course will also introduce the participant to external reporting through Financial Accounting. Module Objectives • Appreciate how SAP ERP supports an organization’s Financial Accounting processes and integration of processes related to Material Management, Production, Sales and Distribution, Management Accounting etc. with Financial Accounting. The participant would be able to identify various organization units and master data which support Financial Accounting. The participant will also be introduced to transactions in Accounts Payable, Accounts Receivable, Asset Accounts, General Ledger etc. The course also aims to introduce the participant to the New General Ledger functionality and external reporting through Financial Accounting. • Explain the tasks in Financial Accounting. • Explain the functionality of the main structures used in Financial Accounting. • Describe display of the Chart of Accounts. It also explains how to create the GL accounts, and execute GL postings. In addition, it also describes the special role of Reconciliation Accounts and the functions of the New General Ledger. • Explain Vendor Master Record and Post Vendor Invoices. Along with this, it also describes Basic Purchasing Process and Integration of MM with Financial Accounting and the automatic payment program. • Describe the customer master record and its three components, the process of maintenance of Credit Management Data, the processes of posting a Customer Invoice, Basic Sales Process in Sales Order Management and its integration with the Financial Accounting. • Describe Asset Master Record, the role of an Asset Class, Asset postings, and the role of depreciation areas in Asset Accounting. • Explains the process of Preparing Financial Statements. Module Content • • • • • • • Tasks in Financial Accounting Organizational Levels General Ledger Accounting Account Payable Account Receivable Fixed Asset Accounting Prepare Financial Statements Solution architect, project managers, team members, and solution consultants who want to gain a broad fundamental understanding of the core processes, business interrelations, and integration of the individual business applications within the SAP ERP solution.
Tasks in Financial Accounting
About This Topic Describes the important tasks in Financial Accounting.What's in it for me? • Describe the tasks in Financial Accounting
Tasks in Financial Accounting
Audio Transcript Let us understand the tasks in Financial Accounting. The General Ledger is a critical part of Financial Accounting. It is in this General Ledger where all the business transactions are recorded and external accounting is prepared here. Major postings such as Account Receivables from the SD course and Accounts Payables from the MM module may take place in the sub-ledgers. These subledgers are connected to the General Ledger with an assignment called the Reconciliation account in the General Ledger. These reconciliation accounts are balance sheet accounts that represent “Receivables” and “Payables” in the Balance Sheet. Since the system updates these accounts online and in real time, the General Ledger is always up to date and balanced. You will have all the details of individual posting for customers and vendors in the sub-ledgers and only the total debits and credits, which are collective postings, are posted in the General Ledger. Similarly, you can see here that Asset Accounting and the Bank Ledger are connected to the General Ledger. As SAP ERP has an integrated framework, you will find that all expense postings flow automatically to Controlling (CO).
Integration of the G\L in Financial Accounting:
Audio Transcript In SAP ERP, the integration to the G\L is real time. Let us understand this in detail here. If you make postings in FI-AA such as acquisition, retirement and so on for the assets, the same will be updated in the asset reconciliation account. The material purchase entry through a purchase order or goods receipt which was made in Materials Management will be automatically posted to the material account in Financial Accounting. With respect to the customer sub-ledger, if there is any increase or decrease in the customer balance such as sales or incoming payments, it is updated in real time to the “Receivables Reconciliation account.” Sometimes entries in this sub-ledger happen through SD like sales made to customers. Similarly, in the case of bank accounts, the entries with respect to a bank account, for example, incoming or outgoing payments will be automatically posted to the bank’s GL account. This is what happens in the case of loans which are made from the “Treasury” With respect to a vendor sub-ledger, if there is any increase or decrease in the vendor balance like purchase or outgoing payments, it is updated in real time to the “Payables Reconciliation account“ under liabilities. Sometimes entries in this sub-ledger happen from MM like purchase made from vendors.
Financial Accounting versus Management Accounting:
Audio Transcript Financial Accounting deals with publishing information on the financial position and performance of an entity through financial statements. The financial information is mainly used by persons who are outsiders to the organization such as Shareholders, Auditors, and so on. Level: Financial accounting is defined by the law to ensure that the published information conforms to the legal requirements. Financial Accounting includes • Accounts Receivable • Accounts Payable • Asset Accounting • Bank Accounting. Management Accounting refers to Controlling in the SAP system and contains all the functions necessary for effective cost and revenue control. In Management Accounting, the financial data can be allocated across several entities like company codes. Management Accounting includes 1. Cost Center Accounting 2. Product Costing 3. Job Costing
4. Profitability Accounting. Users of Management Accounting are called as internal users. In SAP ERP unlike R/3, automatic reconciliation happens between FI and CO.
We now come to the end of this topic on the tasks in Financial Accounting.
About This Topic This topic describes the various Organization Units which support the Financial Accounting Processes and Transactions. What's in it for me? • Explain the functionality of main structure used in Financial Accounting
Audio Transcript Let us now understand the organizational unit-Company Code. The company code is an independent balancing or legal accounting entity. It is the minimum structure necessary in R/3 Financial Accounting. Since most government and tax authorities require the registration of a legal entity for every company, a separate Company Code is usually created per country. There must be at least one Company Code in the production environment for a business to be live. The Company Code is identified by a 4-digit alphanumeric key.
Audio Transcript The Business Area is one significant Organizational Unit in FI, although the use of a Business Area is optional in enterprise reporting. Let us now understand what is a Business Area. To illustrate, assume that your Company Code has 2 areas of operations, Machine Construction and Plant Construction. You now want to see the results of each area of operation separately, in addition to the overall results of the company code. You can set up 2 business areas–for each area of activity and create financial statements for each. Please note that the Business areas are not attached to Company Codes. This leads us to the question: why cannot we attach a business area to a Company Code? Take for example, your corporate group has 2 company codes and both have two areas of operations, Machine Construction and Plant Construction. It would not be logical to restrict any of these two areas to any particular Company Code. Both Company Codes should be permitted to operate in any area of operation. This is the reason is why there are no attachments or “assignments” of business areas to Company Codes–they are free-flowing units that are freely definable. Remember – the use of the Organizational Unit “Business area” is NOT mandatory!
Audio Transcript Controlling Areas are the Organizational Units within a company where Cost Accounting is performed. You cannot allocate costs outside Controlling Areas. A Controlling Area may contain more than one Company Code and these Company Codes can include more than one currency. However, the Company Codes assigned to a Controlling Area must all use the same operational chart of accounts and the same fiscal calendar year. Here you can see Company Codes A, B, and C using the same chart of accounts and finally being assigned to a Controlling Area.
Audio Transcript A Business Area is an Organizational Unit in external accounting, which corresponds to a separate operational or responsibility area in the organization and value flows recorded in Financial Accounting can be assigned to it. Business Areas are generally company code-independent, which facilitates the introduction of postings from any Company Code into these Business Areas.
We now come to the end of this topic on Organizational Units in Financial Accounting.
General Ledger Accounting
About This Topic This topic describes how to display the Chart of Accounts, create G/L accounts, describe the role of Reconciliation Accounts, describe the benefits of the New General Ledger functionality and perform G/L postings. What's in it for me? • • • • • Display the Chart of Accounts Create G/L accounts Describe the special Role of Reconciliation Accounts Describe the functions of the New General Ledger Perform G/L postings
Charts of Accounts:
Audio Transcript The Chart of Accounts contains the definitions of all G/L accounts in an ordered form. In other words, the Chart of Accounts is a variant that contains the structure and basic information about general ledger accounts. In the slide here you can see that the charts of accounts INT, CAUS, and IKR contain GL accounts 1000, 2000, and so on. This means that all the GL accounts which are supposed to be used in a company code must find a place in the Chart of Accounts. In the SAP ECC system, you can maintain Chart of Accounts such as: 1. Operational Chart of Accounts,
2. Group Chart of Accounts, and 3. Country Chart of Accounts. You can define unlimited number of Charts of Accounts in the SAP ECC System. The standard system consists of many country-specific charts of accounts.
Charts of Accounts Assignment:
Audio Transcript The Company code in order to use financial accounting in the SAP ECC system must have a Chart of Accounts for the general ledger. The Chart of Accounts is assigned to the Company Code. In other words, every Company Code must have a Chart of Accounts assigned to it. One Chart of Accounts can be assigned to several Company Codes. In this slide, you see that a single Chart of Accounts has been assigned to two Company Codes BP01 and BP0X. This assignment enables cross Company Code controlling.
GL Account Master Data:
Audio Transcript The GL Account master data has two segments–Chart of Accounts segment and company code segment. The Chart of Accounts segment contains information that applies to all Company codes. Information about an account is summarized in the Chart of Accounts segment in the form of: • Account number (maximum 10 digit, numeric, alphanumeric) • Name of the account (as short as long text) • Control fields, for example: account group • Consolidation fields, for example, a unique company ID in a group. Company code segment: To be able to use one of the accounts from the assigned Chart of Accounts in your company code, you must create a company code segment for the account. This company code segment is added to the Chart of Accounts segment and together they form the account. In this slide, you can see that the GL account X has been defined at the Chart of Accounts segment and at company code segments CC BP01 and CC BP0X which facilitates a complete GL account for the respective company codes.
Account Groups for G/L Accounts:
Audio Transcript Before you start creating accounts in the Chart of Accounts, you must have account groups. Account groups: • are group accounts of the same type. • control the number ranges. • control the field status of the company code segment. To explain further, 1. An account group groups accounts with the same tasks within the general ledger such as cash accounts, material accounts, asset accounts, profit and loss statement accounts, and so on. 2. By assigning a number range to an account group, you can ensure that accounts of the same type are within the same number range. 3. Account groups control the appearance of the company code segment of a G/L account.
Reconciliation Accounts and Sub-Ledgers:
Audio Transcript Reconciliation Accounts are General Ledger Accounts assigned to the business partner Master Data to record all the transactions in the sub-ledger. The Reconciliation Account connects a sub-ledger to the General Ledger real time. All postings to the sub-ledger accounts are automatically posted to the assigned reconciliation accounts because amounts cannot be directly posted to reconciliation accounts The sub ledgers which are connected to the general ledger via reconciliation accounts include: • Accounts Receivable • Accounts Payable • Assets • Contract Accounts Receivable and Payable.
Benefits of the New General Ledger-Overview:
Audio Transcript In SAP ERP, the New General Ledger has advantages such as: • The New General Ledger has an extended data structure by default, due to which customer fields can be added to the general ledger. • The document split makes balance sheet possible for entities such as segments, which will be dealt in detail later. • Real time integration between FI and CO, which enables reconciliation between Financial Accounting and Controlling real time. • The new GL makes it possible to maintain multiple books.
Advantages in Detail-Extended Data Structure:
Audio Transcript The new totals table contains additional standard fields for storing totals. With the standard table, you can easily activate support for many scenarios by customizing the software. The table thus supports activities such as: • Segment Reporting • Profit-Center updating • Cost-of-Sales Accounting • Cost-Center updating • Preparation for consolidation • Business-Area updating You can add other fields that are supported in the standard software, such as “plant” from the SAP Materials Management software. You can include these fields in the totals table with minimum effort. You can also define your own fields.
Advantages in Detail-Document Splitting (Online Split I):
Audio Transcript Document Splitting is an appropriate tool for determining missing account assignments according to the cause in common accounting processes in SAP software (Invoices, Payments, or Clearing). For each financial-account document, document splitting applies account-assignment information to non-assigned accounts according to the assignment rules set in the customizing area. The following business transaction demonstrates the advantages: There is a vendor invoice for Euro 11600. Expenses needed to be assigned to two segments. You can see that the document can be posted to segments; this was not possible in the earlier prevalent classic general ledger. Currently, SAP supports the derivation of segments from profit centers. Profit centers can in turn be derived from a cost center, a CO-internal order or a project, for example.
Advantages in Detail-Document Splitting (Online Split II):
Audio Transcript You can assign profit centers to expense accounts manually, derive the assignment automatically or make the assignment using a substitute cost center. Document splitting places these profit centers in the payables accounts of the invoice document. This function can help you create balance sheets for entities that extend beyond the scope of the company code. Typical examples include balance sheets at the segment or profit center level or balance sheets based on company-specific or industry-specific entities. In addition to the split, the display shows the inheritance of the segment to the vendor and tax lines of the document.
Advantages in Detail-Real Time Integration of CO-FI:
Audio Transcript Integration with SAP controlling software enables the transfer of cross-entity controlling postings to the new general ledger in real time. Such transfers allow continuous reconciliation of cost elements and expense accounts and remove the need for subsequent reconciliation runs – which considerably accelerates period-end closings. The faster closings are particularly evident in profit-center accounting: cross-cost-center controlling transactions that involve different profit centers. The net result is a high level of transparency and quality for your data at all. Let us understand this in greater detail through an example: Here, you can that see a posting has been made in FI for wages and salaries Gl account 420000, an assignment is also made to the cost center 1000 and functional area 0400 is derived. The entry in functional area 0400 will be debited to the GL account 42000 and credit payables with Amount 500. In CO the cost center 1000 will be debited with amount 500. The cost element will be the same. If in CO, the cost center 1000 is reposted to cost center 4140, the functional area 0100 will be derived. Once reposting is done, the following effect will happen in real time. In case of CO, the cost center 1000 will be credited and cost center 4140 will be debited, carrying the same cost element. In case of FI, the GL account 420000 of the functional area 0400 will be credited and GL 420000 of functional area 0100 will be debited.
Advantages in Detail-Parallel Accounting:
Audio Transcript For listed companies which are in the European Union, new financial reporting regulations such as the International Financial Reporting Standards or IFRS will apply to all consolidated financial statements filed as of 2005. In addition, local requirements will remain in force. Parallel reporting is critical to your company’s ability to meet these new standards. But until now, it has been rather difficult to gather, store, and report the valuation bases required to settle the various accounts, making parallel reporting a challenge. With the new general ledger capabilities of SAP ERP, parallel financial reporting can be represented in several ledgers. These ledgers are provided with contents through a unified posting transaction. Or, they may be analyzed through a unified reporting tool for purposes such as the balance sheet or profit-and-loss statements. Let us understand the advantages in relation to parallel accounting: • In each client, there is only one leading ledger. The leading ledger is based on the same accounting principle as that of the consolidated financial statements. For example, IAS. • However, you can also maintain non-leading ledger alongside the leading ledger. The nonleading ledgers are parallel ledgers to the leading ledger. They can be based on a local accounting principle, for example, HGB, US GAAP.
G/L Account Posting:
Audio Transcript The postings in the general ledger are single screen transactions. You can enter documents with a minimal number of entries on one screen. Work templates here you can select screen variants, account assignment templates, or held documents as references. On the top part of the screen, you enter the general data for the document that you want to enter or process further, together with the data for the customer or vendor item. Important fields are on the initial tab page, less frequently used fields and detailed information are on the subsequent tab pages. On the lower part of the screen you enter the invoice or line items in a table. Once you have made your entries, you can check, hold or post the document. Information area - here the debit and credit totals of the document are displayed.
Audio Transcript The posting key is a two digit numeric key which is significant in controlling the entry of the document. This two-digit numeric key defines • Postings to Account type (S, D, K, A, M) • Debit or Credit Posting • Layout of the entry screens (field status). For example, posting key 40 would mean it is hitting a G/L account posting and that it is for Debit, while posting key 50 would mean it is hitting a G/L account posting and that it is for Credit. It also determines, the field status of line item entry, whether certain fields of the line items are “Required”, “Optional” or “ Suppressed” The posting key also specifies: • Whether the line item is connected to a payment transaction or not. • Whether the posting is sales-relevant and the sales figure of the account is to be updated by the transaction, for example, by the posting of a customer invoice. In the standard transactions, posting keys are labeled “debit” and “credit”.
Audio Transcript The balance display and line item display are provided to display the account data. The line item display is only possible for G/L accounts for which the Function “Line item display” has been activated in the General ledger master record. The balance display is the sum of the debit and credit balances of the account. You can display the line items of an account directly from the balance display. In order to go to the line item display, the line item display setting has to be set for the G/L account. You make this setting in the G/L account master record. Line items are document items that were posted to a specific account. In contrast to a document item, a line item only contains the information from the document that is relevant from the account view. You can display the following line items: • Open items • Cleared items • Noted items • Parked items • Items with special G/L transactions (in Accounts Receivable and Accounts Payable)
• Items with customer or vendor items (in Accounts Receivable and Accounts Payable) You can drilldown from the line item to the document containing this line item. From there you can see the complete transaction by selecting Document Overview.
We now come to the end of this topic on General Ledger Accounting.
About This Topic This topic describes the Vendor Master Record and its three components, the processes of posting a Vendor Invoice, the basic purchasing process in Material Management and its integration with the Financial Accounting. The topic also describes the process of running the automatic payment program. What's in it for me? • Describe the vendor master record • Post Vendor Invoices • Describe the Basic Purchasing Process in Material Management and integration with the Financial Accounting • Run the Automatic Program
Vendor Master Record:
Audio Transcript Vendor master records contain data that controls how transaction data is posted and processed. This includes all the information about a vendor that is needed to be able to conduct business with them Just like general ledger accounts, vendor accounts also have two segments: • One segment at client level that contains general data. This data can be accessed throughout the whole organization. • A segment with company code specific data at company code level. Any company code that wishes to do business with a specific vendor has to create a company code segment for this vendor. This also creates a vendor account. Here you can see Master data Vendor X created for company codes BP01 and BP0X includes both general data and company code data.
Procurement Process From The Accounting View:
Let us now look at the inventory procurement process from accounting point of view. There might be instances where Goods are received first and invoice is received later. Accounting in these cases has to be made; therefore for a GR/IR account, a clearing account is opened. Once the goods are received, a goods receipt entry is passed in materials management. Due to the integration of various courses in the SAP ECC system, an accounting entry is passed in Financial accounting by debiting the Material account and crediting the GR/IR account. When bills are submitted by vendors, an invoice entry is made in FI-AP by debiting the GR/IR account and crediting the vendor account. Next, a payment has to be made to vendors after taking into consideration the due date, cash discount and so on. In the SAP ECC system the payment is usually made by a running an automatic payment program-Transaction code- F110 by creating an entry-debit vendor and a credit bank sub account. Finally, the entries in the bank sub account will have to be transferred to the “Main Bank Account” by debiting the bank sub account and crediting the Main Bank Account.
Integration of Materials Management:
Audio Transcript The Purchase Order is created in MM containing details like Material, Vendor, Quantity, Amount, and so on. The Purchase Order does not create any FI document. Through Purchase Order you can create two entries in MM: 1. Goods Receipt for Purchase Order 2. Invoice Receipt Goods Receipt entry create two documents one material document for goods received and another in Financial Accounting by debiting “Material stock or consumption Account” and crediting GR/IR account, sometimes it even creates a controlling document if controlling module is used. Like Goods Receipt, Invoice Receipt entry also creates two documents one in Materials Management as invoice verification and another in Financial accounting. The entry in Financial Accounting will be “Debit GR/IR account” and “Credit Vendor Account”. The GR/IR account as explained in the earlier slide is a clearing account which checks whether goods were received for each invoice or invoice were received for the goods received.
AP Invoice/Credit Memo Entry:
Audio Transcript The postings in the vendor area are single screen transactions. You can enter documents with a minimal number of entries on one screen. Work templates - here, you can select screen variants, account assignment templates, or help documents as references. On the top part of the screen, you enter the general data for the document which needs to be entered or processed further, together with the data for the customer or vendor item. The important fields are on the initial tab page and the less frequently used fields and detailed information are on the subsequent tab pages. On the lower part of the screen you enter the invoice or line items in a table. Once you have made your entries, you can check, hold, or post the document. The system uses the check, proposal, and posting logic of the existing entry transactions such as the invoice/credit memo fast entry or the standard document entry. The Enjoy transactions are offered parallel to the standard transactions. Information area - The document balance and information about the vendor are displayed here.
Elements of the Payment Process:
Audio Transcript Let us understand the payment process. Select payment method and bank: You need to select the payment method like check, bank transfer and so on. In the SAP ECC system standard payment methods have been delivered for example: - C- International check and T- Bank transfer. Select items for payment: - You have to select the items in order to make payments, for example, selecting line items in a vendor account or customer account. Calculate the payment amount, taking account of cash discount periods:- The payment amount has to be paid after deducting any cash discount. The cash discount will be entered in the vendor master record or at the time of document entry. Post the payment document: - once steps 1, 2 and 3 are performed you need to post the document called a payment document. The entry in Financial accounting after posting a payment document will be Debit – Vendor Account and Credit-Cash account. Finally you need to print the payment medium like payment advice notes, checks bills of exchange. Payment medium can be printed manually and automatic. For example, in case of printing checks for vendor, you can print it using the transaction code-f-53 (Manual) or F110 (Automatic).
Overview of the Automatic Payment Program:
Audio Transcript Now let us understand in the graphic the Payment Process steps. The process contains 4 steps 1. Parameters: In this step, the following questions are asked and answered: • What is to be paid? • What payment methods will be used? • When will the payment be made? • Which company codes will be considered? • How are they going to be paid? 2. Start proposal run: payment proposal is created by the system after the parameters are entered. It generates a list of business partners and open invoices that are due for payment. 3. Edit Proposal: You can edit the proposal generated by the system. Invoices can be blocked or unblocked for payment. Once edited, you can confirm the proposal. 4. Program- Start Payment Run: Once the payment list has been verified and confirmed, the system triggers the Run. A payment document is created and the general ledger and subledger accounts are updated. 5. Print: The accounting functions are completed and a separate print program is started to generate the payment media (for example, EDI, DME or Cheque printing). While understanding the payment process, you also need to know where the settings for the payment program are defined. These are defined in three places:
1. In the master record for the business partner, for example, bank details and payment method 2. In the items. For example, payment methods in the document, terms of payment and so on. 3. In Customizing for the payment program Now what happens if the data in the master data and document is different: The data in the document takes precedence over the data in the master record (the system assumes that the user has changed the standard data on purpose).
We now come to the end of this topic on Accounts Payable.
About This Topic This topic describes the Customer Master Record and its three components, the process of maintenance of Credit Management Data, the processes of posting a Customer Invoice, Basic Sales Process in Sales Order Management and its integration with the Financial Accounting. What's in it for me? • • • • Describe the customer master record Maintain credit management data Post a customer invoice Describe the basic sales process in Sales Order Management and the integration with the Financial Accounting
The Customer Master Record:
Audio Transcript Customer Master Records contain data that controls how transaction data is posted and processed. This includes all the information about a customer that is needed to be able to conduct business with them Just like general ledger accounts, Customer accounts also have two segments: • One segment at client level that contains general data. This data can be accessed throughout the whole organization. • A segment with company code specific data at company code level. Any company code that wishes to do business with a specific customer has to create a company code segment for this vendor. This also creates a customer account. Here you can see Master Data customer X created for company codes BP01 and BP0X includes both general data and company code data.
IDES Credit Control Area:
Audio Transcript A Credit Control Area is an Organizational Unit for specifying and controlling customer credit limits. This organizational unit can either be a single or several company codes, if credit control is performed across several company codes. One credit control area contains credit control information for each customer. According to your corporate requirements, you can implement credit management that is centralized, decentralized, or somewhere in between. For example, if your credit management is centralized, you can define one credit control area for all your company codes like company codes USA, Canada, and Europe. If, on the other hand, your credit policy requires decentralized credit management, you can define credit control areas for each company code or each group of company codes. For example, company codes Mexico and Japan.
Credit Management Master Record:
Audio Transcript The Credit Management master record is an extension of the customer master record which is set up by the credit department. The data relevant to credit management is maintained and monitored in this master record. The credit management master record consists of the following sections: • General data: The data which is same for all credit control areas. It is even relevant for credit control areas, such as customer’s address and communication data, the maximum total limit that can be permitted for the sum of all granted credit limits, individual limit or currency. • Credit control area data: The data mentioned in this segment is only relevant for specific credit control area. For example, credit limit at the credit control area level, Risk category, credit representative group, and so on. • Overview: The credit overview shows certain additional data including dunning data, open items, and texts on the customer.
Sales Process And Integration:
Audio Transcript A sales order is an electronic document that records your customer’s request for goods or services. At the time of sales order creation no financial document is created. During shipping an outbound delivery document is created. Next transfer order is created in order to pick the goods. The goods to be delivered are posted as goods issue in MM at the same time a Financial accounting document is created with an entry Debit cost of goods sold account and credit Inventory account. The last stage in the sales process is “Billing”. A billing document is created in SD and in real time an FI document is created with an entry Debit customer account and credit revenue/sales account.
Sales Order Process From Accounting View:
Audio Transcript At the time of delivery, the “Stock change FG” will be debited and the material account will be credited. Billing creates revenue from the respective customer. The in-entry in FI-GL will be to the Debit Customer/receivables account and credit sales/revenue account. The payment from the customer will settle the balance in the FI-GL with an entry to the Debit bank account and credit customer/receivables.
Credit Control Process:
Audio Transcript You enter a sales order. A check is run to see whether the customer’s credit limit would be exceeded. If it does not exceed, the sales process can be carried out in the usual way. Assuming that this sales order leads to the credit limit being exceeded for this customer, the system now responds. It blocks the order. In the second case, the procedure continues as follows: If the order is blocked, the credit representative processes the blocked order either from a list of blocked sales and distribution documents, or from his/her Mailbox. The credit representative now decides how to proceed with this order. Once the credit representative releases the order, a delivery can be created and a billing document generated. Once you have saved this document, the system automatically creates a financial accounting document. If the credit representative decides not to release the order, the order is rejected.
Incoming Payments in Accounts Receivable:
Audio Transcript Let us understand the incoming payment process in accounts receivable. Down payment: Sometimes there might be a situation where in a customer might make a down payment in those cases the down payment is created for the concerned customer. Complete payment: Once full payment is received from the customer, the down payment is cleared off. Minor payment differences: At the time of clearing of the invoice, if there is a minor payment
difference, then it will be charged off automatically since it is with in tolerances. Greater payment differences: If the payment differences is outside the tolerances that is there is greater payment difference then it has to be taken care of either by Post partial payment or Generate residual item. Partial payment: For a partial payment the invoice and the partial payment are managed as open items and both have the same assignment. Double-clicking on the partial payment shows that it is a payment for the invoice. The invoice and the partial payment are not cleared until the payment is cleared. Residual payment: When you create a residual item the payment difference is posted as residual item and remains in the account; the original document and the payment are cleared. The system creates a new document number with reference to the original document.
We now come to the end of this topic on Accounts Receivable.
Fixed Assets Accounting
About This Topic This topic describes the process of marinating an asset master record, describe the role of an asset class, explain Asset Postings and describe the role of depreciation areas in Asset Accounting Management What's in it for me? • • • • Maintain an asset master record Describe the role of an asset class Explain asset postings Describe the role of depreciation areas in asset accounting
Assets in FI Organizational Units:
Audio Transcript In Order to view a segment report of assets, each asset should belong to a company code and cost center. All postings made for the asset like acquisitions, retirements, depreciation, and so on are captured in the company code. The segments as explained in earlier slides are derived from the profit center which in turn is derived from the cost center.
Audio Transcript Asset Classes are the most important means of structuring fixed assets according to the requirements of your enterprise. The Asset Class definitions apply to all company codes in a client. The asset class is the main criteria for defining the asset. Each asset is assigned to only one asset class. You can specify certain control parameters and default values for depreciation calculation and other master data in each asset class. Each asset has to be assigned to an asset class for example various machineries can be assigned to one asset class called machinery. Real Assets-Machinery-Fixtures and Fittings are standard assets. You can maintain one special asset class for Assets under construction and one for low-value assets. An asset class consists of two main sections: • A Master Data section with control data and default values for the administrative data in the asset master record • A valuation section with control parameters and default values for valuation and depreciation terms. .
Audio Transcript The acquisition posting can be created in the department that is primarily responsible for this business transaction. Acquisition of an asset from a business partner -- external acquisition: In Asset Accounting (FI-AA) integrated with Accounts Payable (incoming invoice), but without reference to a purchase order. In FI-AA with automatic offsetting entry, but without a link to a purchase order and without integration with Accounts Payable; this posting is normally used when the invoice has not yet been received, or when the invoice was posted by the Accounts Payable department beforehand in a separate step. The offsetting account also has to be cleared. In FI-AA with automatic clearing of the offsetting entry: The first posting usually is made in FIAP. The clearing account is cleared at the same time as the asset posting is made. It is also possible, however, for both departments to make postings in the opposite sequence: An asset is entered with automatic offsetting entry, and the clearing account is cleared with the credit posting of the incoming invoice. In Materials Management or MM: The asset is posted in MM
Audio Transcript The transaction type is an addition to the asset posting keys 70 (debit) and 75 (credit). Transaction types are used with every posting. They identify acquisitions, retirements and transfers. The asset history sheet reports and other FI-AA reports use the transaction type to identify the different kinds of transactions and display them separately, for example, the transaction type specifies where the value change is shown in the asset history sheet: as a retirement of a prior-year acquisition, or of a current-year acquisition. The transaction type specifies which of the following are updated: • Asset Balance sheet accounts • Depreciation Areas • Value Fields You can also defined your own transaction types. They can be used to seprate variouse types of accounting or business transactions in Reports.
Audio Transcript From SAP R/3 4.6C, the Asset Explorer contains all the main functions from the old asset value display transaction. The main differences are: • • • a better overview thanks to the use of an overview tree and tab pages; a more transparent display of the systems calculation of depreciation; and new functions for printing and exporting values.
In the Asset Explorer, depreciation areas are displayed in an overview tree, from which they can be selected. Two different symbols enable you to immediately distinguish between real depreciation areas and derived depreciation areas. The field above the tree structure provides information on the selected asset, including its company code, asset main number, and sub number. You can jump from this field to the asset master data. You can display planned values, book values, and transactions directly in the Asset Explorer in a print preview format, and you can print and export this information. On the planned values tab page, you can call the functions for displaying the depreciation calculation and for recalculating depreciation. A useful feature in asset explorer is the overview tree, which lists objects such as cost center, G/L account, vendor, employee, purchase order or equipment related to the asset, and which also enables you to go to the master data object. Another feature in the asset explorer is the comparisons tab page. This allows you to display the changes in value of an asset over several years and, at the same time, in several depreciation areas.
Audio Transcript Asset portfolios and transactions are often valued differently for different purposes, for example, different valuation approaches may be used for: • Financial Statements according to local requirements • Balance Sheets for tax purposes (insofar as another valuation is permitted) • Internal Accounting (Cost Accounting) • Parallel Financial Reporting, for example, for creating a consolidated balance sheet (according to IAS, US GAAP, and so on) Depreciation areas are created to manage these different valuation approaches. There are separate transaction figures for: • Each Asset and Depreciation Area • Individual Value Components, such as Asset Values, Depreciation, and net book values Depreciation Areas are identified in the system by a two-character numeric key. The numeric keys represent depreciation terms that you can enter in the asset master record or in the asset classes. Values and depreciation are posted to the general ledger. Depreciation area 01- book depreciation in SAP ECC system is the major depreciation area. Values and depreciation are posted to the general ledger.
Audio Transcript In the book Depreciation Area, the system calculates book depreciation without special depreciation according to the commercial law.
We now come to the end of this topic of Fixed Asset Accounting.
Prepare Financial Statements
About This Topic This topic describes the process of Preparing Financial Statements. Estimated time to complete this topic: 30 minutes
What's in it for me? • Describe the process of preparing financial statements
Preparing Financial Statements:
Audio Transcript Financial Statement versions are created in order to prepare the reports according to various criteria. You can create as many financial statement versions as you need. For example, you can create financial statements as company code financial statements, segment financial statements, financial statements for operating chart of accounts or country chart of accounts, and so on. Financial statement versions are also used in the structured balance list, drilldown reporting, planning, and transferring data to consolidation. The financial statement version enables you to configure the report format. You define the following: • Which items are to be included and the sequence and hierarchy of these items • The text describing the items • The Charts of Accounts and the individual accounts relevant to the report • The totals to be displayed.
Balance Sheet and Profit & Loss Statement:
Audio Transcript Financial Statements are created in order to provide monetary information for review of the reporting company’s financial performance and position, and enable the readers of the financial statements to assess the management and make decisions. Financial statements are created using the general ledger of a company code. The following financial statements can be created in SAP ECC system: 1. Balance sheet 2. Income statement 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.
Financial Statements-An Alternative:
Audio Transcript Tool for evaluating the data of an application according to its characteristics and key figures. Drilldown reporting allows you to generate simple data-driven lists (ad-hoc reports) as well as complex formatted reports (using forms). Using hierarchies, variables, formulae, cells and key figures, you can generate reports that satisfy all user requests. A new FI drilldown report is available as an alternative to the conventional statements. Let us see the advantages of drilldown reporting compared to RFBILA00. • A drilldown report is more “Flexible” than the older ABAP program • Selecting the report by standard characteristics such as profit centres, functional area, business area, company code and so on.
We now come to the end of this topic on Preparing Financial Statements.
The participant should now be able to appreciate how SAP ERP supports an organization’s Financial Accounting processes and integration of processes related to Material Management, Production, Sales and Distribution, Management Accounting etc. with Financial Accounting. The participant would be able to identify various organization units and master data which support Financial Accounting. The participant will also have an understanding of transactions in Accounts Payable, Accounts Receivable, Asset Accounting, General Ledger Accounting etc. and describe the New General Ledger functionality and external reporting through Financial Accounting.
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