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Before understanding the account category reference, once should know what mater ial type and valuation class are and how they are important in the valuation pro cess of a material. If we are not aware these, then it will be difficult to unde rstand what account category reference is and how it is related to valuation str ucture. Since our materials are grouped together on the basis of material types and valuation classes for the purpose of valuation at different levels, we have to establish some link between these two components of valuation structure.

Account category reference is the link between the valuation classes and the mat erial types. The account category reference is a combination of valuation classe s. Precisely one account category reference is assigned to a material type. In t he standard SAP R/3 System, an account category reference is created for each ma terial. The account category reference is, in turn, type assigned to precisely o ne valuation class. This means that each material type has its own valuation cla ss. In the Standard SAP we have the following account category references for ma terial type finished goods and valuation classes 7920. FERT 7920 0009 Finished Goods Ref. for finished products 0009

In the standard we have some predefined material type, valuation class and accou nt category reference and a link between them has already established by the sys tem itself. If we are using these standard setting no additional efforts are req uired. But to meet any specific requirement, if we have to create a new material type or a new valuation classes or a new Account Category Reference or all the three, then we have to establish this link. In configuration we have to make the following settings:

Create new material type

Create new account category reference

Define new valuation class

Link material types & valuation class via account category reference

Create an account determination for each valuation class in the step configu re automatic posting

. Now Go to OBYC to assign GL for those Transaction + Valuation Class. category <-->Valuation Class <---> G/L Account So. is a link between Material Type and Valuation class.Use T code OB40 assign GL to Tax's Conditions.g. 3. 2. Better u understand this. Hi. Create Valuation Class and Assign to Acct Ref category. Frieght Cle aring Acct etc Hope Clear U ! . 1.. there are certain more assigemnt e. 3. Acct Ref Cat. then nothing more is requ ired.. Now. The system will take care of the rest of the activities automatically. the link for Automatic posting as Material ! Material Type ! Acct Ref. 2. First Create Acct Ref Cateogry. For OBYC.Once this link has been established for the entire new requirement and automatic posting has been configured to meet this requirement. For Tax Related Issue. GL clearing Acct.