1. What do you mean by ASAP?

ASAP is the implementation solution provided by SAP

2. What are the components of ASAP?

a) Methodology-Project preparation, Business Blue Print, Realization, Final

Preparation and Go & Live Support
b) Tolls-Implementation Assistant, QA & db
c) Service-Training, Support, Training Material etc
d) Project related knowledge-Project management, risk analysis, review
program etc

3. What is the output of a Kickoff meeting?

Kickoff meeting report, project charter, project team details, organization chart,
project work plan, project logistics and standards

4. What is the outcome of a kickoff meeting?

The outcome of kickoff meeting is the official start of the project and explanations
for any issues and questions about the project from the kickoff meeting
participants

5. What do you mean by Business Process Definition?

The QAdb is the tool supporting the definition of the business process. You can
use the customer input template and the business process questions with in the
QAdb to support the preparation and completion of the BPD

6. What are the status values for Project?

In process, Completed, Quarterly check done, Review planned, Confirmed etc

7. What do you mean by project management?

a) Basic data about the project i.e., person responsible, project language,
planned and actual start and end dates etc
b) Details of the project team members
c) Status values of the project
d) Project scope i.e., application components viz, FICO, SD, MM etc.
e) Project views i.e., mandatory activities, critical activities etc.

8. What do you mean by Integration Test?

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 The focus of integration test is testing that data crosses from one function to
another. By integration testing you can finalize the entire system configuration

9. What do you mean by Customizing Management System?

The CMS manages the transport requests in the R/3 system in relation to an
assigned customizing project.
a) copy SAP objects from one system such as the development system to a
target system such as the production system
b) client copy from development client to training client as defined by a
transport request

10. How do you provide initial production support?

When ever a problem arises, end-users know whom to contact and how. The help
desk is a single point contact with access to internal first level support for
hardware, network, operating system, database, training and application system
problems.

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 GENERAL LEDGER ACCOUNTING

1. When it is necessary to define a shortened fiscal year variant?

A shortened fiscal year could be necessary in the following

cases, for example:
Establishment of a company
Changeover from a calendar year to a non-calendar fiscal year,
or vice versa. A shortened fiscal year must always be defined as
year- dependent, since it can only apply to a specific year and
must be followed by a complete fiscal year.

2. What points you have to consider, when you post in special

posting periods?

When posting to special periods, you must take the following

into consideration:
a) The posting date must fall within the last regular posting
period.
b) You have to enter the special periods in the document
header in the Period field, since the special periods
cannot be determined automatically by the system.

3. What are the prerequisites for posting to a new fiscal year?

The prerequisites for posting to a new fiscal year are as follows:

a) If you are using a fiscal year variant which is year-specific,
you first have to create a variant for this fiscal year
and assign it to the relevant company code.
b) If you have also defined year-dependent document
number assignment, you must have already set
up the document number ranges for the new fiscal year.
c) The relevant posting periods must be open in the new
fiscal year.

4. What do you mean by Financial Statement Version and why you need it?

Financial Statement Version is Hierarchical arrangement of G/L

accounts.
You need a financial statement version for the following
functions:
a. To create and print financial statements
b. To run various reports, such as a structured list of account
balances
c. As a basis for planning in General Ledger Accounting

3
5.

Accounts receivable and Accounts Payable

1. How many segments are there in a complete vendor/customer account?

A complete vendor/customer account consists of the following three segments:

a) General data at the client level
b) Company code segment
c) Purchasing organization/sales organization segment

2. What is the difference between regular customer/vendor accounts and one-time

customer/vendor accounts?

In contrast to other master records, no data specific to a single customer/vendor is

stored in the onetime master record, since this account is used for more than one
customer/vendor. Therefore, the customer-specific fields should be
suppressed.
The customer/vendor specific data for one time customers/vendors are entered
into the document at the time of posting.

4
 3. How many ways are there to control the filed status of customer/vendor screen
layout?

The layout of customer/vendor master data screens can be affected by several

factors:
Account group control: Usually the field status is controlled only by the account
group. This way all accounts of one account group will have the same screen
layout.
Transaction dependent control: If desired, the field status can also depend on
the master data transaction Create, Change, and Display. The
transaction dependent field status should be set on display for the
transaction change if the field should not be changed after creation, e.g. the
field reconciliation account.
Company code dependent control: The field status can also be controlled per
company code. Fields which are not used in one company code can be
suppressed while they are entry fields in others.
Field status definitions of account groups, the transaction, and company code are
combined and the one which has highest priority is used

4. How you will prevent creation of duplicate customer/vendor accounts?

Creation of duplicate accounts can be prevented by:

a) using the match code before creating a new account
b) switching on automatic duplication check

5. What additional configuration is required if a customer is also a vendor and vice

versa?

The vendor account number must be entered into the customer account and the
customer account number must be entered into the vendor account Each company
code can decide separately whether it wants to clear a customer with a vendor. If
clearing is to be used, the fieldClrg with vend. in the customer account must be
marked and vice versa.

6. What are the organization levels in the procurement process?

a) Client
b) Company code
c) Plant - A plant can be one of the following types of locations:
Central delivery warehouse
Regional sales office
Manufacturing facility
Corporate headquarters
Maintenance plant
d) Storage Location- The storage location is an organizational unit that
allows the differentiation of material stocks within a plant. Inventory

5
 Management on a quantity basis is carried out at storage location
level in the plant. Physical inventory is carried out at storage
location level.
e) Purchasing Organization/Purchasing Group-A purchasing
organization is an organizational level that negotiates conditions of
purchase with vendors for one or more plants. It is legally
responsible for completing purchasing contracts. A purchasing
group is the key for a buyer or group of buyers responsible for
certain purchasing activities.
Note: - Defining organizational levels is an essential step in your project
and is vital for all subsequent activities.
7. What are the Organizational Levels in Inventory management?

a) Client
b) Company Code
c) Plant
d) Storage Location.

8. How many procurement processes are available at purchasing organization level?

a) Plant-specific purchasing organization

b) Cross-plant purchasing organization
c) Cross-company code purchasing organization

9. What are the stages in a procurement cycle?

i. Determination of requirements
ii. Source determination
iii. Vendor selection
iv. P.O. Processing
v. P.O. Monitoring
vi. Goods receipt
vii. Invoice Verification
viii. Payment Processing

10. What do you mean by Item category in MM and in SD?

In MM- An identifier indicating the characteristics of an item. The item category

determines whether the following are mandatory or permitted for an item:

a) Material number
b) Additional account assignment
c) Inventory management in the SAP system
d) Goods receipt
e) Invoice receipt

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 In SD- An indicator that defines the characteristics of a document item. For
example, the item category controls the type and scope of:

a) Pricing
b) Billing
c) Delivery
d) Inventory posting
e) Transfer of requirements

Items in stock and value and text items are item categories.

11. What do you mean by Movement Type?

The movement type is a three-digit key used to differentiate between goods

movements in the R/3 System. Examples of these goods movements are goods
receipts, goods issues or transfer postings. The movement type determines which
stock or consumption accounts are updated in Financial Accounting.

12. What is the effect of Invoice Verification?

Invoice Verification creates a link between Materials Management and external or

internal accounting.

13. Can you enter vendor invoice with out receipt of goods?

If the indicator for goods-receipt-based Invoice Verification was not set in the
purchase order, the vendor invoice can be entered before or after the goods are
received.

14. What is the configuration settings required for an automatic payment program?

a) All Company Codes

b) Paying Company Codes
c) Payment Methods / Country
d) Payment Methods / Company Code
e) Bank Selection

15. What do you mean by Special G/L Transactions?

Special G/L transactions are transactions in accounts receivable and accounts payable
that are displayed separately in the general ledger and the subsidiary ledger. This may
be necessary for reporting or internal reasons. For example, down payments must not
be balanced with receivables and payables for goods and services.

16. How many types of Special G/L Transactions are there in an SAP R/3 system?

7
 There are 3 ways that special G/L entries can be recorded in the system.
Real Postings are part of the balance sheet. They are postings with a freely-definable
offsetting entry. Example: The posting of a down payment received.
Automatic offsetting entries are transactions that are always posted to the same
offsetting account. They are typically part of the balance sheet appendix. Example:
Posting a guarantee.
Noted items are postings that are not intended to be displayed in the general ledger
but are only to remind you of outstanding payments due or to be made. Example: A
down payment request.

17. How many tolerances are there in FI?

In FI, tolerances are divided into two types: employee tolerance groups and
customer/vendor tolerance groups. The employee tolerance group is used to
control: - upper limits for posting procedures (posting authorizations), permitted
payment differences. The customer/vendor tolerance group is used to provide
specifications for: - clearing procedures, permitted payment differences, posting
residual items from payment differences, tolerances for payment advices.

18. What do you mean by SAP script?

It is an integrated tool for text entry and form printing in many R/3 applications
(accounting, sales and distribution, production planning, online documentation,).

19. What do you mean by Exchange rate spread?

The spread is the difference between the average rate and the bank buying rate, or
between the average rate and selling rates. Spreads are maintainable in R/3.

20. The closing of a period consists of how many sets of steps?

The closing of a period is performed in three sets of steps: pre-closing, managerial
closing, and financial closing.

21. What are the activities involved in each set of a closing of a period?

Pre-Close activities ensure that all necessary entries have been posted in the
General Ledger (G/L), including entries from feeder systems/sub ledgers and
accruals and recurring entries posted directly to the G/L. Pre-close activities occur
in both the old and new months.
Managerial Close activities involve the re-assignment of costs throughout the
entire organization, using the allocation and settlement functionality provided
within Controlling (CO).
Financial Close activities include final adjustments to valuations and balances
prior to the final close and preparation of reports. Adjustments from the cost flows
recorded in the managerial closing activities are updated to FI through the
reconciliation ledger posting.

22.

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ASSET ACCOUNTING

9
1. What do you mean by Account Determination?
Automatic system function that determines the accounts for posting amounts in Financial
Accounting.

2. What do you mean by an asset Class?

The asset class is the main criterion for classifying fixed assets according to legal and
management requirements. For each asset class, control parameters and default values can be
defined for depreciation calculation and other master data. Each asset master record must be
assigned to one asset class. Special asset classes are, for example:
Assets under construction
Low-value assets
Leased assets
Financial assets
Technical assets

3. What do you mean by Depreciation Area?

An area showing the valuation of a fixed asset for a particular purpose (for example, for
individual financial statements, balance sheets for tax purposes, management accounting values,
and so on). Along with real depreciation areas, it is possible to define derived depreciation
areas. The values for these derived areas are calculated from those of two or more real areas.

4. What do you mean by Derived Depreciation?

It is the difference between book depreciation and tax depreciation.

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 INTEGRATION

1. What do you mean by Valuation Class?

Valuation class: If you select this option, you can maintain GL codes
Valuation class wise. Separate valuation classes are created for each
material types. You can have posting in FI per material type e.g. raw
material, packaging material, Semi finished goods, finished goods, Spare
parts. You must select valuation class option.

Assignment of a material to a group of G/L accounts. With other factors,

the valuation class determines the G/L accounts that are updated as a
result of a valuation-relevant transaction or event such as a goods
movement.

The valuation class makes it possible to:

Post the stock values of materials of the same material type to different
G/L accounts

Post the stock values of materials of different material types to the same
G/L account

2. What do you mean by valuation modifier?

Valuation modifier. : If you select this option, you can maintain GL codes
Plant wise. The valuation group code should be active in Materials
management.

3. What do you mean by Access Sequence? (Sales and Distribution)

A combination of accesses to condition records. The access sequence

defines the order in which the system searches for condition records.

4. What do you mean by Condition Table in Sales and Distribution?

A table that defines the structure of condition record keys. The key
consists of a variable part that represents one or more fields, and a fixed
part that is identical for all condition records.

5. What are the total combinations of fields or terms (Condition Table) to be

considered at the time of FI-SD integration?

11
You specify a G/L account depending on the following terms:
a. Application (key for the Sales and Distribution application)
b. Account determination type or Condition Type
c. Chart of accounts (from the FI System)
d. Sales Organization
e. Customer account assignment group
f. Materials account assignment group
g. Account key
h. Distribution Channel
i. Division

12
 Controlling

6. How many options are there to transfer the external controlling data to R/3
system?

You have two options for transferring data to the SAP R/3 System:

a. External Data Transfer with Function Modules

b. External Data Transfer with BAPIs
c. The external data has to be divided into-Master data, Planning data and
Actual data
7. What is the main task of Controlling?
The main task of controlling is planning.

8. What do you mean by Controlling Area?

Organizational unit in an organization that represents a closed system

used for cost accounting purposes.

4.

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 Cost Center Accounting

1. Can you implement Cost center accounting without Financial Accounting?

You can also implement Cost Center Accounting without Financial Accounting. Some
settings, however, such as chart of accounts, company code, must be made in Financial
Accounting.

2. What is the role of cost and revenue element accounting in controlling?

Cost and Revenue Element Accounting (CO-OM-CEL) provides the structure for
assignment of CO data through the classification of transaction line items
according to the nature of the cost or revenue being posted to a given controlling
object (e.g. cost center, internal order, etc.).

3. What is the fundamental requirement for implementing Cost Center Accounting?

A fundamental requirement for implementing Cost Center Accounting is the

creation of a standard hierarchy for a controlling area.

4. What do you mean by controlling area?

An organizational unit within a company, used to represent a closed

system for cost accounting purposes. A controlling area may include
single or multiple company codes that may use different currencies. These
company codes must use the same operative chart of accounts .

14
 5. How many currencies can be utilized in controlling?

You may utilize three currencies in CO:

Controlling area currency
Company code currency OR object currency
In cross-company-code cost accounting, the object currency defaults from the
company code currency, and can not be modified. If there is only one company code
assigned to the controlling area, then the object currency is freely assignable for each
controlling object (such cost center)
Transaction Currency
The transaction currency is the currency in which a document is posted to CO.

6. What do you mean by cost element?

Cost elements describe the origin of costs. Cost elements are defined as either
primary or secondary. Primary cost elements arise through the consumption of
production factors that are sourced externally. Secondary cost elements arise
through the consumption of production factors that are provided internally (that is,
by the enterprise itself).

7 What do you mean by activity type and statistical key figure in controlling?

Activity types categorize production and service activities provided by a cost

center to the organization and used for allocating costs of internal activities to the
originators of the costs.
Statistical key figures (values that describe a cost center) are used as the basis
(tracing factor) on which to make allocations (assessments, distributions) and to
analyze statistical key figures.

7. What do you mean by True postings & Statistical postings?

Cost and revenue postings in CO can trigger subsequent true and statistical postings:
- True postings can be processed, and can be allocated or settled with other
controlling objects. Only true postings (and only one) can be made to CO. This is
where the information is, that is used transferred to FI for reconciliation purposes.
- Statistical postings are only used for information purposes. You can make as many
statistical postings as you wish.

d. Default account assignment, Automatic account assignment, Additional account

assignment?

Using the original cost element (reposting, distribution) or

15
Using a secondary cost element (assessment, internal activity allocation).
9. Can you make actual/true posting of revenues on cost centers?

Note that you can only post revenues statistically on cost centers. The true posting must
occur on a revenue-carrying object.

10.

1. What do you mean by internal activity allocation?

The method of internal cost allocation by which valuated activities

(allocation bases) from cost centers can be assigned to cost receivers in
accordance with the cause of the cost.

The activities or allocation bases represent the output of a cost center

(such as production hours or machine hours). These outputs are
represented in the SAP System as activity types. The activity types are

16
 valuated with prices that are either specified by the user manually or
calculated by the system by means of iterative activity price calculation. To
calculate iterative prices, the SAP System divides the cost center planned
costs assigned to the activity types by the planned activity (or capacity,
depending on how the system is configured).

In internal activity allocation, the activity produced by the cost center is

multiplied by the activity price. The result is the cost to be allocated. The
sender cost center is credited with this amount and the receiver object is
debited.

2. What do you mean by indirect activity allocation?

A method of periodic allocation to determine the input of activity indirectly

allocated from the sender (cost center or activity type) from the
perspective of the receiver.

If you are not able to enter the activity consumed by the receiver, or it is
too time-consuming, this method can be used to distribute the total activity
quantity from the sender to the receivers.

3. What do you mean by direct activity allocation?

In direct internal activity allocation, the activity output is measured,

entered, and assigned. To do so, you must create the corresponding
measurable tracing factors (units of measure for cost occurrence) in the
R/3 System. In the Cost Center Accounting component (CO-OM-CCA),
these tracing factors are known as activity types. For example, activity
allocation starts through the confirmation of work operations or recording
activity data. Thereupon the R/3 System multiplies the resulting activity by
the price rate defined for the activity type.

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 Profitability Analysis
1. What do you mean by Profitability Analysis?

Profitability Analysis (CO-PA) enables you to evaluate market segments,

which can be classified according to products, customers, orders or any
combination of these, or strategic business units, such as sales organizations
or business areas, with respect to your company's profit or contribution
margin.

2. How many forms of profitability analysis will be supported by system?

Two forms of Profitability Analysis are supported: costing-based and account-

based.

3. What is the difference between Costing-based Profitability Analysis and Account-

based Profitability Analysis?

Costing-based Profitability Analysis is the form of profitability analysis that groups

costs and revenues according to value fields and costing-based valuation
approaches, both of which you can define yourself. It guarantees you access at
all times to a complete, short-term profitability report.
Account-based Profitability Analysis is a form of profitability analysis organized in
accounts and using an account-based valuation approach. The distinguishing
characteristic of this form is its use of cost and revenue elements. It provides you
with a profitability report that is permanently reconciled with financial accounting.
In costing-based CO-PA, you define value fields in which to store your data for
analysis. In account-based CO-PA, the values are structured by account.

4. What do you mean by Profitability Segment?

A profitability segment in an operating concern is defined by a combination of

characteristic values. Characteristics can be concepts already available in the
SAP System (customer, product, sales organization, and so on), or you can
define your own concepts (such as "order size class").

5. What is the difference between Profitability Analysis and Profit Center Accounting?

The aim of Profitability Analysis is to provide your sales, marketing, planning, and
management organizations with decision-support from a market-oriented
viewpoint. The data can be analyzed by period, or by order or project.

18
The application EC-PCA lets you analyze internal profit and loss for profit
centers. The profit-relevant data is displayed by period.
Profitability Analysis (CO-PA) calculates profits according to cost-of-sales
method of accounting. Profit Center Accounting (EC-PCA), on the other hand,
supports both period accounting as well as the cost-of-sales approach.
6. What are the prerequisites to use CO-PA?

To use Profitability Analysis (CO-PA), you have to create structures first. To

create the structures, you need to define the operating concern as well as the
characteristics and value fields belonging to the operating concern. From a
technical point of view, you are actually creating different tables.

7. What do you mean by Operating Concern, Characteristics and Value Fields?

An operating concern represents an organizational unit in your company for

which the sales market has a uniform structure.

The characteristics in Profitability Analysis represent those criteria according to

which you analyze your operating results and your sales and profit plan. Valid
values of these characteristics are combined to form profitability segments. You
can use concepts within the SAP System, such as "Customer" and "Sales
organization," to define characteristics. In addition, you can manually define your
own characteristics when you customize your SAP System.

The value fields contain values and quantities that were updated or planned for
particular objects. In costing-based profitability analysis, value fields represent
the highest level of detail at which you can analyze quantities, revenues, sales
deductions, and costs for profitability segments in profitability analysis or
contribution margin accounting

8. How many types of currencies CO-PA supports?

CO-PA supports the following currency types:

B0 (operating concern currency)
10 (company code currency)

9. In CO-PA when to use and not to use multiple currencies?

It makes sense to use both currencies when the organization carries out
transactions in currencies whose exchange rates change daily
If your organization works with average exchange rates by period instead of
exchange rates that fluctuate daily, it is advisable not to update both currencies.

10.

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It is possible to set up a single operating concern if all controlling areas and
company codes in your company use the same fiscal year variant.

Characteristics represent the dimensions to be analyzed in CO-PA. They define

which objects can be evaluated in the information system. Alongside the fixed
characteristics that are present automatically in every operating concern, you can
define up to another 50 characteristics.

In costing-based CO-PA, values and quantities are stored in value fields. In

general, value fields represent sales-related figures such as revenues, sales
deductions and costs. In contrast to characteristics, there are no fixed value
fields that are contained in every operating concern

Standard Characteristics in the R/3 System

1. Fixed characteristics-product number, company code
2. Proposed characteristics-industry and customer group
User-Defined Characteristics
1. Characteristics referenced to SAP tables-you can
select fields from the tables for customer master records, material master
records, and sales documents. In most cases, it is not necessary to define
derivation for these characteristics.
2. Defining characteristics manually-To derive values for
these characteristics, you need to define your own derivation rules. Examples
of characteristics in this category are the strategic business unit and the
product category.

Note:- Once a user-defined characteristic has been generated, it is then available

for further use as a proposed characteristic. This means that any defined
characteristic is automatically available as a proposed characteristic for all
operating concerns.

Characteristics beginning with WW are user-defined

Value fields are required for costing-based Profitability Analysis. Some value
fields (called "amount fields") contain currency amounts, while other value fields
(called "quantity fields") contain quantities.

Basic structures of the operating concern

1. Assignments of the Operating Concern -KEKK

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 2. Displaying Characteristics in an Operating Concern KEA5
3. Displaying Value Fields in the Operating Concern KEA6
4. Setting Up an Operating Concern-KEA0

a) Enter the name of the operating concern.

b) Define the attributes.
c) Specify the types of Profitability Analysis.
d) Select the characteristics.
e) Select the value fields.
f) Save. (This will store the structures of the characteristics and of the value fields in the
ABAP dictionary.)
g) Activate. (This checks and activates all created tables in the ABAP Dictionary. Any
consistency problems occurring are displayed in an activation log.)
h) Generate the environment. (This generates all required programs, update modules,
views, and so on, that are related to the tables created.)
i) Activate Profitability Analysis (Customizing Flows of Actual Data Activate
Profitability Analysis)

Realignments

This function enables you to make organizational changes in the product

structure, customer structure, or sales structure for data that has already
been posted. For example, if the material group in the material master
changes for some products, these products can be adapted via realignment
to match the new material group. Realignments can also be used in reporting
to represent past data in the most recently assigned material group.

1. Displaying Line Items KE24

2. Creating the Realignment Run-KEND
3. Creating a Realignment Request -
4. The Test Monitor
5. Executing the Realignment Run
6. Calling up a Report KE30
7. Resetting the Data-KEND

Introduction to Sales and Profit Planning

You can use planning in Profitability Analysis (CO-PA) to plan sales quantities,
revenues, discounts, product costs, and so on, for any profitability segment.

1. Displaying the Planning Framework -KEPM

2. Displaying the Planning Layout -
3. Changing Sales and Profit Planning Data
4. Deleting Data

Multiple currencies in planning

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Whereas actual data can be updated simultaneously in all the combinations of
currency type and valuation that are described below, planning data is always
updated in one currency only

This is useful if your organization works with one global currency (operating
concern currency) but has subsidiaries that carry out their business transactions
in a local currency (company code currency).

1. Activating Multiple Currencies -

2. Displaying the Plan Version for Multiple Currencies
3. Calling Up a Planning Layout and Entering the Planning Data
4. Copying Between Plan Versions
5. Displaying a Profitability Report
6. Deleting the Plan Data

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 Profit Center Accounting
1. How many methods are there to determine the profit & loss by Profit Center
Accounting?

Profit Center Accounting (EC-PCA) lets you determine profits and losses
by profit center using either period accounting or the cost-of-sales approach.

2. What is the purpose of dividing the organization into profit centers?

Dividing your company up into profit centers allows you to analyze areas of
responsibility and to delegate responsibility to decentralized units, thus
treating them as companies within the company.

3. What is the difference between profit center and business area?

The essential difference between a profit center and a business area is that
profit centers are used for internal control, while business areas are more geared
toward an external viewpoint.

4. What is the difference between profit center and cost center?

The profit center differs from a cost center in that cost centers merely
represent the units in which capacity costs arise, whereas the person in charge
of the profit center is responsible for its balance of costs and revenues.

5. How a profit center will be treated as investment center?

By assigning balance sheet items (asset portfolio, payables and receivables,

material stocks, work in process) to profit centers, you can analyze your
companys fixed assets by profit center, thus using them as investment centers. ..
This also makes it possible for you to analyze a number of key figures by profit
center, including return on investment, working capital and cash flow.

6. What are the various ways to set up the profit centers?

23
 EC-PCA lets you set up your profit centers according to product (product lines,
divisions), geographical factors (regions, offices or production sites) or
function (production, sales).

7. Is Profit Center is an account assignment object in Controlling?

The postings in EC-PCA are statistical postings, since the profit center is not
itself an account assignment object in Controlling.

8. Is it possible to delete a profit center after the transaction data has been posted?

The profit center cannot be deleted if transaction data has already been posted to it
and/or the profit center is assigned to the following objects:
Cost centers
Materials
Business processes
Assignments to other object types, however, do not prevent you from deleting the
profit center.

9. What will happen if you post a transaction without assign the profit center to the
company code?

If the profit center is not assigned to a company code, the system displays an error
message whenever a posting is made to that profit center.

10. Is it possible to copy the entire cost center hierarchy to your profit center
hierarchy?

You can copy the entire cost center hierarchy to your profit center hierarchy. You
can then modify the hierarchy as necessary to meet your requirements in Profit
Center Accounting. You can only use this function if the enterprise organization
is not active in the controlling area.

11. How you will differentiate the dummy profit center with normal profit center?

The dummy profit center is structured just like a normal profit center. The only
difference is a flag indicating that it is the dummy profit center.

12. Which part of sales order data is ideal/finer to assign to profit center?

Sales orders are divided into header data and item data. Each order item is
assigned separately to a profit center, since this is the finer level of detail.

13. When it is required substitutions for sales orders in profit center accounting?

24
 If you wish to structure your company from a sales-oriented point of view, you
can define substitution rules to assign sales orders to profit centers in a different
way.
Note that it is generally difficult to analyze balance sheet items in profit centers if
you choose a sales-oriented division of your company into profit centers, since the
balances are difficult to assign clearly to individual profit centers.
14. How to assign a Production Order to Profit center?

Each production order is assigned to a plant. Each plant, in turn, is assigned to a

company code, which is assigned to a controlling area. This controlling area must
be the same as that to which the profit center is assigned.

15. How many types of transfer prices supports by R/3 system?

The R/3 System supports three types of transfer prices to represent the three
primary views of goods movements within a corporate group.

In the legal view, transfer prices represent the value (sales price) of goods or
services transferred between legally independent member companies in the group.
These values are reflected in the individual financial statements of these
companies.
In the corporate view, the goods and services are valuated using the corporate
cost of goods manufactured. For these prices, internal profits are eliminated from
the prices of the legal view.
In the profit center view, transfer prices are the prices negotiated for goods and
services exchanged between areas of responsibility (profit centers) and used to
determine their internal profitability.

16. Explain the conditions and limitations to be observed in case of transfer pricing?

If you intend to use Transfer Pricing, be sure to observe the following conditions
and limitations:
Global Limitations
Transfer prices are limited to goods movements. It is not currently possible to
valuate activities using multiple valuation approaches.
Limitations in Cost Object Controlling
At this point you can only perform group costing within one controlling area.
Multiple valuation approaches cannot be used for the purposes of make-to-order
production for unvaluated customer sales order stock.
To calculating WIP correctly using target costs, the operative version must use
legal valuation approaches.
Limitations in Purchasing and Material Management
Multiple values can only be transferred during invoice verification in Logistics.
Multiple values can only be transferred between systems using the ALE or EDI
interfaces.

17.

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 COMMITMENTS MANAGEMENT (CONTROLLING)

1. What do you mean by Commitment?

Commitment Identifies costs that will be incurred in the future for materials and
services that you have requested or ordered. Commitments reserve funds that
will become costs at a future date.

2. Depending on the account assignment object how many types of commitments are
there in commitments management?

There are three types of commitments, depending on the account assignment

object:
Order Commitment: The commitment is initially assigned to an order.
Cost Center Commitment: The commitment is initially assigned to a cost
center.
Project Commitment: The commitment is initially assigned to a project, or to a
work breakdown structure element.

3. How to activate commitments management in Controlling?

You activate commitments management:

3. For each controlling area from a chosen fiscal year
4. For orders per order type
5. For Cost Centers per cost center type
Note: - If Commitments Management is activated in the controlling area, then it is
automatically activated at the same time for projects.

4. How Purchase Order Commitments are created?

The system calculates purchase requisition commitments (PReq commitments)

from the remaining quantity of a purchase requisition. The system then multiplies
this by the price from the purchase requisition. The system reduces PReq
commitments on a quantity basis, using purchase orders referring to the
corresponding purchase requisition.
a) Purchase Requisitions using Consumption-Based Planning
b) Manually Entered Purchase Requisitions
c) Purchase Requisitions Created Automatically in Networks

5.

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Closing and Reporting (FI)
1. How many types of closing operations are there in Financial
Accounting?

Closing operations recur periodically and can be subdivided as

follows in Financial Accounting:
Day-End Closing
Month-End Closing
Year-End Closing

2. What is the prerequisite to carry out closing operations in

General Ledger Accounting?

To carry out closing operations in General Ledger Accounting,

you must first carry out the closing operations in the sub ledgers
that you use. These include, for example:
a) Accounts Receivable and Accounts Payable
b) Materials Management
c) Asset Accounting
d) Payroll

3. How to valuate day-end closing?

You can use the following valuations for day-end closing:

a) Correspondence with business partners
b) Document journal
To monitor the updating of data in the database, you should
generate a list of all the terminated updates each day.

4. What are the activities involved in Month-End Closing?

You can carry out the following activities as part of month-end

closing:
Open and close posting periods
Create external reports
a) Financial statements
b) Advance return for tax on sales and purchases
c) Report required by German Foreign Trade Regulations

Document the posting data - This includes the following reports:

Compact journal

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 Balance audit trail
Accounting reconciliation
Account balances
Open item list
Carry out internal evaluations, such as extracts for downstream
applications
Reorganize and archive documents
5.

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