SAP - FICO

Basic Interview Questions

Tell Me Something About Your Self?

A) My Name Is Tirupathirao My Native Place Is Guntur, My Parents are stay there, Here I Am
Residing at My Cousin's House Nizampet. Iam working in Lince soft solutions pvt Ltd from past 2
years as SAP FICO consultant .

What Is Your Strengths?

A) I Am Hard Worker and Optimistic.

What Is Your Weaknesses?

A) I Am Very straight forward And quiet Emotional Person So I trust the people very soon So I am
Ok With That But that doesn't harm our any of my professional career .

Why we will hire you?

A) I am a Good hard worker and always willing to learn new things I Believe I Will be a good
resource to your company By Meeting All Your Expectations.

What Is Salary requirements?

A) I Am A Fresher Salary Is Not First priority for me This Is A big Platform To Start my Career And Also
I Want to improve my knowledge And Skill and gain experience so I expect a considerable salary
According to my ability and your company norms which will full fill my economical needs .

Why you leave your current company?

A) Am looking for a better career prospects and professional growth. I am leaving because I want to
make a career change from my current industry to a different one.

What is your career goals?

A) My short term goal is get a job in reputed company Where I can utilize my skills and
improve my career , My Long term goal is to be in respectable position In That organization .

What do you know about YASH technologies?

YASH Technologies has a span history of growth and success. Founded in 1996. Headquartered in the
U.S. YASH is a well-regarded, global IT service provider, with customers in a number of industries. As
a leading technology service and outsourcing partner for large and fast-growing global organizations.
YASH is a SEI CMMI (Level 5) and an ISO 9001:2015 certified organization.

why do you want to join in our company ?

A) As a fresher , I need a good platform to improve my skills and knowledge. So your company is one
of the best company. So it is a good opportunity to start my career.

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What is your Role ?

A) Responsibilities:

 Book keeping.
 Checking and posting of all types of vouchers i.e. Receipt Vouchers, Payment Vouchers, and
Purchase Vouchers.
 To Prepare the Bank reconciliation.
 To maintain all cash Transactions.
 Maintaining Petty Cash.
 Maintain vendor accounts, generating monthly on demand cheques.
 Prepare purchasing order and purchase stock.
 Receiving customer orders from sales executives of company
 According to customer order raising sales invoices
 Reporting Weekly and monthly reports.
 Maintain Inventory Reports.

Finally do you have any questions to ask me?

A) Thanks For Giving This Opportunity, sir I would like to know about the job timings and what will
be the job location and salary scale for this job In Your Organization.

Why You Learn SAP?

A) Actually My Brother Suggest To Learn SAP He Told Me It Is The Best Way To Start My Career
That's Why I Am Learn SAP FICO.

SAP - FI Interview Questions

1. What Is ERP?

ERP Is Enterprise Resource Planning It Integrates All Modules Into single System Like Manufacturing
, Sales And Distribution , Payables , Receivables , HR , Purchases Etc...

2.What Is The FI -CO Explain Briefly ?

A) FI Means 'Financial Accounting' And CO Means Controlling , FI Used To Store financial Data Of An
organization . It Helps To Analyze Financial Condition of company. And controlling Module provides
information to management decision making , the main task of controlling is planning . we can get
the variances by comparing actual data with plan data. so based on that variances management
take the decisions why the cost is increasing .Management Can Understand The Where The Money
Is Being Spent.

3.What Is Client In SAP ?

A) Client Is The Highest Hierarchal Organizational Unit In Sap

4.Where The Data Stored ?

A) All Tables And Master Records Stored At Data Base.

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5.What Is The FI- CO Organization Structure ?

A) Client --> Operating Concern --> Controlling area --> Company Code

what is company code ?

A) Each company code has a legal entity. If You Want To do the Accounting for company we should
create At least one company code. Under company code we will prepare the financial statements
Like P&L Account And Balance sheet .

what is fiscal year variant ?

A)The fiscal year is nothing but our financial year , In The SAP Fiscal Year is Assigned As a Variant,
Posting Periods can Further Be Defined In Each fiscal year variant . SAP Allows A Maximum 16
Posting Periods.

what is GL?

A) A General Ledger Is A Complete record of financial transactions Over the Life of a company ,This
Ledger Holds accounts information that is need to prepare financial statements and includes
accounts for assets ,Liabilities , owner's equity , revenues And Expenses.

How Many Periods There In Fiscal Year

A)Normal Posting Periods Is 12 , Special Posting Periods 4. It Used For Audit Adjustments At The
End The Year

7. What Is The Type Of Fiscal Years

A) We Have Type of Fiscal Years :

1. Calendar Year

2. Year Dependent Fiscal Year

Calendar Year means from Jan to December. So if the financial year of your company is same as
Calendar year then you need not to maintain posting periods separately.

But suppose your Financial year April to March then you have to maintain the posting periods within
variant.

If it is Year-dependent then it means that the financial year may change from year to year

If it is Year independent fiscal year then it means that the financial year is same forever

If you have less than 12 posting periods we use shortened fiscal year .Suppose if you have started
business in the August but at the same time your fiscal year is Apr to Mar then we will have to use
short end fiscal year and this is year dependent why because the same fiscal year will not be used for
the next fiscal year.

8. What Is The Year Shift ?

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A) For Example Our Financial Year Is April 2019 to March 2020 , As per SAP which year have a least
months that is our fiscal year. So 2019 is our fiscal year. So if We Want To Add That 3 Months In
our fiscal year, In That Case We Use Year Shift -1.

9. What Do You Enter In Company Code Global Settings ?

A) 4 Digit Alpha Numerical Key , Name , City , Country , Currency , Language , Address

What is the Use of number range In sap ?

A) The number range becomes Effective via the document type specified in document entry and
posting. You can use one number range for several document types . This means you can
differentiate documents by Document type. we have type of number ranges 1. Internal number
range 2. External number range

10. What Is Document Type

A) Document Type Is Used To Identify The Different Type Of Accounting Transactions. Document Key
Is Used To Classify The Accounting Documents. Controlling the posting to account types (vendor,
customer or G/L accounts). The document type determines which account types that particular
document can be posted to . And a number range is assigned to every document type.

11. What Is Posting Key?

A)Posting Key Can Determine The Type of Posting Mean What Is Debit/ Credit .

12. What Is Posting Period Variant ?

A) Posting Period Variant Can Control The Which Accounting Period Is Open For Posting for data to
post for a specific account type.

13.What Is Field Status Group ?

A) Field status group is basically to control entering values into fields during document entry- Either
suppress , Required or optional.

14. What Is The Field Status Variant ?

A) All Field Status Groups Configured In Field Status Variant to Main G/L Field Status

15. What Is Chart Of Accounts ?

A) Chart Of Accounts Is List Of G/L Accounts. Chart Of Accounts Is Used To One Or Several Company
Codes. This Chart Of Accounts Is The Operating Chart Of Accounts And Is Used For The Daily
Postings. The Use Of Different Chart Of Accounts Has No Affect on The Balance Sheet And P&L
Statement. Group chart of accounts are used if different company codes are using different chart
of accounts . To see the all company report together we use group chart of accounts. This allows you
to provide reports for the corporate group

What is the importance of chart of accounts ?

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A) An important purpose of chart of accounts is to segregate expenditure, revenue ,assets, liabilities.

so that viewers can quickly understand the company financial position.

16. What Does The Definition Of Chart Of Account Contain ?

A) Chart Of Accounts Key , Name , Maintain Language , Length Of G/L Account Number , Controlling
Integration , Group Chart Of Accounts Consolidation , Block Indicator

17. What Is Account Group ?

A) Account Group Determine The Definition Of G/L Accounts ,By Using Account Group GL's Can Be
Grouped to Different Categories Based On The Nature Of G/L.

18.What Is The Difference Between Classic GL And New GL ?

A) New GL Provides A Some Advanced Concepts Over Classic GL . New GL Concepts Are :
1. Document Splitting:

2. Parallel Accounting : New GL Provides Non Leading Ledgers For Parallel Accounting Like IFRS And
US GAAP

3.Segment Reporting : We Will Submit To The Report The Government Segment wise

4.COFI Reconciliation: CO - FI Reconciliation Will Be Happen In Real Time Integration As Soon As

There Is Any Changes In Profit Center And Segment Level Corresponding Adjustment Entry Will Be
Posted In FI.

30.What Is Document Splitting ?

A) Document splitting is a New GL concept. useful for getting the complete balance sheet for
account assignment objects like profit center and Segment. International accounting standards
mandate to provide financial statement segment wise

1.Active splitting: Active splitting is rule based splitting. The system splits the document on the
basis of Predefined splitting rules document splitting basing on the business transaction and
transaction variant assigned to the document type and item category assigned to G/L account
system determines and does the splitting of each line item in document base on the configuration
what you have done. You have control over active splitting.

2.Passive splitting: Passive split is used especially during the clearing transactions for example:
Payment transaction .The system creates a reference to the Existing account assignments and these
account assignments are used as basis for the line items to be split.

3.Zero balance clearing : Zero balance is taking care of Document should be balanced and also it
should be balanced for specific characteristics. For example document should be balanced per the
segment and profit center characteristics.

19 .What Is Ledger ?

A) A Ledger Is A Section Of Database Table. Ledger Is Required Reporting This Allows You To Produce
Financial Statements In Different Accounting Principles . The Non Leading Ledgers Are Parallel

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Ledgers To Leading Ledger , This Can Be Used To Apply Different Accounting Standards Such As IFRS
Or US GAAP.

20. What Is Entry View And General Ledger View ?

A) Entry View Is For Leading Ledger And General Ledger View Is For Non - Leading Ledgers , If You
Want To Submit Financial Statements In Different Accounting Principles We Use Non Leading Ledger

21.What Is Leading Ledger And Non Leading Ledger ?

A) Leading Ledger Is A Parent Ledger .All Documents Posted In Leading Ledger Automatically It Will
Flow ToThe Non Leading Ledger

22.What Is General Ledger ?

A) General Ledger Records The All Accounting Entries Of Company

what BRS statement ?

A)Company maintain cash book to record both the cash as well as bank transactions . Bank also
keeps an account for every customer in their books. Sometimes the bank balances as per cash book
statement doesn't match. So we have to Reconcile the differences. For reconciling the cash book and
pass book a reconciliation statement is prepared known as a bank reconciliation statement.

Accounts payable/Procure to pay cycle

A)the process begins with planning what materials are required , when they are required

Then company prepares the list of vendors that they think which can provide the materials

The company asks the vendors to submit a quotation. So in this stage company decide which one
give the better quality at lowest price

Once the vendor has been chosen the buyers create a purchase requisition form

A formal purchase order send to the vendor to supply the goods along with instructions which they
have to supplied

Once the company receives the goods from supplier , the purchases department prepares a goods
receipt. the goods receipt is compared with the purchase order to validate if the two match.

Once the verification of goods issue is done , the payment invoice is created

Then company paid to the vendor

23. What Is AP (Accounts Payable)

A) It Is Used To Manage and Record Accounting Data for All Vendors. Any postings made in accounts
payable it’s simultaneously update in general ledger as well .Using this sub module we can track the
transactions each and every vendor wise .

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Can I use the APP for customers ?

A)Yes we can use automatic payment program for customers. Generally we pay only to vendors .
but In some cases we pay also customers too like damage of goods and down payment return to
customers and some times we will receive the payments from customers through bank transfer.

24.What Is The Difference Between General Ledger And Sub Ledgers ?

A) Using Sub ledger We Can record Transactions That Transaction Will Classified by General Ledger .
sub ledger to review transaction specific information.For Example Using Accounts Receivable Sub
Ledger We Can Analyze The Transactions Of Each And Every Customer Wise .

What is the house bank ?

A)house bank is in sap terminology to group the bank branches

Ex : you have 10 branches of ICICI

So each branch will created as a bank In FI01

Then all this branches grouped into one house bank via FI12

Under the house bank, you will have 10 branches, under these branches we can have multiple
accounts

25. What Are The Payment Methods In SAP

A) Manual Payment ,Cheque , APP , Transfer , Electronic Transfers

What is Special GL Account ?

A)This Is Also A reconciliation account But we don't assign the In sub ledger accounts. We assign this
account to the main Reconciliation account with Special GL Indicator So That System Posts The
Special GL Transactions Like Advances , Bad Debts . For Example to track down payment separately.

26 .What Is The Use Of Recon Account( Sub Ledger Account ) ?

A) For Example We Have A Lot Of Vendors To Our Company So We Can't Maintain Vendor Wise G/L
Account In That Case We Will Create Recon Account This Recon Account Will Assign In Vendor
Master

Vendor down payment (advance) accounting entry:

Vendor dr

Advance to vendor cr

Manual chequepayment :

Vendor dr

Bank cr

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28. What Is Vendor Master Record ?

A) We Will Give The Vendor Related Details In Vendor Master

29. What Is The Vendor/ Customer Tolerance Group Why We Will maintain ?

A) If you want to maintain the Payment Differences for Vendor/ Customer in That Case Tolerance
Group Is Required. We did not Give The Tolerance Group that Blank Tolerance Group Become
Automatically Assigned to Vendor / Customer.

what is reconciliation account can you directly enter the documents in a/c ?

when you post items to subsidiary ledger the system automatically posts the same data to general
ledger. Each subsidary ledger have one or more reconciliation accounts. we can't use reconciliation
ledgers for direct posting.

31. What Is APP?

A) APP Stands For Automatic Payment Program It Is a Tool Provided By SAP To Company To Pay It's
Vendors, Using This Automatic Payment Program We Can Paid To The All Vendors At a time.

32.What Are The Payment Run Steps ?

A) Entering Of Parameters , Proposal Scheduling , Payment Run , Printing Of Payment Forms.

33. Why We Have To Create Vendor Account groups ?

A) The Account group determines Which Screens and Fields Are Necessary for Entering Master Data.

34. What Is GR/ IR?

A) When we receive the goods from Vendor Goods receipt will come. But the same time we may not
have receive vendor invoice . So we have to temporarily book the cost in some GL account. Later
when Vendor invoice is received the GR/IR account is cleared.

What is the use of Special purpose ledger?

A)Special purpose ledgers are used if data cannot be analyzed used standard functions in SAP FICO.
Special purpose ledger is used for reporting purposes

Special purpose ledger means a ledger which is maintained parallel to regular ledger. This ledgers
are maintained in case of different reporting requirements. Suppose a company has two branches
one in USA and one in India.USA has an accounting year from JAN-DEC and also the India will follow
the year from APRIL to MARCH. so when document is posted in India in the month of April period
1,if special purpose ledger is active ,The document is posted in period 4.

What is SAP O2C Process?

A)Order to cash is an integration point between FI and SD .It is also known as a O2C. It is business
process that involves sale order from customers to delivery and invoice.

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SAP O2C Process flow :

 Customer inquiry
 Quotation
 Sales order creation
 Post goods issue
 Delivery
 Billing
 Customer payment

35.What Is AR ?

A) Accounts receivable is one of the most commonly used financial concept in any organization .
Accounts receivable means the amount a customer owes to company for the goods or services

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provided by the company . Accounts Receivables Control The Customer Accounts. It Integrate With
Sales And Distribution Module, Sale Invoices Flow From SD To AR .

36 .What Is The difference between Residual And Partial Payments

A) Partial Payment : For Example I Supposed to pay Rs.100 and now I think Only paid 75/- In
partial payment It shows 75/- paid as a payment and in this 100/- . 25/- is still to be paid. In Partial
clearing the document of 100/- will be cleared only If the entire payment made . until the time
100/- document along with the other partial payment made will be open

The remaining balance paid will be generated as New document it will also be open item until
whole thing is cleared .

This allows us to See what was the original outstanding of 100/-

What is the partial payment

What is the remaining amount to be paid

Residual Payment : In Residual payment the original outstanding of 100/- automatically cleared by
the system when payment of 75/- is done. Anew document will be generated as open for 25/-

Here We Can Not Identify the Original outstanding of 100/-

When you make a residual payment It clears the original invoice and new line item for the
remaining balance is created. Where as in partial payment the original invoice is not cleared and
would be cleared only whole payment is done.

37. What Is Dunning ?

A) Dunning is similar to reminder notice for Customers Who Have Not Paid Their Open Invoices In
That Case We Will Send the Reminder Letter to Customer.

38.Tables IN FI

A)Chart Of Accounts Level G/L's - SKA1

Company Code Level G/L's - SKB1

Accounting Documents - BKPF

Chart of Accounts - TOO4

Posting Period Variant - TO1OP

Document Types - TOO3

Customer master General Data - KNA1

Customer Master Company Code Data - KNB1

Customer Master Sales Data - KNVV

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Customer bank details - KNBK

Customer master dunning data - KNB5

Vendor master General Data - LFA1

Vendor Master Company Code Data - LFB1

Vendor Master Bank details - LFBK

Vendor master dunning data - LFB5

Cost center master data - CSKS

Cost Center Controlling Area Level - CSKT

Chart Of Accounts Level Cost Elements - CSKA

Controlling Area Level Cost Elements - CSKB

Cost totals for External postings - COSP

Cost center Line items - COEP

Document header - COBK

SAP – CO

What is the difference between management and cost accounting ?

A)cost accounting is method of collecting , recording , classifying and analyzing information related
to cost. the information provided by it is helpful in the decision making process of managers .the
main aim of the cost accounting is control and reduce the cost of product .Management accounting
help us to make effective decisions .As management accounting depends on a lot on cost accounting
to prepare reports

1. What Is The Use Of Costing?

A) The Main Motto Of The Company Is Profitability, They Will Implement The Cost Accounting Is
Properly They Will Identify The Cost And Increase The Profitability. Costing is used for two purposes:
Internal reporting. Management uses costing to learn about the cost of operations, so that it can
work on refining operations to improve profitability. This information can also be used as the basis
for developing product prices.

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Cost Element Accounting

2. Why do we need Create Cost Elements?

A) Cost Elements Will Help Us to Classify the Costs / Revenues .if you want to analyze the costs in co
we should create cost elements. We have a two type of cost elements: 1.Prime cost elements 2.
Secondary cost elements. Primary cost elements is a cost carrier of transferring costs from FI to
Co .These cost elements closely related to general ledger accounts in FI. This helps to reconcile the
Values from Controlling and financial accounting. Secondary cost elements is cost carrier within co.
If you want to transfer cost between cost objects and if you want to do any calculation between cost
objects we should use secondary cost element. Secondary element used for internal allocation
purpose.

3. What Are The Cost Element Types?

A) We Have A Two Type Of Cost Elements: 1. Primary Cost Elements 2. Secondary Cost Elements.

4. What Is the Difference between Primary and Secondary Cost Elements?

A) If You Create A Primary Cost Element First You Should Create A G/L Account, If You Create
Secondary Cost Element We Won't Create A G/L Account, It Is Used For Internal Postings In co.so if
you want to transfer the cost and of you want to do the calculation In Between cost objects we
should use secondary cost element.

5. What Are the Primary and Secondary Cost Element Categories?

A) Primary Cost Element Categories:

1. Primary Costs

3. Accrual Percentage Method

4. Accrual Target = Actual Method

11. Revenue

12. Sales Deductions

22. External Settlement

Secondary Cost Element Categories:

21. Internal Settlement

31. Order/Project Analysis

41. Overhead Rates

42. Assessment

43. Internal Activity Allocation

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Cost Center Accounting

6. Explain About Cost Center Accounting?

A)cost center accounting is the one of the main sub module In Co .using cost center accounting we
can control and reduce the cost .if you implement the cost accounting is properly we can easily
identify the cost . The main objective of cost center accounting is plan At The End Of The Month We
Will Do The Variance Analysis , Based On Variance Analysis Management Take The Decisions Why
The Cost Increasing, Next Period We May Try To Control The Cost If You Control The Overhead Cost
Automatically Increase Our Profitability.

7. Cost Center Accounting Activities Of during the Month

A) 1. Cost Center Planning

2. Cost Center Actual Values

3. Period End activities

4. Advanced Planning’s:Template Planning, Formula Planning

8. What Is Cost Center?

A) Where the Cost Is Incurred That Is a Cost Center, We Can Consider Particular Product As A Cost
Center Or Department As A Cost Center. cost center accounting is used identify the costs incurred by
the organization. cost center have responsibility for controlling costs.

9. What Is The Cost Object?

A) Which One Is Receive the Cost And Send the Cost That Is the Cost Object Ex: Production Order,
Cost Center, Process Order, Product Cost Collector

Direct activity allocation

A)The service cost center Plumbers (4110) performs 2 hours of the activity type Repairs for
production cost center HFI (4210). The plan price for the repairs activity type is USD 15 per hour. In
direct activity allocation, this price is valued as follows:

2 hrs X 15 USD/hr = 30 USD

The Plumbers cost center is credited with this amount and the HI production cost center is debited
accordingly.

Account assignment Logic :

1. You enter costs of 100 USD for statistical order 40010. The order also stores the posting
to cost center 2330. Cost center 2330 is assigned to profit center P100.

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Because this is a statistical order, the cost center is the true account assignment object for this
posting. The system also posts the costs statistically to the order and to the profit center.

2. The system records costs of 100 USD on cost center 2330 and on the order 40020. Cost
center 2330 is assigned to profit center P100.

Orders and cost centers are true Controlling objects. The system therefore posts the costs as
true costs to the order and as statistical costs to the cost center. In addition, the system posts the
costs statistically to the profit center.

3. You enter revenues of 200 USD on cost center 2330. Cost center 2330 is assigned to
profit center P100.

As you cannot make true revenue postings to a cost center, the SAP system derives a
summarized reconciliation object as the true account assignment object. The system also makes
a statistical posting of the costs to the cost center, and to the profit center.

10. What Are The Cost Allocation Methods?

A) Distribution, assessment With Allocation Structure, Assessment without Allocation Structure,

Periodic Reposting.

11 .What Is the Difference between Distribution and Assessment?

A) If You Want To Transfer The Cost Using Distribution Cycle We Can Distribute Only Primary Costs
Distribution Using Assessment Cycle We Can Distribute Primary And Secondary Costs With 42 Cost
Element Category. the original cost elements are not recorded on the receivers. Allocation through
assessment is useful when the composition of costs is unimportant for the receiver . For example
assessment of cafeteria costs to a cost center need not to be broken down further. And we cannot
allocate consumption quantities using assessment To allocate activity quantities you must use
indirect activity allocation.

12. Why We Using Distribution And Assessment?

A) We Have Some Common Costs in Company Like Power, Rent so This Costs Related To All Cost
Centers We Can Distribute These Costs Using Cost Allocation Methods

13. What Is The Cost Center Planning Types?

A) Two Types Of Planning's Is There: 1. Activity Dependent Planning 2. Activity Independent

Planning

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14. What Is the Difference between Activity Dependent Planning and Activity Independent Planning?

A) In Activity Dependent Planning We Can Maintain Fixed and Variable Costs but Activity
Independent Planning We Can Maintain Only Fixed Cost

Indirect Activity allocation:

For Ex: Utility cost center provide steam or electricity to production cost centers . So we can use
the production hours as the basis to allocate the utility cost center costs to Production cost
centers

Indirect activity allocation is used when quantity is not directly known and cost is allocated on the
basis of statistical key figures e.g. number of employees.

Indirect Act Alloc (IAA) - You have power as a cost center.. You collect all costs for power in this cost
center....

But Power as act type is not specified on this cost center, but on mfg cost center 1, Mfg CC 2, 3, 4, 5,
etc...

So in this case, cost is collected on one CC and Act Qty is collected on another CC.... Now, if you want
to transfer costs from power cost center to all mfg CC based on power (Act Qty) confirmed in those
cost centers, you will use IAA...

IAA will tell the system that Qty confirmed in all MFG CC = Qty of POWER CC... i.e. Qty sent by the
sender = Qty received by the receiver

The result of IAA cycle would be that sum total of Act Qty confirmed on Mfg CC will be transferred to
Power CC.. Act rate will be calculated on Power CC in KSII and accordingly costs will be transferred to
Mfg CC in same proportion

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

A) Cost Center is only responsible For the Cost, Using Cost Center Accounting We Can control And
Reduce the Cost. But Profit Center Responsible to the Cost and Revenues, we will prepare The
Financial Repots Profit Center wise For Internal Reporting Purposes.

16 .What Is Activity Type?

A) Activity Type Classifies the Activities,The department costs are subdivided into activities to
understand the cost structure and we will take correct action

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17. Cost Center Period End Activities?

A) Accrual calculation of accrued of costs, Indirect Internal activity allocation ,Distribution

,Assessment, Periodic reposting, Splitting, Actual Price Calculation, variance analysis, CO-FI
Reconciliation.

Internal Order Accounting

Internal Order Accounting Topics:

 Real Order
 Statistical Order
 Budget And Budget Availability Control
 Commitment Management

18. What Is The Purpose Using Internal Orders?

A) Internal Orders Will Be Used to plan , collect, and settle the costs of internal jobs and tasks , It
can be used for track the costs and in some cases revenues with in CO. Ex: Team lunch, Trade
fares and advertising

19 .How Many Types of Internal Orders Is There?

A) Internal Orders Are 4 Types:

1. Overhead orders:  Used to monitor overhead costs incurred for a particular purpose, such as
conducting a trade fair, or tracking costs for maintenance and repair work.
2. Profitability orders: Used to replace the cost accounting parts of SD customer orders if SD is not
being used, so that both costs and revenues can be tracked; or to monitor revenues not affecting the
organization's core business (such as miscellaneous revenues).
3. Investment orders: Used to monitor costs incurred in the creation of a fixed asset, such as
building a storage facility.
4. Production orders

20. What Is The Statistical Order?

A) Statistical Order Is A Dummy Cost Object, It Is Used For Reporting Purpose. We Won't Settle This
Order.

EX: We Have a One Vehicle Maintenance Department

If You Want Know the Particular Vehicle Cost In That Case We Will Use Statistical order

21. Why We Create The Settlement Profile? What Is Settlement Profile

A) At The End Of The Month All Costs / Revenues We Will Settle To The Receiver, Receiver Could Be
Cost Center,COPA, GL Accounts Etc...

what is commitment management ?

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A) Identify the costs that will be incurred in the future for materials and services that you have
requested or ordered . commitments reserve funds for costs that will be incurred at a future date.

For example :

Specific goods are ordered for an internal order , a cost center, or a project . A purchase order
commitment is created that is equivalent to the purchase order value

22. What Is The Budget?

A) A Budget is a financial Plan, We Allocate the Budget to Particular Purpose

23. What Is The Difference Between Budget And Planning?

A) If You Do the Plan We Can't stop over spending expenses, which is possible using Budget.
Approved Plan Is Budget.

24 .How Can You Control the Budget?

A) Using Budget Availability Control We Can Control The Budget, This Function Check The Available
Amount To Be Spent On A Specific Object And Issues Warning Messages And Errors according to the
tolerance limits settings We can control without exceeding the cost.

What Is The Difference Between Internal Order And Cost Center?

A) Cost Center Used For Daily Transactions. Internal Order Used For Short Term Jobs.

Product Costing

Product Costing Topics:

 Product Cost Planning

 Cost Object Controlling
 Period End Activities
 ML And Actual Costing

How the system pick the GL While taking goods receipt ?

A) In transaction code : OBYC we will assign the Inventory GL A/C to Valuation class against BSX
Transaction key That transaction key assigned to the Movement type So Based on movement type
and valuation class combination System automatically posts the accounting entry to FI.

25 .What Is Product Costing?

A) Product Costing Is Used To Find The Cost Of Product And Control The Cost.

26. Why We Do Product Cost Planning?

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A)Product cost planning help us to analyze the product cost. If You Want Make Any Product First We
Will Do The Plan, Product Cost Plan Will Help Us To Make Or Buy Decision . You can create different
types of cost estimates at different stages of the product planning and production cycle.

1. Unit Costing: Our Product Is In Initial Stage We Will Use This Method, It Means With Out Quantity
Structure

2. Base Object Planning :

3. Standard Costing: Our Product Is in Maturity Stage We Will Use Standard costing, we can evaluate
the Inventory Based on Standard Cost Estimate, If You Want to do STD Cost Estimate You Should
Have Proper BOM and Routing.

4. Mixed Costing: For Example I Want to Manufacture One X Product for Making That Product I
required A, B, C, D Materials but I Want to Make This Product A, B Raw Materials 40% And C, D Raw
Materials 60% In That Case We Will Use Mixed Costing.

5. Additive Costing: For Example Our Manufacturing Plant in AP .I Want to Manufacture X Product
Cost Is 1000And Our Sales DEPO in Delhi We Want to Transport That Product We Spend Some
Expenses.

What is the difference between standard cost estimate and preliminary cost estimate ?

A) Standard cost estimate is done for updating manufacturing price for the material in material
master. This will be the basis for Valuation of inventory. Preliminary cost estimate is nothing but
when you create the order planned costs will be calculated based on the costing variant for the PP
Order.

27. Difference between product costs planning And Cost Object Controlling?

A) Product Cost planning will help us to control the cost if you don't do the planning for product we
can't identify where the cost is increasing. using Cost Object Controlling we will compare the both
plan and actual data, then we got some variances.

What is origin group?

A) For Example: I Have a Two type Of Raw Materials 1. Domestic Material 2. Import Material, so if
you want only one cost element for both materials We Will Create Origin Groups.

Explanation About Cost Object Controlling?

A) We Have Some Scenarios Like: 1. Lot Based Costing 2.Batch Based Costing 3.Period Costing
4.Order Costing, Using Production/process Order We Can Control the Lot/Batch Wise

28 .What Is Cost Component Structure?

A) Cost Component Structure Is Product Cost Breakup, While Executing The Standard Cost Estimate
Total Cost Will Be Displayed By Splitting The Costs According To Cost Component Structure.

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29. How Many Cost Components We Can Create?

A) We Can Create 40 Cost Components If It Is A Variable Cost Is One Cost Component And It Is A
Fixed Cost Is A One Cost Component We Don't Have Fixed Cost Option We Can Maintain Only
Variable Costs or Fixed And Variable Costs.

What is Direct Cost?

A) If there is any cost directly attribute to the products that is direct cost. It should be directly
involved in production Process. Ex: Labor cost, machine cost, setup cost

30. Why we maintain costing sheet? What Is Overhead Costs

A) We Will Maintain The Overhead Costs In Costing Sheet For Example We Are Getting A Raw
Material From Vendor Once Reached To Our Stores Department So We Have To Unload The Stock
That Unloading Charges Are Indirect Cost. usually there are some costs involved in production which
can not be directly assigned to production that is called indirect cost. So the indirect costs are
assigned using costing sheet either on percentage or quantity basis. And other indirect costs are
service cost center costs these are purely not related to Products. But if there is any costs in plant
that all Costs Should be inventorised.

31 .What Is the Costing Variant Components?

A) System pick the cost based On Costing variant but amount is picked from cost elements

1. Costing type; Costing type defines the valuation view to be costed and defines the purpose of
costing

2. Valuation variant: In Valuation Variant We Will Maintain the Priority

Which Price Should Be Taken From Material Master

It Also Contains Which Price Should Be Considered For Activity Price Calculation

Which costing sheet is used to get the Overhead Costs?

3. Date Control: It controls the validity of cost estimate , The cost estimate valid from which date to
which date.

Which date of BOM and routing to be used in the cost estimate

Which date price to be used in the cost estimate

4. Quantity Structure Control: How the System Should Select BOM and Routing

32 .What Is the Difference between Cost Component Structure and Cost Component Split?

A) The Result of Cost Estimate Is Called as a Cost Component This Is a Cost Component split

33 .What Is the Primary Cost Component Structure?

A) Primary Cost Component Structure Is the Alternative View of Cost Estimate

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34 .What Is Roll up Cost Component?

A) If there is any lower level material That Cost Will Roll up To Next Level Material

For Example : For Making One Piece Of FG I Required SFG And Some Other Raw Materials Before
Making FG We Have To Make SFG So SFG Also Have Same Cost Breakup That SFG Cost Added To FG
This Is The Roll Up Cost

35. Cost estimate Components?

A) 1. selection Of Materials : In This Step System select the Materials as per selection criteria ,
Generally we specify the plants a selection criteria, if you don’t specify the plant or material then
system consider the all plants.

2. Structure Explosion : Structure explosion is the process of including lower level materials , The
main reason for this step is to do the cost estimate for the raw materials In BOM so that cost
estimate for in-house materials can be ascertained correctly.

3. Costing Run: In this step allow the system to do the cost estimate for all the materials selected
in structure explosion step. It includes the cost estimate for raw materials

4. Analysis: This step provides the analysis of cost estimates based with details of different
components like Raw material cost, manufacturing cost, overhead cost

5. Marking: When we mark cost estimate it will updated as a future standard cost estimate In
Material Master.

6. Release: When we execute this step It Will updated as a current standard cost estimate.

What is planned cost , target cost and actual cost?

A)plan cost = planned Qty * standard price

Target cost = Actual Qty * Standard price

Actual cost = ActualQty * Actual Price

For Ex : A production order is planned for producing 10 units of a material

Then plan cost is in order= 10 * Standard cost

Target costs are calculated once production is confirmed

Suppose only 9 Units were produced out of 10 planned

Then target cost = 9 * Standard cost

What is the difference between standard price and moving average price?

A)Using standard price during of the month our inventory valuated based on standard price. If
goods movements or invoice receipts Get the price differences that price differences are posted to a
price difference account. the variance not taken into valuation.

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But using Moving average price is automatically adjusted to the Material master record when price
variance occur. If any differences from Purchase order Price Or Invoice receipt the differences are
posted to a stock . And the system determines a new Moving Average price.

36 .Why We Will calculate WIP?

A) At The End of the month all orders May not be close in that case we will calculate WIP , If You
Don't Calculate The WIP Our P&L Shows Loss But It's Not an Actual Loss. . That is all you done for to
receive the finished good, as of now the consumption has been posted to P&L but You Haven’t
consider same as an inventory in balance sheet. So it shows a wrong profitability.

What is The WIP settings?

A.1 Define result analysis key: Under this result analysis key WIP calculation will be happen

2. Define cost elements for WIP calculation:

3. Define result analysis versions: In this step we will specify the version. means based on which
version you are going to calculate WIP

4. Define valuation method (actual costs): Here we have to specify that how we are going to
calculate WIP

5. Define Line Ids : Line ID’s Enable you to group the costs according to the requirements of CO – PA

And FI. For example you can create Separate Line ID’S for Material cost, direct cost and indirect cost

6. Define assignment: Here we assign the cost elements under the which an object is debited or
credited to Line ID’S for settlement to FI. You specify which costs must be capitalized, cannot be
capitalized, have an option to capitalize

7. Define Update: Here we will assign the Lined ID’s to WIP Cost Elements

8. Define posting rules for settling work in progress: Here specify the G/L accounts in FI to which
result analysis data passed.

WIP Tables: COSB, COSBD

Variance configuration settings?

A) 1. Define Variance Keys: This variance key help us to calculate variance

2. Define default variance keys for plants

3. Check variance variant

4. Define valuation variant for WIP and scrap

5. Define Target Cost Versions

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What is variance types?

A) Input side variances:

1. Input price variance: Input price variances are caused by differences between the planned and
actual prices of the materials and activities

Input Price Variance = (Actual Price – Plan Price) * Actual Input Quantity
2. Resource usage variance: Ex: suppose your finished product is X UsesRM1. But when you produce
the material, RM1 is not available so RM2 was used instead. The use of Raw B higher costs then
would have been the case with RAW A. the difference between the costs planned for RAW A and
the costs incurred by the system as a Resource usage variance.

Resource Usage Variance – Actual Cost – Target Cost – Input Price Variance

3. Input quantity variance: Input quantity variance caused by differences between the planned and
actual consumption quantities of materials and activities.

Input Quantity Variance = (Actual Input Quantity – Target Input Quantity) * Plan Price
4. Remaining Input Variance: This can happen when costs are entered without a quantity or when
the overhead rates are changed.

EX: I Plan to Use 5 Pcs ofROH1 Each one is 100 Amount - 500

I Have Planned 5% in costing sheet on Material Usage, Which is 25

I Used 6 Pcs of ROH1 and each piece Costed 110, so the total material cost is 660

5. Scrap variance: Scrap variance are caused by difference between operation scrap planned in
routing and the operation scrap actually confirmed.

Output Variances:

Output price variances are reported in the following situations:

If the standard price has changed between the time point of delivery to stock and the time point
when the variances are calculated

With respect to the above point, pls follow the example and let me know if you agree or not...

Let us say, we have Standard Cost of Product X for the month of Feb as $100 per tonne.

One Production Order is created for 100 Tonnes and you made Goods Receipt for 50 tonnes during
Febrauray. (50 Tonnes posted to Inventory a @$100). Now, at the month-end, you estimated the
Standard Cost once again and the new Standard Cost effective for the month of March is $110 per
tonne.

Revaluation of inventory is done for 50 tonnes (for GR posted alread and in stock) and $10 * 50
tonnes is posted to Price Difference Account.

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Now, during the month of March, you made the GR for balance 50 Tonnes on the Production Order.
Inventory is posted @ $110. Once you do TECO and do the variance calculation, the system will post
$10 * 50 tonnes as output price variance, which will flow to COPA and Price Difference Account.

6. Mixed price variance :

7. Out Put Price Variance: The output price variance occurs if the standard price is the changed at
the time of delivery to stock and time when variance are calculated.

8. Lot Size Variance: Lot size variance are only calculated if the planned order quantity is Different
than the confirmed quantity (Delivered Quantity).

Variance related Important T.Codes :

KKBC_ORD

KOC4

MB5B

why we will create COGS as cost element in MTO scenario and why we won't create COGS as cost
element in MTS scenario particulartly if COPA is activated?

A)You have 2 kinds of scenarios: made-to-stock and made-to-order (MTO)

In a made-to-stock scenario you will get a posting to COPA during the release of billing doc to
accounting. (record type F)

In a made-to-order scenario the billing doc will not post to COPA. A made-to-order scenario can be
identified in COPA in that the billing doc will have an account assignment to a sales order in addition
to a PA segment.

In MTO you need to settle the sales order to COPA via VA88. The costs and revenues will be passed
to COPA (record type C).

In case of MTS the VPRS will be passed to COPA via statistical condition VPRS in the invoice which
will be mapped to value field in tcode KE4I. So in this case it does not matter if it is cost element or
not. In case of MTO the SO will be settled to COPA. Here the transfer of COGS will be via the PA
transfer structure maintained KEI2 where the cost elements are mapped to value fields. So in this
case its important that the COGS is contained in a cost element

37. What Is The Product Costing Period End Activities?

A) Actual Activity price calculation, Actual Price Revaluation ,Actual Overhead Calculation, WIP,
Variance, Actual Settlement.

Accounting Entries:

At The Time of Delivery: Movement Type - 601

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COGS DR

Inventory CR

Customer Invoice Entry:

Customer Dr

Revenue Cr

Customer Payment Entry:

Bank Dr

Customer Cr

Can I run the Cost estimate for two production versions In REP scenario?

A) You can have only one active cost estimate for product for a period , That might be based on
first Prod. Version and second prod. Version. You cannot do the costing of both prod.
Version and release it in the material master. Say suppose if you have done the costing
based on first production version and released it and let it be say 100/- and in the mid of the
period you want to make use of second production version whose cost is say 75/- and if you
want to mark this in material master then you have to cancel the existing one using CKR1
and then you have to do fresh standard cost estimate for second version. But this
Procedure is not recommended. Because every period we can do costing only once.

Can I Use the split valuation for above scenario ?

A) In my understanding split valuation is used for a material which is valuated using 2 different
values .

Say if material A has been In house manufactured And also subcontracted then in this case we
can use split valuation. Or say material X is procured from vendor Z at a certain rate and the
same material may be import at a different rates ,Then in this case also we can use split
valuation.

38. What Is The Difference Between Material Ledger And Actual Costing?

A) Using Material Ledger Our Inventory will Revaluate in Multiple Currencies If you Use Parallel
Currency We Should Use ML .With Out ML Our Inventory Revaluate in Company Code Currency.

Actual costing : Actual costing valuates all goods movements in standard price . At the same time all
price variances and exchange differences for the material are collected in material ledger. Actual
Costing Will Be Allocate to The All Variances to Particular Material. Actual costing determines what
portion of variance to be debited to the next highest level using material consumption . with the
actual BOM, variances can be rolled up over multiple production levels all the way to the finished
product.

Ex: With Out Actual Costing Using Moving Average Price (Procurement Materials)

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Raw material (V) - 100

I Create PO:

Raw Material - 10 sty - 120/-

When I Take Goods Receipt:

Raw Material - 1200

Next I Want To Consume This Stock:

Raw material 10 sty -120 = 1200/-

Entry Is: Consumption Dr 1200

Inventory CR 1200

So I Have No Stock

Now I Got The Invoice Receipt:

Raw Material 10qty - 200 = 200/-

Entry Is: GR/IR Clearing DR 1200

Price Differ DR 800

Vendor CR 2000

39. Actual Costing Run Flow Steps?

A) 1. Selection

2. Determine sequence

3. Single Level Price Determination

4. Multilevel Price Determination

5. Revaluation of Consumption

6.WIP Revaluation

7. Post-closing

8. Mark Material Prices

What Is Dynamic Price?

A) We Have Three Type Of Scenarios In Dynamic Price Release:

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1. If you close the month in same month That Month Actual Cost Update As a Standard Cost Of Next
Month

2. If We Are Unable To Close In Same Month In That Case For Example:InJan Month We Will Do The
Standard Cost Estimate, We Will Post The Actual Values Of Jan In Feb Month. So We can’t Copy
theActual Values To Feb Month. We Can Copy The Jan Actual Cost To March STD Cost This Is The
Second Scenario.

3. We Will Do The STD Cost Estimate For Every Month.

40 .What Is Operating Concern?

A) Operating Concern is the valuation level of profitability analysis.

41 .What Is Characteristics' And Value Fields?

A) At What Level Management Want To See The Profitability For Period That Is The Characteristics Ex
:Customer group , Distribution channel , Zone What values You Want To Analyze That Is Value
Fields Ex: Revenue , Cogs .

42. What is the difference between profit centers And COPA?

A) Using Profit Center We Can Analyze Profit Center Wise Cost and Revenue, COPA Analyze the
Profitability of Different Segments likeProduct, customer, Plant, Distribution Channel.

COPA Flow:

1. Transfer of billing documents

2. Direct postings from FI/MM

3. Transfer of overhead

4. Transfer from Cost Object CO/Production variances

What is the difference between Costing based COPA and Accounting based COPA?

A) Using costing based COPA We can analyze profitability in multi-dimensional way means product,
customer zone, Distribution channel Like that. In Costing based Copa we will create value fields For
Analyzing profitability.But In accounting based Copa we will analyze our profitability Using GL
accounts it’s Similar to Our P&L Statement.

Differences between costing and accounting based COPA?

A) Costing based COPA is very flexible and have some extra features over accounting based COPA

1. Accounting based Copa uses transactions tables COEP, BSEG and costing based Copa takes values
from CE1 to CE4 Tables

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2. Reports based on line items is not possible in accounting based Copa. Possible in costing based
Copa

3. Actual top down distribution is only available in costing based Copa

4. Revaluation of actual data to plan data is not available in accounting basedCopa

5. In accounting based Copa we can’t get the Cogs and Production variance breakup

What is profitability segment level characteristics?

A) For example II have two type of billings so I want to analyze profitability billing type wise. If you
analyze profitability billing type wise you should select costing based Copa or accounting based Copa
either both types. If you don’t select anyone you can’t see the profitability billing type wise, so that is
the segment level characteristics.

FI-MM Integration:

In OBYC settings we will assign G/L account to valuation class Against transaction keys, that
transaction keys assigned to movement type. so that movement type finds the valuation class and
post the amount to G/L account which is assigned to this particular valuation class

FI-MM Integration happens in T.Code OBYC

1. We will give purchases order to vendor

2. When we receive the goods the in that time goods receipt will be come

FI-SD Integration:

FI-SD Integration done through a transaction VKOA. Documents are posted in SD to FI Module as per
the configuration done while integrating both modules.

At the time of sale order No accounting entry will pass to FI

At the time PGI Accounting entry flow to FI

COGS Dr

Inventory Cr

At the time of billing accounting entry is:

Customer DR

Bank/cash CR

SD – CO Integration:

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This Integration Mainly Happens in COPA Where In you want to know the Costs and Revenues
flowing from billing documents to COPA. This transfer Of Values Are Done through the Condition
Types, Which we have In the Pricing Procedure. Also we can assign quantity value fields from the
billing document, if there is any requirement of transfer of quantity to COPA.

PP- CO Integration:

PP-CO integration is regarding costing point of view.

 Price update in material master

 Activity type, cost center linked with work center use to calculate production activity price.
 Costing variant assigned in order dependent parameter
 Costing sheet
 Standard cost estimate
 WIP Calculation, Variance Calculation, Settlement.

MM- CO Integration: Internal Orders and cost center consumption

TICKETING PROCESS:

The ticket process normally in sap is 3 Levels.

That is High Priority, MediumPriority,and Low Priority

If it is high priority, you should solve the issues within 2 hrs. Or 3 Hrs.

If it is medium priority, you should solve the issues within 4 to 6hrs.Or 8 Hrs.

If it is Low priority,youshould the issues in with in 8hrs. Or Next day itself.

The Time Dependencies may depends upon the client to client

ASAP Methodology:

ASAP Implementation has five phases:

1. Projectpreparation: During this phase the team goes through initial planning and Preparation for
SAP Project.

2. Business Blue Print: The Purpose of this phase to achieve a common understanding of how the
company intends to run SAP to Support their business. Also to refine the original project goals,
objectives and revise the overall project schedule in this phase .The result is the blue print

3. Realization: The purpose of this Phase toimplement all the business process requirements based
on the Business Blue print

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4.Final Preparation : The Purpose of this phase to complete the final Preparation ( Including testing ,
end user training , system management and cutover activities .This Phase also Serves to resolve all
critical open issues.

5. Go Live Support: In This Phase The Most Important Elements Include setting up Production
support,monitoring system transactions and optimizing overall SystemPerformance.

LSMW STEPS:

Enter project name, sub project name and Object Name

1. Maintain Object attributes

SAP Landscape:

SAP is divided into three type of landscape: 1 development server 2. Quality server 3.Production
server

Development would have multiple clients forex: 190 Sandbox,100 Golden, 190 Unit test

Quality may have again differentclients ex:300 Integration test 700 to 710 training

Production may have something like 200 Production

Now whatever do in the sand box it doesn't effect on other servers. It is only for rough usage

Real Time Issues :

I have a scenario where production entries are posted to wrong cost center because Wrong costing
sheet was assigned so it posted to a different plant.

Also now the costing sheet has been corrected with right Credit( cost center) and calculation base,
so there is several production orders in between those particular period how do rectify those and
also some of them have settled to wrong cost center as well. how do we correct those?

issue:

material Overhead was settled to wrong cost center

A)1) Reverse the settlement removing the test run

2) Change the Costing sheet (Credit keys)

3) Re-Run Overhead job again CO43

4) Run WIP and Variances jobs again

5) Settlement.

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