Accounting Principles, Ledgers, and Parallel

Accounting
Here’s some general information about accounting principles, ledgers, and parallel accounting:

Accounting Principles
Accounting principles are rules for legal accounting and financial statements and govern how companies
record and report their financial data. Accounting standards are collections of accounting principles, for
example, the International Financial Reporting Standards (IFRS) issued by the International Accounting
Standards Board (IASB). In addition, there are local accounting standards, for example, the United States
Generally Accepted Accounting Principles (US GAAP) or German Commercial Code (Handelsgesetzbuch,
HGB).

Ledgers
SAP delivers the following ledgers with the following underlying accounting principles:
 0L: This mandatory leading ledger is a local ledger based on the generally accepted accounting
principles (GAAP) of your country or region.
 2L: This optional corporate or group ledger is based on IFRS.
 3L: This optional corporate or group ledger is based on US GAAP.

You can use the following ledger or ledger combinations (parallel ledgers):

Ledger Description
0L leading ledger (local
GAAP)
0L + local GAAP + IFRS
2L
0L + local GAAP + US
3L GAAP

To set up financial reporting in your system based on the accounting principles mentioned above, in the
scope setting phase of your implementation, choose one of the following scope items:

 Local ledger: Accounting and Financial Close (J58)

 IFRS: Accounting and Financial Close – Group Ledger IFRS (1GA)
 US GAAP: Accounting and Financial Close – Group Ledger US GAAP (2VA)

Parallel Accounting
Parallel accounting enables you to perform valuations and closing operations for a company code based on
the accounting principles of the group as well as additional accounting principles, such as local accounting
principles.

Here’s a typical use case:

The German subsidiary of a US-American group has to create financial statements according to German
commercial law (Handelsgesetzbuch, HGB) as well as according to the accounting principles of the group
(US GAAP).

To read more, please go to the SAP Help Portal:

Accounting Principles: https://help.sap.com/viewer/6b39bd1d0e5e4099a5b65d835c29c696/Latest/en-US/

50f1192d60274ed29eb0985bf46086df.html

Ledger: https://help.sap.com/viewer/6b39bd1d0e5e4099a5b65d835c29c696/Latest/en-US/
8a4fd7531a4d424de10000000a174cb4.html

Parallel Accounting: https://help.sap.com/viewer/6b39bd1d0e5e4099a5b65d835c29c696/Latest/en-US/

fce0d25320cd4608e10000000a174cb4.html