SET - II

#1 What are the organizational elements SAP FI and what is their hierarchy?

We find four hierarchical components in SAP FI:

a. Company Code
b. Business Area
c. Functional Area
d. Chart of Account

#2 What do you mean by chart of accounts and how many types are there in SAP?

We use FI Chart Of Accounts (COA) in order to meet the daily needs of your company as well as the legal requirements
of the country.
The COA has three types:
a. Operating COA: this record is assigned to the company code and contains all the general ledger accounts. This is used
to record all the day to day operational transactions.
b. Country COA: this is the list of general ledger accounts required in order to meet the legal requirements of the
country.
c. Group COA: this is the list of general ledger accounts required for consolidation reporting at group level.

#3 What do you mean by Reconciliation Accounts? Can they be posted directly?

SAP financial accounting has several sub ledgers, including accounts receivable, accounts payable and asset accounting.
An account is maintained for each customer, vendor or asset in the sub ledger. When preparing financial statements, the
details of these individual accounts are not necessary. Instead, every asset, customer or vendor account is linked to a
certain SAP reconciliation account, also known as a control account. Each SAP reconciliation account is used to reconcile
the sub ledgers with the general ledger. SAP reconciliation accounts are reported on the financial statements, while the
individual sub ledger accounts are not.

Every transaction in an account of a sub-ledger is automatically posted to the general ledger. This integration is
guaranteed by the reconciliation account in SAP. It must be assigned to every customer or vendor master record. This is
done be entering the respective General Ledger account in the Reconciliation account field of the customer master
record.

The SAP general ledger is linked to the sub ledgers. For every transaction posted in the sub ledger, the same value will
be updated to the corresponding reconciliation account.

#4 What is the significance of financial statement version within SAP?

Financial statement versions are used to create the financial statements, to run account balances reports and for
General ledger accounting and planning. GL accounts can be used as per the legal regulations to generate the final
statements. We can also define multiple financial statement versions to generate financial statements in different
formats.

#5 Have you worked on Data migration?

Yes, I have been a part of migration team. I have created various LSMWs to update master data of GLs, Vendors and
customers and assets from legacy system into SAP system (live system).
#06 Tell me about APP (Automatic Payment Program - F110) configuration?

Automatic Payment Program (APP) serves the purpose of posting accounts payable like payment to a vendor based on
vendor invoices automatically. APP is used to find out due/overdue invoices and to process a list of customer and vendor
invoices to make payments in one go. APP cannot be used for all company codes from different countries.

APP has the following customization steps and configured in FBZP −

# Setup all company codes

# Setup paying company codes
# Payment method per country
# Payment method per country code
# Bank Selection
# House Bank

#07 What is of document splitting and how many types are there?

Document splitting is a concept of New General Ledger. In SAP ERP the document splitting is the most powerful tool is
widely and most used. With this function the document splits the line items based on the “Characteristics” we define in
system. Often this function is used to get the financial statements correctly for segment reporting.

Types of document splitting:

 Passive Splitting – This type of splitting is mostly occurring when the payment transaction is posted for a vendor
invoice. Now system splits the payment document bases on how the vendor invoice was split in place already.
 Active Splitting – In Active Splitting the document is split according to my SAP ERP predefined rules. SAP almost
supports all the business process transactions but if it doesn’t suit to any requirement the own splitting rules can
be created.
 Zero Balancing Splitting – When the amounts within financial documents are not able to balance out to Debit of
Profit Centre and Credit of Profit Centre which does not Net Off as its own, SAP then automatically generates
new line item to balance the document.

#08 What is chart of depreciation and what all does it contain?

Chart of depreciation is the highest organizational unit in asset accounting. All the asset related configurations are done
under chart of depreciation. In SAP, they are defined for each country at client level and can be modified to suit the
requirements. Chart of depreciation contains depreciation areas which are maintained to depreciate the same asset in
multiple ways. In asset accounting, maximum of 99 depreciation areas can be maintained.

The various features of chart of depreciation are as:

# The chart of depreciation is a directory of depreciation areas organized according to business management
requirements.
# The characteristics and significance of the individual depreciation area is defined in each chart of depreciation. A
depreciation area is always assigned to only one chart of depreciation.
# Depreciation keys for automatic calculation of depreciation are also defined in chart of depreciation. They are based
on elements for calculation (calculation methods, period controls, and so on) that are available client wide.
# There are specific objects in the chart of depreciation for special calculations of asset values.

#09 How do we transfer assets within a company code?

Once an asset is created as assigned to an asset class, we cannot change the asset class details even if we assigned
wrongly. For this, we need to create a new asset master in correct asset class and transfer the asset created wrongly.
This transfer is carried out in ABUMN transaction.
If we want to transfer the assets within the company code to different cost centers, we have two scenarios.

# Both old and new cost centers belong to the same profit center, then we can update the old cost center with new cost
center details, directly in the asset master.
# If the old and new cost centers belong to different profit centers, then we need to create new asset master, transfer
the values from the old asset master and finally we need to retire the old asset in ABAVN.

#10 What do you mean by intercompany postings/transactions and how are they configured?

Several company codes are involved in a cross-company code transaction. In a cross-company code transaction, the
system posts a separate document with its own document number in each of the company codes. Individual documents
are linked by a common cross-company code number. The system generates line items automatically (receivables and
payables arising between company codes) in order to balance the debits and credits in each document.

At times one company code makes purchases on behalf of another company code or makes payment on behalf of
another company code. This needs entries to be passed in both company codes. If cross company code settings are
done, entry in one company code would generate the entry in the other company code also.
Configuration steps:
# Check whether Document Type SA allows cross-company postings in control data tab in transaction OBA7.
# Create clearing GLs in both the company codes (FS00)
# Prepare cross company code transactions. (OBYA)
# Prepare cross company code manual payment (OB60)
# Prepare cross company code automatic payment (FBZP)
# Display the cross-company code document using transaction FBU3 after posting in FB60.

To clear open items in inter-company G/L there is no automatic program like F.13 but you can do clearing manually with
F-03 by selecting the other inter-company G/L with "Select More" in Edit option.

#11 How are assets from a legacy system?

As the name implies, legacy asset transfer is the transfer or migration of assets from a source(s) other than the target
system. Meaning transfer of assets records currently residing in a legacy system (or manually maintained) to a new
(target) system. The transfer of asset data is carried out through transaction AS91, and the subsequent transfer to the
General Ledger via transaction OASV.

Pre-requisite Configuration Settings

# Set Company Code Status to “test company code with data transfer always allowed”.
# Specify Sequence of Depreciation Areas.
# Specify Transfer Date/Last Closed Fiscal Year.
# Specify Last Period Posted in Legacy System.
# Define Transaction Types for Transfer of Open Items.
# Specify Entry of Net Book Value (No Accumulated Ordinary Depreciation).

#12 What is the accounting entry for depreciation?

The entry for depreciation would be

Depreciation expenses A\C - Dr

Accumulated Depreciation A\C - Cr.
#13 Can you name some of period closing activities in SAP FICO?

This is one of the regular tasks in the production environment. The period end closing activities are defined as the
regular periodical tasks to be executed at predetermined period intervals. In each application component or activity this
period end closing activity is a routine process. The period end closing can be done by manual or by automatically
through the help of Schedule Manager.

FI Monthly period end closing activities:

# Open and close of posting period in the beginning of the month.

# Posting of Recurring entries at the defined period intervals.
# Accrual/deferral of postings at the predetermined as per the project.
# Depreciation in Asset accounting component (if it is monthly selection)
# Interest postings for GL accounts and open items.
# AUC settlement
# List of open items and list of bills of exchange account statements for customers and vendors.
# Execution of automatic payment program if required.
# Generating dunning notices for the vendor and customer balances if predetermined.
# Monthly evaluation of Business area reporting; if followed
# Foreign currency valuations
# Tax payments and reporting for the month
# Final reporting for generating financial statements.
# Internal reports for the management for strategic decision making.

CONTROLLING MONTH END CLOSING ACTIVITIES:

# Month end preliminary reports

# Month end allocations, distribution of expenses for cost centers, through various methods if defined.
# Settlement of internal orders
# Locking of business transactions if required.
# Cost center profitability analysis and Allocations based on activity-based costing.
# Monthly allocation of planning figures if planned like that.
# Follow-up postings to reconciliation ledger in controlling.
# Posting of periodic transfer of balances to Profit center accounting if followed.

YEAR END CLOSING ACTIVITIES FINANCE MODULE:

# Open and close of new fiscal year.

# If number range is year specific transport the new number ranges for the next year.
# Balance carries forward open items, assets as opening balances
# Balance confirmations form vendors, customers, and bank balances
# Inventory valuations and defining new material cost estimates
# Asset depreciation for the year. And valuations if required
# GR/IR account reconciliation
# Regrouping of receivable and payables
# Making provisions for doubtful receivables and payables
# Verify the asset history sheets
# Verify the Balance audit trail
# Final adjustments for balance sheet
# Final tax adjustments and CENVAT adjustments
# Misc settlements, allocations, apportionment’s, and so on.
#14 What do you mean by house bank and where do you configure it?

The house banks of your company are the banks that your company has an account with. You can use them to process
payment transactions.

In the SAP system, house banks have the following characteristics:

# They are assigned to company codes.
# Each company code can have multiple house banks.
# Each house bank of a company code is represented by a bank ID.
# Every account at a house bank is represented by an account ID.

House bank is maintained in the transaction FI12.

#15 What is a depreciation area and what does it control?

Depreciation areas are used to calculate different values in parallel for each fixed asset for different purposes. The
system allows us to define up to 99 depreciation areas. The depreciation areas are identified by two-digit numeric keys.
The asset specific depreciation terms can be specified for every depreciation area belonging to the chart of depreciation.
Transaction code: OABD/OADC (Specify area type).

#16 What are the depreciation methods in SAP?

The following depreciation calculation methods are available in SAP:

i. Base Method.
ii. Declining Balance Method.
iii. Maximum Amount Method.
iv. Multi-Level Method.
v. Period Control Method.

#17 What do you mean by assessment cycle?

Assessment cycle is used in sap controlling module to assign all primary cost elements and secondary cost elements
from a sending cost center to the receiver cost center i.e. when we want to transfer costs from one cost center to
another through an assessment cycle, SAP use a secondary cost element (created as a assessment cost element) and
accumulates all the primary cost (posted from financial accounting module) and secondary cost (assigned to the cost
center from other cost centers) and send it to the receiving cost center.

In the receiving cost center, we don’t get costs break up by the primary cost element and secondary cost element to
which it was originally posted. We get only one line with the cost that is sent from the sending cost center. Finally, in the
sender cost center you get online negative posting and in receiver cost center we have one-line positive posting.

To create an assessment cycle, we use the transaction code KSU7 or we can also use transaction code KSU1 to create
assessment cycle.

In the create plan assessment cycle segment update following details:

Assessment cost element created
Sender rules
Receiving tracing factor
Sender cost center
Receiver cost center
Percentage of sender value
Tracing factor
Selection criteria
Receiver cost center factors in percentage
Execution of Assessment cycle - KSU5.
#18 What do you mean some cut-over activities?

SAP Cutover Activities are the phase wise activities that need to be finished before the start of every phase of a project.
Cutover activities are done in both implementation and rollouts. These are performed during final preparation phase of
a project as per ASAP implementation methodology.

In simple words, Cutover is the process of planning, managing, and executing all the tasks and activities that allow the
impacted business function to 'cutover' to the SAP system. The key components of the Cutover Plan include business
preparation activities related to cutover and legacy integration/shutdown. Cutover data includes data on financial and
materials balances that SAP must carry forward, and how to handle open transactions from the legacy system. Open
transactions are those business transactions that are still under process when the company switches from the legacy
system to the SAP system.

Some of the cutover activities are:

1. G/L Master Upload Thru BDC or LSMW (TC-FS00 and extended one co code to another company code FS01)
2. Asset Master Upload (Thru AS90)
3. Cost Element Master Upload
4. Cost Center Master Upload
5. Profit Center Master Upload
6. G/L Balances through F-02
7. Vendor Balances through F-43
8. Customer Balances through F-22
9. Customer Advances through f-29
10. Vendor Advances through F-48

#19 What do you mean by reversal in SAP and how many types of reversals are there?
In SAP, we are not allowed to delete any posted document even if we entered incorrect data. We can modify only few
fields of a posted document ie #value date, #Assignment date, #Text, #Reference and Document header text. Rest of all
fields are unchangeable. For these reasons, in SAP we are provided with the option for reversing the posted document.

When we go for reversing a posted document, the old document will be nullified by posting a relevant document.

There are three types of reversals:

# Individual Reversal - FB08
# Mass Reversal - F.80
# Reversal & Reset - FBRA (used in case of clearing documents) In clearing document reversal, we need to remember
that the transaction should be reversed and the open item should be moved back to OPEN status from cleared status.

#20 Can you please explain electronic bank statement reconciliation?

SAP have the features of Electronic Bank Reconciliation Statement (EBRS) process where we can directly upload the
Bank Statement in a format called MT940.
Configuration of EBRS:

 Financial Accounting–Bank Accounting–Business Transactions–Payment Transactions–Electronic Bank

Statement–Make Global Settings for Electronic Bank Statement (T Code – OT83)

 1) Create Account Symbol for Transaction

 2) Assign GL Accounts to the Accounts Symbol
 3) Create Key for Posting Rule
 4) Define Posting Rule for Posting key
 5) Create Transaction type
 6) Assign External Transaction Type to posting Rule
 7) Assign Bank Accounts to Transaction Types
#21 How do you go about setting the FI MM account determination?

FI MM settings are maintained in transaction code OBYC. Within these there are various transaction keys to be
maintained like BSX, WRX, GBB, PRD etc. In each of these transaction keys you specify the GL accounts which get
automatically passed at the time of entry.

Few examples could be: BSX- Stands for Inventory Posting Debit
GBB-Stands for Goods Issue/Scrapping/delivery of goods etc
PRD- Stands for Price Differences.

#22 What are the additional settings required while maintaining or creating the GL codes for Inventory accounts?

In the Inventory GL accounts (Balance sheet) you should switch on the ‘Post automatically only’ tick. It is also advisable
to maintain the a fore said setting for all FI-MM accounts and FI-SD accounts. This helps in preserving the sanctity of
those accounts and prevents from having any difference between FI and MM, FI and SD.

#23 What is Valuation Class?

The Valuation Class in the Accounting 1 View in Material Master is the main link between Material Master and Finance.
This Valuation Class along with the combination of the transaction keys (BSX, WRX, GBB, PRD) defined above determine
the GL account during posting. We can group together different materials with similar properties by valuation class. Eg
Raw material, finished Goods, Semi Finished. Different materials with the same material type can be assigned to
different valuation classes. Materials with different material types are assigned to a single valuation class.

#24 What is Valuation and Account assignment in SAP?

This is the actual link between Materials Management and Finance. The valuation in SAP can be at the plant level or the
company code level. If you define valuation at the plant level, then you can have different prices for the same material in
the various plants. If you keep it at the company code level, you can have only price across all plants. Valuation also
involves the Price Control. Each material is assigned to a material type in Materials Management and every material is
valuated either in Moving Average Price or Standard Price in SAP. These are the two types of price control available.