IS365SAPAccountingProcess

Report
Introduction to
Financial Accounting
Processes
Categories of Accounting (1)

Financial Accounting (FI) is concerned
with recording the financial impacts of
business processes (transactions) as they
occur

Usually external sources are interested in these
outcomes

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Financial statements for shareholders
Tax and regulatory requirements for
governmental agencies
Categories of Accounting (2)

Managerial Accounting (controlling) (CO)
is of interest to the business itself
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Managerial reporting
Allocation of costs and revenues
Internal financial statements
I’ll talk about each in turn but this lecture is
about financial accounting
Background

For this lecture, I assume that you have
taken your core accounting classes. You
should be familiar with
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T accounts
GL / AP / AR
Account categories
Asset / Liability / Capital / Income / Expense
Refer to my Web site link at www.middlecity.com for
an accounting tutorial
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Financial Accounting Tasks
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General Ledger
Accounts Receivable
Accounts Payable
Asset accounting
Withholding tax
Enterprise Global Settings

The following are not completely in the
financial accounting domain but occur prior to
FI configuration

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Company Code
Business Area
Functional Area
Credit Controlling Area
Organizational Data
(Company Code)

Financial statements are usually prepared at
the company code level
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(US00) (DE00) for Global Bike so they can
prepare financial statements for the US or
German company
It’s the smallest unit of financial accounting
We meet the regulatory and reporting
requirements of a particular country
Company Tables


Table T000 stores the company codes
Table T001 stores the company code / GL
assignment
Organizational Data
(Company Code)

Use transaction
OX02 (IMG)
Organizational Data
(Division)

A division is an OU based on sales of materials and
services
 They are an OU for sales and distribution
 They are assigned to sales organizations (another
OU)
 Global Bike has two divisions
Organizational Data
(Business Area)

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We often need internal financial accounting
across company codes (legal boundaries)
A business area is an internal division of a
company used for internal reporting
You can create internal financial statements by
business areas
Use business areas to

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Organize (report by) product lines
Organize geographically (usually reserved for
business segment)
Business Area (Illustration)

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Global Bike has one business area (BI00)
Business area 0001 is part of the default SAP
installation (US 0X03)
Assignment of Business
Areas to Transactions

When a transaction is recorded, we post to a
FI / GL account

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
We assign the transaction to a business area or
segment too
This can be done manually
Or automatically through automatic assignment
of plant, division, sales areas, distribution
channels, and cost centers
Business Area Plant
Assignment

We can connect a plant and division to a
business area through configuration
Organizational Data
(Segment)

Segments are responsible for monitoring
performance and profitability

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Similar to a business area
Typically used for product line reporting
Use with business areas to internally report
by geography or product line
Global Bike does not use segment accounting
Functional Area
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Used for cost-of-sales accounting

Functional areas are used to classify expenses

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Finance, marketing, production, HR, etc..
Global Bike does not define functional areas
Functional areas are implemented by means
of a special purpose ledger
We will not discuss them further here
Organizational Data
(Credit Control Area)


Defines the area of responsibility for credit
monitoring (of companies)
Again, the CCA can be centralized or
somewhat decentralized

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One CCA for multiple company codes
(centralized)
One CCA for each company code (decentralized)
Organizational Data
(Credit Control Area)
Credit Control Area
(Global Bike)

Define credit control area (OB45)
Credit Control Area
(Global Bike)
Assign credit control area – GB has one for both companies
Required FI Org Units
Financial Accounting
Global Settings (STEPS)
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Define
Define
Define
Define
Define
Define
Assign
fiscal year
posting periods
field status variant
tolerance groups
document types and number ranges
posting keys
all of the above to company code
Fiscal Year


A period (usually 12 months) for which a
company produced financial statements
Fiscal year need not correspond to a calendar
year
Fiscal Year Variants
Global Bike uses K1
Fiscal Year Variants

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Assign fiscal year variant to company code
Both Global Bike companies use the same
fiscal year variant
Posting Periods

A period within a fiscal year to which
transactions are posted
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Every transaction has a posting period
A posting period must be “Open” to post
transactions
A posting period (variant) has a beginning
and an end
Posting Periods

IMG posting periods (OBBO)
Posting Periods
(Define Variant)

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Use IMG transaction OBBO
Global bike used variant GL00

This is not the operating ledger GL00
Posting Periods
(Open and Close)
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IMG transaction code OB52
Tolerance Groups

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Tolerance groups exist throughout SAP
They define an accepted deviation from
specified values

The chief accountant will likely have higher
tolerances than accounting clerks, for example
Tolerance Groups for Users

IMG transaction code OBA4
Document Types

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Document types classify accounting
documents
The document types appears in the header
record for accounting documents

Document number ranges are based on the
document type
Document Types (Example)

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The document type SA is the G/L Account
Document
WA is for goods issue (goods out)
WE is for goods receipt (goods in)
Trans code OBA7
Document Types (Example)
Posting keys

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A two-character numerical key that controls
the entry of a line item in an accounting
document
Posting keys are defined by SAP but new keys
can be added
Posting Keys (OB41)

Posting key 40 is a G/L debit
Posting Keys
General Ledger Accounting

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Define chart of accounts
Define account groups and number ranges
Define retained earnings account
Create GL master records
Financial Accounting Processes

Primary Ledger

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General Ledger (GL) contains the primary source
data used in financial reporting
Subsidiary ledgers

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Accounts payable accounting is concerned with
procurement (Chapter 4)
Accounts receivable accounting is concerned with
fulfillment (Chapter 5)
Asset accounting is concerned with keeping track
of asset acquisition, depreciation, and disposal
General Ledger Accounting
(FI-GL)

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Provide a comprehensive view of financial accounting
The GL is a COMPLETE record of all FI transactions
 Transactions are available in “real time”
Some G/L transactions are posted manually (we’ll do
that today)
Some G/L transactions are posted automatically
GL Illustration
SAP GL Tables
SKB1
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Company Code Segment
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(K) Client
(K) Company Code
(K) Account Number
Specific company accounts
For Global Bike (US00) and (DE00)
SKA1
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Client Segment (SKA1)
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(K) Client
(K) Chart of Accounts
(K) Account number
Balance sheet, PL, OR other account
(Account Group)
SKAT
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It’s the GL account master record
Organizational Data
(Company Code – G/L) (Options)
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Centralized
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Cross company code accounting
Multiple operational chart of accounts are
assigned to a group chart of accounts
Decentralized
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One chart of accounts for each company code
No cross company code accounting is possible
Accounting Master Data (COA)
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An ordered listing of accounts is called the
Chart of Accounts (COA)
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This is the same COA that you are familiar with
Instead of one, SAP supports up to three
charts of accounts
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Operative
Country specific
Group
You should be familiar with the standard
numbering scheme for account types
Accounting Master
Data (Operative COA)
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Operative (COA) – This is the primary GL
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Day-to-day postings are recorded here
Shared by FI and CO
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In other words, it’s used by cost accounting
Two company codes can use the same operative
COA
The operative COA is required
Organizational Data
(Company Code) Illustration

The general ledger GL00 is shared by both
company code US00 and DE00
Accounting Master
Data (Optional COAs)
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Country-specific operative (COA) – Used to
meet country-specific reporting requirements
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Optional
Additional accounts are added to the ledger to
support local requirements
Must be assigned to a company code!
Group (COA) – Used to consolidate financial
statements
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Optional
COA Illustration
COA (Creating)
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IMG transaction OB13 (Global Bike)
Chart of Accounts
(Configuring)
Account Groups
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An account group defines how a GL account
behaves and the screens that are available
Retained Earnings Account
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Every P&L account is assigned to a retained
earnings account
At the end of a fiscal year, the P&L accounts
are transferred to the corresponding retained
earnings account
There has to be at least one retained
earnings account but there can be many
Retained Earnings Account
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Transaction code OB53
Global Bike has one retained earnings
account
Clearing Accounts
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These are temporary accounts that hold data
until moved to another account
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These are typically AR and AP accounts
Subsidiary ledgers and reconciliation accounts
The Recon Account Process

A/R is a reconciliation account
The Recon Account Process

And it’s a recon account for customers (as
opposed to vendors)
Accounts Receivable
Accounting
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Here we are concerned with customer
purchases (fulfillment)
Each customer typically has a reconciliation
account in the sub-ledger
See Figure 3-16 on page 65
Accounts Payable Accounting
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A/P accounts are reconciliation accounts
Transactions are automatically posted to the
corresponding GL account
For Global Bike, the AP reconciliation account
is #300000
Accounts Payable
GL Accounting Processes
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Some postings are made manually
Most are made as a result of a business
transaction
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Procurement (goods receipt) / fulfillment (goods
issue)
SAP has rules that define how these automatic
postings are performed (We will not get into
those rules here but will later)
Asset Accounting

Organizations (hopefully) have assets
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Tangible (physical) assets
Intangible assets (goodwill, patents,
trademarks)
Financial assets (financial instruments,
mortgages due, …)
We will do little with asset accounting in this
course
Financial Accounting
Outcomes

The result of GL accounting is financial
statements
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Balance sheet
Income statement (profit and loss)
Statement of cash flows
Cost Centers (Using)

When posting selected GL transaction, we
allocate expenses (costs) to a particular cost
center

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