Financial Accounting (FI)

Financial Accounting (FI)Financial Accounting(FI)- Overview -Unit 3ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 20082January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 3SAP Enterprise SystemR/3FIFinancialAccountingCOControllingPSProjectSystemWFWorkflowISIndustrySolutionsMMMaterials Mgmt.HRHumanResourcesSDSales and DistributionPPProductionPlanningQMQualityMgmt.PMPlant MaintenanceSMServiceMgmt.Client / ServerIntegrated BusinessSolutionECEnterpriseControllingAMFixed AssetsMgmt.ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 20083Green ones (and blue): LogisticsStart out with sales and distributionYellow HR was added later in SAPs life (1990)Red: Tracking side of house. (Financials)Purple:Workflow is the least understood by faculty and studentsAllow the movement of information in the enterprise to the people who need it. (e.g. Credit limit e-mails, updates)

Industry Solutions: Each install is tracked by SAP and the configuration is monitored by industry. This way SAP knows the whole set of answer of how industries works with their best business practices.

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 4Unit 3, Part 1 OverviewFinancial Accounting (FI)Goals and ObjectivesTarget AudienceComponentsManagerial Accounting (CO)Goals and ObjectivesTarget AudienceComponentsComparisons and Relationships ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 20084January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 5R/3FIFinancialAccountingCOControllingPSProjectSystemWFWorkflowISIndustrySolutionsMMMaterials Mgmt.HRHumanResourcesSDSales and DistributionPPProductionPlanningQMQualityMgmt.PMPlant MaintenanceSMServiceMgmt.Client / ServerIntegrated BusinessSolutionECEnterpriseControllingAMFixed AssetsMgmt.Financial Accounting (FI)ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 20085Green ones (and blue): LogisticsStart out with sales and distributionYellow HR was added later in SAPs life (1990)Red: Tracking side of house. (Financials)Purple:Workflow is the least understood by faculty and studentsAllow the movement of information in the enterprise to the people who need it. (e.g. Credit limit e-mails, updates)

Industry Solutions: Each install is tracked by SAP and the configuration is monitored by industry. This way SAP knows the whole set of answer of how industries works with their best business practices.

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 6Goals and ObjectivesFinancial accounting is designed to collect all of the data needed to support the preparation of financial statements for external users

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 20086Reporting SEC etcThese reports give a consistent view of the companys financial health.

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 7Target AudienceInternalExecutivesSenior ManagementAccountsAdministration StaffEmployees

ExternalLegal AuthoritiesBanksAuditorsShareholdersInsuranceTaxing AuthoritiesMediaFinancial Analysts

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 20087There are two types of audiences: Internal and External. Internally: The employees who run the company. This gives them the information needed to make decisions.Externally: Anyone who has a financial stake in the company. This could be shareholders, creditors, government (taxes, fraud, etc.) insurance companies, or anyone who would like to purchase shares of the companies stock. January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 8Components of Financial AccountingFinancial Accounting(FI)AccountsReceivableAccountsPayableSpecialPurposeLedgerFixedAssetsBanksGeneralLedgerECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 20088The Financial Accounting (FI) application component fulfills all the international requirements that must be met by the financial accounting department of an organization. It provides the following features:Management and representation of all accounting dataAll business transactions are recorded according to the document principle, which provides an unbroken audit trail from the financial statements to the individual documents.Open and integrated data flowData flow between Financial Accounting and the other components of the SAP System is ensured by automatic updates.Data is available in real time within Financial Accounting. Postings made in the subledgers always generate a corresponding posting in the general ledger. Preparation of operational information to assist strategic decision-making within the organizationGeneral Ledger Accounting PurposeThe central task of G/L accounting is to provide a comprehensive picture for external accounting and accounts. Recording all business transactions (primary postings as well as settlements from internal accounting) in a software system that is fully integrated with all the other operational areas of a company ensures that the accounting data is always complete and accurate.Accounts Receivable Account Receivables application component records and administers accounting data of all customers. It is also an integral part of sales management.All postings in Accounts Receivable are also recorded directly in the General Ledger. Different G/L accounts are updated depending on the transaction involved (for example, receivables, down payments, and bills of exchange). The system contains a range of tools that you can use to monitor open items, such as account analyses, alarm reports, due date lists, and a flexible dunning program. The correspondence linked to these tools can be individually formulated to suit your requirements. This is also the case for payment notices, balance confirmations, account statements, and interest calculations. Incoming payments can be assigned to due receivables using user-friendly screen functions or by electronic means such as EDI and data telecommunicationAccounts PayableThe Accounts Payable application component records and administers accounting data for all vendors. It is also an integral part of the purchasing system: Deliveries and invoices are managed according to vendors. The system automatically makes postings in response to the operative transactions. In the same way, the system supplies the Cash Management application component with figures from invoices in order to optimize liquidity planning.Payables are paid with the payment program. The payment program supports all standard payment methods (such as checks and transfers) in printed form as well as in electronic form (data medium exchange on disk and electronic data interchange). This program also covers country-specific payment methods. Bank Accounting PurposeThis component is used to handle accounting transactions that you process with your bank. FeaturesIt includes the management of bank master data, cash balance management (check and bill of exchange management), and the creation and processing of incoming and outgoing payments. It is possible to freely define all country-specific characteristics, such as the specifications for manual and electronic payment procedures, payment forms, or data media.Asset AccountingFeaturesThe Asset Accounting component consists of the following parts:Traditional asset accountingProcessing leased assetsPreparation for consolidationInformation SystemTraditional asset accounting encompasses the entire lifetime of the asset from purchase order or the initial acquisition (possibly managed as an asset under construction) through its retirement. The system calculates, to a large extent automatically, the values for depreciation, interest, insurance and other purposes between these two points in time, and places this information at your disposal in varied form using the Information System. There is a report for depreciation forecasting and simulation of the development of asset values. Special Purpose Ledgers PurposeIn the application Special Purpose Ledger, you can define ledgers for reporting purposes. You can keep these user-defined ledgers as general ledgers or subsidiary ledgers with various account assignment objects. Account assignment objects can either be SAP dimensions from various applications (such as account, cost center, business area, profit center) or customer-defined dimensions (such as region).The special purpose ledgers enable you to report at various levels using the values from the various application components. The functions available in the special purpose ledgers enable you to collect and combine information, create and modify totals, and distribute actual and plan values. The values are transferred to the special purpose ledgers from other SAP applications and external systems.January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 9R/3FIFinancialAccountingCOControllingPSProjectSystemWFWorkflowISIndustrySolutionsMMMaterials Mgmt.HRHumanResourcesSDSales and DistributionPPProductionPlanningQMQualityMgmt.PMPlant MaintenanceSMServiceMgmt.Client / ServerIntegrated BusinessSolutionECEnterpriseControllingAMFixed AssetsMgmt.Controlling (CO)ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 20089Green ones (and blue): LogisticsStart out with sales and distributionYellow HR was added later in SAPs life (1990)Red: Tracking side of house. (Financials)Purple:Workflow is the least understood by faculty and studentsAllow the movement of information in the enterprise to the people who need it. (e.g. Credit limit e-mails, updates)

Industry Solutions: Each install is tracked by SAP and the configuration is monitored by industry. This way SAP knows the whole set of answer of how industries works with their best business practices.

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 10Goals and ObjectivesManagerial accounting is designed to collect data for the preparation and analysis of reports for use by internal users

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200810Controlling reports on whos using and generating the money per segment (cost center, product, etc.) in the company. Controlling information is not reported externally and is typically confidential internally to a company. Cost center accountingInternal Projects: Do we make money or not: per project?January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 11Target AudienceExecutivesSenior ManagementDepartment ManagersControllersCost Accountants

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200811The people responsible for the profit, budget, or health of the organizational segment (cost center, department, product, etc.) in the company. Many times bonuses are based upon the profitability of a managers or VP department. In these companies there is often internal competition to keep costs down between departments and can be very efficient.January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 12Components of Managerial AccountingControlling(CO)CostElementAcctCostCenterAcctProductCostControllingInternalOrdersActivityBasedCostingProfitCenterAcctProfitabilityAnalysisECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200812Controlling (CO) PurposeControlling provides you with information for management decision-making. It facilitates coordination, monitoring and optimization of all processes in an organization. This involves recording both the consumption of production factors and the services provided by an organization.As well as documenting actual events, the main task of controlling is planning. You can determine variances by comparing actual data with plan data. These variance calculations enable you to control business flows.Income statements such as, contribution margin accounting, are used to control the cost efficiency of individual areas of an organization, as well as the entire organization.

Cost Element AccountingPurposeCost Element Accounting is the part of accounting where you enter and organize costs incurred during a settlement period. It is thus not an accounting system as such, but rather a detailed recording of data that forms the basis for cost accounting.Cost Center Accounting PurposeYou use Cost Center Accounting for controlling purposes within your organization. The costs incurred by your organization should be transparent. This enables you to check the profitability of individual functional areas and provide decision-making data for management. This requires that all costs be assigned according to their source. However, source-related assignment is especially difficult for overhead costs. Cost Center Accounting lets you analyze the overhead costs according to where they were incurred within the organization.Internal Orders PurposeInternal orders are normally used to plan, collect, and settle the costs of internal jobs and tasks. The SAP system enables you to monitor your internal orders throughout their entire life-cycle; from initial creation, through the planning and posting of all the actual costs, to the final settlement and archiving:Activity-Based Costing PurposeActivity-Based Costing provides a process-oriented, cross-functional view of overhead, in contrast to the traditional location-oriented view provided by Cost Center Accounting. Activity-Based Costing thus complements and enhances Cost Center Accounting.Activity-Based Costing allocates process quantities based on resource and process drivers, allowing you to define cost allocation along the value-added chain more exactly than is possible with overhead rates. Activity-Based Costing also complements and enhances product costing by assigning costs to the business processes where they originated. Cost center resources can allocate to business processes based on their true utilization of activities.Product Cost Controlling Product Cost Planning Cost Object Controlling Actual Costing/Material Ledger Product Cost Controlling Information System Profit Center AccountingPurposeProfit Center Accounting determines the profit of the defined cost centerProfitability AnalysisPurposeProfitability Analysis enables you to evaluate market segments, which can be classified according to products, customers, orders or any combination of these, or strategic business units, such as sales organizations or business areas, with respect to your company's profit or contribution margin.

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 13ComparisonManagerial AccountingCost Center AccountingProfit Center AccountingProduct CostingProfitability AnalysisDifferent ValuationsFlexibility

Financial AccountingExternal AccountingBalance SheetProfit & Loss StatementLegal RequirementsStandardsECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200813You can capture these cost any way you want. Managers bonuses are often based upon their profit centers profitability

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 14Comparative ReportingFinancial Accounting (FI)External ReportingManagerial Accounting (CO)ProductCostsReportsInternal ReportingCostCenterReportsProfitCenterReportsProfitMarginRetainedEarningsReportLiquidityCalculationIncome StatementBalanceSheetECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200814Financial accounting is external and feeds the external reporting requirements

Managerial Accounting is internal only

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 15Income Statement Bal. Sheet

Financial Accounting(FI) TransactionDocumentAmountG/L Account #Cost Center1900012432

(CO) Transaction DocumentCost Center Cost Element20000657Controlling100100BankSupplies Exp.Cost Center100Interrelated and Closely ConnectedECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200815Transactions can have an effect on both FI and CO. The transaction will create a debit and a credit for FI (FI transaction)If CO is turned on a cost center or cost element bucket will be updated. (CO transactions)Financial Accounting (FI)- The Basics -

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200816January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 17Unit 3, Part 2 OverviewGeneral LedgerChart of AccountsBalance SheetAssetsLiabilitiesEquityIncome StatementRevenuesExpensesECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200817January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 18General LedgerThe General Ledger provides a complete record of all "acceptable" business transactions from the viewpoint of an accountantAn acceptable business transaction has the following traitsAffects the financial position of the entityMeasurable in a currencyAffects at least two accountsAssets = Liabilities + EquityDebits = Credits

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200818Cannot have a single sided entry: Debits have to equal creditsThe system will not allow a posting that is out of balance: If it is you must first correct the error, or park it until a later time when you can fix it.You can have multiple debits or credits per side (splits) , but the total has to balance per transactions

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 19Chart of AccountsThe foundation for the General Ledger is the Chart of AccountsA Chart of Accounts contains a complete list of all of the accounts utilized in the General Ledger for a given companyFinancial accounting reports are prepared from the balances contained in the General Ledgers Chart of Accounts ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200819Chart of Accounts This is a list of all G/L accounts used by one or several company codes.For each G/L account, the chart of accounts contains the account number, account name, and the information that controls how an account functions and how a G/L account is created in a company code.January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 20Chart of Accounts (continued)There are five types of accounts contained in a Chart of AccountsAssetsLiabilitiesEquityRevenuesExpenses There are two primary accounting reports prepared from the General Ledger Chart of AccountsBalance SheetIncome StatementECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200820Chart of Accounts This is a list of all G/L accounts used by one or several company codes.For each G/L account, the chart of accounts contains the account number, account name, and the information that controls how an account functions and how a G/L account is created in a company code.January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 21Balance Sheet AssetsThings of value that a company owns or controls that accountants have agreed to measure in monetary terms.Examples of these accounts include:CashAccounts receivablesPlant and equipment Inventory

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200821Balance sheetsAssetsliabilityOwners equityAssets (good guys) generally goodInventory is often an exception (too much is bad)This is what the company owns or hasBalance Sheet Invoice-based closing for a group at a specific point in time (financial statements key date) in the form of a comparison of assets and capital (liabilities and owner's equity). Assets and capital reflect the same total value. This is expressed in the balance sheet (assets = capital).

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 22Balance Sheet LiabilitiesThings that a company owes or must provide services in order to settle that accountants have agreed to measure in monetary terms.Examples of these accounts include:Accounts payableNotes payableBonds payableUnearned revenue

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200822LiabilitiesBad guys What a company owes to settle the accountsTypically debtBalance Sheet Invoice-based closing for a group at a specific point in time (financial statements key date) in the form of a comparison of assets and capital (liabilities and owner's equity). Assets and capital reflect the same total value. This is expressed in the balance sheet (assets = capital).

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 23Balance Sheet EquityEquity is simply the mathematical difference between assets and liabilities.Includes the monetary amounts collected with respect to all preferred and common stock transactions, the aggregate net income reported since organization of the company, and a reduction for dividends that have been paid to stockholders.ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200823Balance Sheet Invoice-based closing for a group at a specific point in time (financial statements key date) in the form of a comparison of assets and capital (liabilities and owner's equity). Assets and capital reflect the same total value. This is expressed in the balance sheet (assets = capital).

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 24

Balance SheetECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200824Assets topLiabilities middleOwners equity bottomCompares one year the nextJanuary 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 25Income Statement RevenuesThe monetary amounts collected from customers in settlement for goods purchased from our company or services rendered by our firm to them during the current fiscal year.

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200825Income Statement (Profit and Loss Statement)Comparison of revenue and expenditure of a period to determine the results for the company and the sources of these results. Often called the P&L

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 26Income Statement ExpensesThe monetary amounts paid to vendors in settlement for goods purchased by our company or services rendered to our firm by other companies during the current fiscal year.

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200826March 1st 1913 Many companies have this as their fiscal year.January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 27Income Statement

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200827RevenuesExpensesProfit on bottomMicrosofts income statementFinancial Accounting (FI)- Organizational Structures -

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200828Draw picture of stool

Seat TransactionsSupported byLeg 1 Organizations dataLeg 2 Master dataVendor, customer, materialLeg 3 RulesGovern how a transaction is used in the systemSAP is an erector setYou can create anything you want with it, the problem is converting it to something elseis not easy. You cant readily dismantle it too easily.

Did you define what you wanted it to do before you started.

One is the biggest problem is people do not define what you want before they start.January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 29Business Process IntegrationFIOrg Data ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200829The first leg in our stool. We will be creating Organizational data for Finance. This is the first step of our implementation of SAP software for our company.January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 30Organizational DataA hierarchy in which the organizational units in an enterprise are arranged according to tasks and functions Are static data and are rarely changed The definition of organization units is a fundamental step, it is a critical factor in how the company will be structured ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200830Master data does not change very oftenOrg data should not changeTransaction data (application data) changes every transactionIf you setup organizational data and wish to change it, it very well may be more work than the initial setup.

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 31Unit 3, Part 3 Org StructuresOrganizational StructuresClientCompanyChart of accountsCompany codeCredit control areaECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200831You are not going to create a client or company: The client and company is going to be setup for us already.

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 32ClientHighest hierarchical level in an SAP environmentA complete database containing all the tables necessary for creating a fully integrated information systemMaster records are created at the client levelECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200832The client may be the enterprise and you may want to share customers at the company levelClient DefinitionA commercially, organizationally, and technically self-contained unit within an SAP System. Clients have their own master records and set of tables. The definition of the client organizational unit is obligatory.UseThe client is the highest level in the SAP System hierarchy. Specifications that you make, or data that you enter at this level are valid for all company codes and for all other organizational structures. You therefore only need to make these specifications, or enter this data once. This ensures that the data is consistent. Users must enter a client key when they log on to the SAP System. This defines the client in which they wish to work. All the entries you make are saved per client. Data processing and analysis is also carried out per client. This means that you cannot include customer accounts from different clients in one dunning run. Access authorization is assigned per client. You must create a user master record for each user in the client where he or she wishes to work.

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 33ClientECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200833The client may be the enterprise and you may want to share customers at the company levelClient DefinitionA commercially, organizationally, and technically self-contained unit within an SAP System. Clients have their own master records and set of tables. The definition of the client organizational unit is obligatory.UseThe client is the highest level in the SAP System hierarchy. Specifications that you make, or data that you enter at this level are valid for all company codes and for all other organizational structures. You therefore only need to make these specifications, or enter this data once. This ensures that the data is consistent. Users must enter a client key when they log on to the SAP System. This defines the client in which they wish to work. All the entries you make are saved per client. Data processing and analysis is also carried out per client. This means that you cannot include customer accounts from different clients in one dunning run. Access authorization is assigned per client. You must create a user master record for each user in the client where he or she wishes to work. The SAP System is delivered with the clients 000 and 001 - these clients already contain default settings. For more information, see Setting Up Clients in Customizing. These sections are automatically selected when you create your implementation projects (company IMG, project IMG).

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 34Company Consolidated financial statements are created at the company level A company can include one or more company codesAll company codes must use the same chart of accounts and fiscal yearCompany is not required in the definition of an enterprise (optional)ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200834A company is the smallest organizational unit for which individual financial statements can be drawn up according to the relevant commercial law. A company can contain one or more company codes.

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 35ClientCompanyOrganizational StructureECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200835Client is the enterpriseTypically the sameA company is the smallest organizational unit for which individual financial statements can be drawn up according to the relevant commercial law. A company can contain one or more company codes.

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 36Company CodeA legally independent entity The smallest organizational unit for which accounting can be carried out Business transactions are processed at this levelAccounts are managed at this levelLegal financial statements, such as the balance sheet and the income statement, are generated at this level using the General Ledger balances

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200836The smallest organizational unit for which a complete self-contained set of accounts can be drawn up for external reporting. This involves recording all relevant transactions and generating all supporting documents for financial statements, such as balance sheets and profit and loss statements.

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 37ClientCompanyCompanyCodeOrganizational StructureECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200837You have to assign a chart of accounts to each company code. This chart of accounts is the operating chart of accounts and is used for the daily postings in this company code. You do not have to create a companyYou do have to create a company codeThe only reason to create a company is when you have to create a consolidated financial statementJanuary 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 38Chart of AccountsA listing of the accounts (assets, liabilities, equity, revenues, and expenses) that are contained in the General LedgerA chart of accounts must be assigned to every company code in order to create the General Ledger for that companySeveral company codes can use the same chart of accountsECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200838We generally we want the same chart of accounts for consolidationsAll the decision you are going to make of how you want to conduct businessChart of Accounts This is a list of all G/L accounts used by one or several company codes.For each G/L account, the chart of accounts contains the account number, account name, and the information that controls how an account functions and how a G/L account is created in a company code.

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 39CompanyCode 010CompanyCode 038CompanyCode 110CompanyCode 117United States Chart of AccountsCanadianChart ofAccounts

Chart of AccountsECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200839Each company may have the same chart of accounts in a given country: That way sales in Canada will go to the Sales account and sales in the US will go to the Sales AccountFor consolidation: these will match upJanuary 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 40ClientCompanyChart ofAccountsCompanyCodeOrganizational StructureECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200840You have to assign a chart of accounts to each company code. This chart of accounts is the operating chart of accounts and is used for the daily postings in this company code. You do not have to create a companyYou do have to create a company codeThe only reason to create a company is when you have to create a consolidated financial statementJanuary 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 41Fiscal Year VariantSpecifies the accounting fiscal year for reporting purposesSpecial periods are created to aid in the quarterly or year-end adjusting process completed prior to preparing financial statements A single fiscal year variant is assigned to each company code

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200841You use fiscal year variants to define:How many posting periods there are in a fiscal year How many special periods you require How the system is to determine the period for postings you enter.

K1, for example has 13 periods, 12 plus 1 specialJanuary 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 42ClientCompanyChart ofAccountsFiscal YearVariantCompanyCodeOrganizational StructureECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200842You have to assign a chart of accounts to each company code. This chart of accounts is the operating chart of accounts and is used for the daily postings in this company code. You do not have to create a companyYou do have to create a company codeThe only reason to create a company is when you have to create a consolidated financial statementJanuary 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 43Credit Control AreaAn organizational unit or area of responsibility created to control customer credit limitsA company code is assigned to one and only one credit control areaMultiple company codes can be assigned to one credit control areaECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200843An organizational unit that represents the area where customer credit is awarded and monitored.This organizational unit can either be a single or several company codes, if credit control is performed across several company codes. One credit control area contains credit control information for each customer.Credit and risk management takes place in the credit control area. According to your corporate requirements, you can implement credit management that is centralized, decentralized, or somewhere in between. If GM control credit at company code leveldealershipSells Chevrolet - $10 million creditThings go wellApplies for Buick - $10 million creditThings go wellAdd Pontiac, etc. Soon $50 million with GMTOO muchIf GM managed at company level instead of company code level. It would have stopped at $10 millionJanuary 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 44ClientCompanyChart ofAccountsCompanyCodeFiscal YearVariantCredit ControlAreaOrganizational StructureECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200844You have to assign a chart of accounts to each company code. This chart of accounts is the operating chart of accounts and is used for the daily postings in this company code. You do not have to create a companyYou do have to create a company codeThe only reason to create a company is when you have to create a consolidated financial statementJanuary 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 45ClientCompanyChart ofAccountsCompanyCodeFiscal YearVariantCredit ControlAreaOrganizational StructureECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200845You have to assign a chart of accounts to each company code. This chart of accounts is the operating chart of accounts and is used for the daily postings in this company code. You do not have to create a companyYou do have to create a company codeThe only reason to create a company is when you have to create a consolidated financial statementJanuary 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 46Consolidation and Business AreasCompanyA company is an organizational unit in Financial Accounting which represents a business organization according to the requirements of commercial law in a particular country. Business AreasA unit in an enterprise that groups product and market combinations as homogeneously as possible for the purpose of developing unified business policy.ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200846An organizational unit that represents the area where customer credit is awarded and monitored.This organizational unit can either be a single or several company codes, if credit control is performed across several company codes. One credit control area contains credit control information for each customer.Credit and risk management takes place in the credit control area. According to your corporate requirements, you can implement credit management that is centralized, decentralized, or somewhere in between. If GM control credit at company code leveldealershipSells Chevrolet - $10 million creditThings go wellApplies for Buick - $10 million creditThings go wellAdd Pontiac, etc. Soon $50 million with GMTOO muchIf GM managed at company level instead of company code level. It would have stopped at $10 millionJanuary 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 47ClientGeneralMotorsGM Corp. Chart of AcctsGMCCadillacChevroletCorporateFiscal Year Var.GMCorporateCredit CACarsCarsTrucksTrucksTrucksBusiness AreasConsolidation of Company CodesOptional Organizational StructuresECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200847You have to assign a chart of accounts to each company code. This chart of accounts is the operating chart of accounts and is used for the daily postings in this company code. You do not have to create a companyYou do have to create a company codeThe only reason to create a company is when you have to create a consolidated financial statementJanuary 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 48Client 100Chart ofAccountsCompanyCodeFiscal YearVariantCredit ControlAreaPen Inc.ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200848You have to assign a chart of accounts to each company code. This chart of accounts is the operating chart of accounts and is used for the daily postings in this company code. You do not have to create a companyYou do have to create a company codeThe only reason to create a company is when you have to create a consolidated financial statementJanuary 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 49Unit 3 ExercisesCreate Company Code Create Chart of AccountsAssign Company Code to Chart of AccountsAssign Company Code to Fiscal Year VariantCreate Credit Control AreaAssign Company Code to Credit Control AreaAssign Permitted Credit Control Area to Company Code

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200849Financial Accounting (FI)- Rules (Internal Controls) -

Unit 5ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200850January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 51RulesDefines the parameters for Master Data and TransactionsDetermines functionality for Master Data and TransactionsRelatively fixedChanges as policy changesECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200851Master data does not change very oftenOrg data should not changeTransaction data (application data) changes every transactionRules are relatively fixed.January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 52Unit 5 RulesRulesAccount groupsBS Balance Sheet Account GroupPL Income Statement Account GroupRA Reconciliation Account GroupField status variantField status groupsFiscal year variantECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200852You are not going to create a client or company: The client and company is going to be setup for us already.

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 53Account GroupsChrt/accts Acct group Description From To CHRT BSBalance Sheet 100000399999 CHRT PLIncome Sheet400000999999 CHRT RAReconciliation 110000310000ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200853Reconciliation fit inside the balance sheet accountsSub-setsHave to create account groups before they create the master recordsYou must assign each account to an account group. The account group ensures that only the relevant screens and fields are displayed and ready for input for each of the customers different partner functions. For example, the address, communication, and bank data fields are omitted for the account group for one-time accounts.

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 54Account GroupsIdentifier that controls which fields must be entered when an account is createdDetermine a valid number interval for each of the groups (types) of General Ledger accounts that have common attributesMust be created before General Ledger Chart of Accounts master records can be createdYou must assign each account to an appropriate account groupECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200854How do they control the credit control area, etc.Account groupsBS accountsPL accountsDetermines which fields needs to be filled in Have to create account groups before they create the master recordsYou must assign each account to an account group. The account group ensures that only the relevant screens and fields are displayed and ready for input for each of the customers different partner functions. For example, the address, communication, and bank data fields are omitted for the account group for one-time accounts.January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 55Account controlSuppress Req. entry Opt. entry DisplayCurrencyTax categoryReconciliation account Account Group BS

Account controlAccount managementDocument entryBank/financial detailsInterest calculationJoint ventureAccount GroupsECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200855Here is an example of the definition of an account group for Account control

Suppress: Does not display and also suppresses functionalityRequired Entry: Cannot continue until you enter the field functionality is enabled.Optional entry: Optional functionality is enabledDisplay: You cannot enter or change the field - Functionality is enabled

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 56Field StatusField status controls how the data will be entered for a field when an accounting master record is being used in a transactionDetermining whether a field is required, optional, suppressed, or display onlyField status controls are also relevant to a specific activity create, change, or display

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200856Under account groupTells what infoUnder that Field statusWhat information we have to have to use that account.Suppress: Does not display and also suppresses functionalityRequired Entry: Cannot continue until you enter the field functionality is enabled.Optional entry: Optional functionality is enabledDisplay: You cannot enter or change the field - Functionality is enabledJanuary 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 57Field Status VariantFld status groupTextZALLAll Accounts ZBSABalance Sheet Accounts ZEXPExpense Accounts ZGRIMaterial Management (GR/IR) Accounts ZRCNReconciliation Accounts ZREVRevenue AccountsECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200857A field status variant groups together several field status groups. You assign a field status variant to each company code.The field status group specifies which fields are ready for input, which fields must be filled or which fields are suppressed when entering documents. Specifying which fields are required, suppressed, optional, or display only when using the various general ledger accounts. A field status group is assigned to a general ledger account when it is created.

Field status variantZEXPWhen we create new things in SAP we have to use naming conventions to prevent things from being overwritten. If you name these things with an x,y,z it will migrate it with upgradeA way to group things togetherJanuary 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 58Field status variant (V000) - Group ZBSA - Balance Sheet Acct. General dataAdditional account assignmentsMaterials managementPayment transactionsAsset accountingTaxes...General DataSuppress Req. entry Opt. entry DisplayAssignment numberTextInvoice referenceField Status VariantECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200858A field status variant groups together several field status groups. You assign a field status variant to each company code.The field status group specifies which fields are ready for input, which fields must be filled or which fields are suppressed when entering documents. Specifying which fields are required, suppressed, optional, or display only when using the various general ledger accounts. A field status group is assigned to a general ledger account when it is created.

We have a whole series of field data with it. January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 59So What is a Reconciliation Account?Postings to sub-ledgers (such as accounts receivable or accounts payable) are automatically concurrently posted to the corresponding reconciliation account in the General Ledger In this way, the General Ledger is automatically updated and remains in balance with the customer and vendor individual account totalsECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200859Sales to an individual customerYou use this to indicate G/L accounts as being reconciliation accounts. For each subledger account , you must keep at least one reconciliation account in the general ledger. When you post to an account in the subledger, the system automatically posts to the corresponding reconciliation account. The "Receivables from goods and services" account is an example of a reconciliation account for customers. Enter Customer in the Reconciliation account for account type field. Enter a Vendor in this field for a vendor reconciliation account. Using the reconciliation account procedure, it is possible to create a balance sheet and a profit and loss statement at any time, since the amounts posted to subledger accounts are also posted automatically in the general ledger. January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 60Unit 5 ExercisesCreate Account GroupsDefine Retained Earnings AccountReview Field Status Variant Assign Company Code to Field Status Variant

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200860Financial Accounting (FI)- Master Data -

Unit 6ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200861January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 62Business Process Integration Master DataFIECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200862Now, we will build two additional chunks of the base of the stool for finance: Rules and master DataJanuary 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 63Master Data Master data is relatively fixedMaterial master dataVendor master dataPurchasing information recordGeneral Ledger master data Before making the master data configurations, you must have completely defined the organizational structures

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200863Master data does not change very oftenOrg data should not changeTransaction data (application data) changes every transactionJanuary 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 64R/3FIFinancialAccountingCOControllingPSProjectSystemWFWorkflowISIndustrySolutionsMMMaterials Mgmt.HRHumanResourcesSDSales and DistributionPPProductionPlanningQMQualityMgmt.PMPlant MaintenanceSMServiceMgmt.Client / ServerIntegrated BusinessSolutionECEnterpriseControllingAMFixed AssetsMgmt.Financial Accounting (FI)ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200864Green ones (and blue): LogisticsStart out with sales and distributionYellow HR was added later in SAPs life (1990)Red: Tracking side of house. (Financials)Purple:Workflow is the least understood by faculty and studentsAllow the movement of information in the enterprise to the people who need it. (e.g. Credit limit e-mails, updates)

Industry Solutions: Each install is tracked by SAP and the configuration is monitored by industry. This way SAP knows the whole set of answer of how industries works with their best business practices.

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 65Unit 6 OverviewGeneral Ledger Master DataChart of Accounts DataCompany Code DataReconciliation AccountsAccounts ReceivableAccounts PayableGoods Receipt/Invoice ReceiptGeneral Ledger Account BalancesECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200865You are not going to create a client or company

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 66General Ledger Master DataA unique master record is created for each General Ledger accountGeneral Ledger accounts are created at the client levelBusiness transactions are posted to the portfolio of General Ledger accounts made available to a company through the assignment of a specific Chart of Accounts ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200866System can generate numbers or you can generate the numbers. With the exception of materials, we will let the system create the numbers.

Company code has to be on every transactions So ledger accounts can be the same. Company codes are unique

General Ledger AccountingThe central task of G/L accounting is to provide a comprehensive picture for external accounting and accounts. Recording all business transactions (primary postings as well as settlements from internal accounting) in a software system that is fully integrated with all the other operational areas of a company ensures that the accounting data is always complete and accurate.

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 67General Ledger Master Data (continued)Contains control information for:Data entryData processingSpecifies the account type:Balance sheet Income statementECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200867Account group controls what is in the balance sheet and the income statement

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 68General LedgerOrganization of the DataContains one or more Chart of Accounts specific information areasContains one or more Company Code specific information areasIn this way, a General Ledger master account can be shared by several combinations of Charts of Accounts and Company Codes ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200868General ledger master data can reside in multiple charts of accounts in multiple company codes. It is truly master data that can be used in many places. January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 69100101CPENXBSAccount numberChart of accounts

Account groupP&L statement acct type Balance sheet account

General LedgerChart of Accounts DataAccount numberName of the Chart of AccountsAccount group provides information that controls the creation of the master record for a company codeECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200869Account groups controls the field used to create the master data

StructureThe following information is contained in the chart of accounts area of a G/L account master record.The chart of accounts The account number and account name (short and long text) The indicator that specifies whether the account is a balance sheet account or an P&L statement account. At the start of a new fiscal year, the balance of a balance sheet account is carried forward to itself. With P&L statement accounts, you must specify the account to which the profit or loss is carried forward at the end of a fiscal year.The account group With the account group, you group similar accounts together and control the creating and changing of master records. They controlThe account number interval in which the account number must lie. The screen layout for creating G/L accounts in the company code-specific area. This means that you can define whether fields require an entry, may have an entry, or are hidden when creating or changing a master record in the company code-specific area.You defined the account groups prior to creating G/L accounts. For more information, read Account GroupEntries which are necessary for consolidation are trading partner and group account number.

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 70General LedgerCompany Code DataLocal currencyForeign currencyTax categoryOpen item managementLine item displaySort key

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200870When creating a G/L account in a company code, you have to make several specifications. These specifications are saved in the G/L account master record and will affect future transactions, such as postings to this G/L account. When setting the account currency, you have two options available:Enter the local currency of your company code. The system automatically uses the local currency that you defined when creating the company code as the default value.This allows posting to the G/L account in any currency. When you make a posting in a foreign currency, the amount is translated into the local currency. For more information, see Posting a Document in a Foreign Currency.The transaction figures are kept as follows:In the local currency, that is, the total of all the amounts posted in the local currency In the individual currencies, that is, the total of all the amounts posted in various currencies.Enter a foreign currency. This is a foreign currency balance sheet account. The G/L account can only be posted to in this currency.The transaction figures and the account balance are kept in the foreign currency entered and in the local currency.

In tax accounts, you can specify the type of tax on sales/purchases (input or output tax) that can be posted to the account.

If you set the "Open item management" indicator in the master record for an account, the line items in this account is marked as open or cleared.The balance of an account with open item management is equal to the balance of the open items. General ledger accounts are kept with open item management if you need to check whether there is an offsetting posting for a given business transaction.

If you set the "Line item display" indicator in the master record for an account, all line items that have been posted to this account are displayed if they have not been archived.You use line item display to display the document line items from the account. For line item display, the system lists all the line items for an account.Sort Sequence When you display or change line items, they are displayed in a standard sort sequence. The standard sort sequence is determined internally by the system. The system uses selected fields within the document to do this.

Reconciliation AccountYou use this field to indicate G/L accounts as being reconciliation accounts. For each subledger account , you must keep at least one reconciliation account in the general ledger. When you post to an account in the subledger, the system automatically posts to the corresponding reconciliation account.

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 71General LedgerCompany Code Data (continued)Local currencySpecify the currency in which the account is to be postedTransaction figures are always updated and displayed in local currency ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200871Account currencyThe account currency indicates the currency in which this account is held. If a currency other than the company code currency is specified, users can only post items in that currency to this account. (An exception to this is exchange rate differences resulting from valuating G/L account balances.)If the company code currency is specified, users can post items in any currency to this account.January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 72General LedgerCompany Code Data (continued)Foreign currencySpecify the alternative currency in which the account is to be postedIt is possible to select up to two alternative currenciesTransaction figures will be updated in both the local and alternative currenciesECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200872You have the following options for the foreign currency valuation:You can carry out the valuation in local currency, (company code currency), or a parallel currency (for example, group currency). You can also use different valuation methods (for example, lowest value principle). In addition to the foreign currency valuation, you can also carry out a currency translation in accordance with FASB 52 (US GAAP). You can thereby translate your account balances from local currency into group currency, for example.

Your foreign currency balance sheet accounts are valuated as part of the foreign currency valuation:The balance of the foreign currency balance sheet account, that is, the balance of the G/L account managed in a foreign currency, forms the basis of the valuation. The result of the valuation is posted to the valuated account. The exchange rate profit or loss from the valuation is posted to a separate expense or revenue account for exchange rate differences as an offsetting posting.

All open items in foreign currency are valuated as part of the foreign currency valuation:The individual open items of an account in foreign currency form the basis of the valuation, that is, every open item of an account in foreign currency is valuated individually. The total difference from all the open items in an account is posted to a financial statement adjustment account. The account therefore retains its original balance. The exchange rate profit or loss from the valuation is posted to a separate expense or revenue account for exchange rate differences as an offsetting posting.

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 73General LedgerCompany Code Data (continued)Tax categorySpecify the type of tax on purchase and sales (input or output taxes) that can be posted to the accountIf the account is not tax relevant, do not make a specification in this fieldECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200873If you make the tax relevant, it will not allow you to post until you account for the taxes.

Tax Category in Account Master RecordDetermines whether the following apply to the G/L account:Is it tax-relevant?Is it a tax account?Is it a tax-relevant G/L account?UseTax-relevant account?You decide whether you want to use the account for tax-relevant postings.If not, leave the field blank.Tax account?You decide whether you want to use the account exclusively for posting taxes.Define the type of tax on sales and purchases you want to use the account for: Input tax or output tax?Use the proposed keys from the possible entries help.Tax-relevant G/L account?You decide whether you want to use the account as a G/L account to which you make tax-relevant postings.Define the tax code which can be used to post to the account. When posting to this account, the system then checks whether the tax code in the line item is permitted for this account. This is useful if you always post to this account using the same tax rate. When you post to this account, the tax code is defaulted and can no longer be changed (for example, the account "Domestic trip costs taxed flat rate" in Germany).Use the tax codes proposed from the possible entries help.January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 74General LedgerCompany Code Data (continued)Open item managementIndicates that the account is subjected to an affirmative clearing process involving the matching of debits to credits with the purpose of closing each individual line itemFor example, reconciliation accounts You can only archive an accounting document if all of its individual line items have been clearedECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200874Used in A/P and A/RYou want to be able to close each individual line/material

If you set the "Open item management" indicator in the master record for an account, the line items in this account is marked as open or cleared.The balance of an account with open item management is equal to the balance of the open items. General ledger accounts are kept with open item management if you need to check whether there is an offsetting posting for a given business transaction. You should use open item management for bank clearing accounts, clearing accounts for goods receipt/invoice receipt, and salary clearing accounts.Bank accounts, however, do not use open item management. If you subsequently define open item management for a G/L account, this entry only applies to the items which are posted afterwards. At the date of the change, the account must display a zero balance.Also, when canceling this indicator, the balance must be zero. You therefore have to clear the remaining open items before making the change in the master record.

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 75General LedgerCompany Code Data (continued)Line item displaySelect if it is desirable to view all the debit and credit detail for the account Remember that when posting items to such accounts and displaying line items, additional storage space and system time are requiredECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200875If you want to display all the credit and debits You also need to specify how it is sorted.

Indicates that line item display is possible in this account.For line item display, the system stores an entry per line item in an index table which contains the link between line item and account.

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 76General LedgerCompany Code Data (continued)Line item display should not be used for the following accounts:Reconciliation accounts Accounts that have a summation function and are analyzed by another application such as revenue or stock accountsOutput and input tax accounts, since tax information is required only in connection with the documentECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200876ProcedureDo not set this indicator for accounts in which the number of postings is so great that line item display online would not be advantageous. These accounts include, for example:Tax accountsReceivablesPayablesCertain revenue and expense accounts

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 77General LedgerCompany Code Data (continued)Sort KeyNecessary when line item display is selected Determines the data field that will be used to sort the line itemsPosting dateDocument dateCost centerECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200877If you turn on line item display, you have to turn on the sort key.

The system uses a standard sort sequence for displaying line items. Among other things, it sorts the items according to the content of the Allocation field. This field can be filled either manually or automatically (by the system) when a document line item is entered. For this purpose, the system requires rules that determine which information is to be taken from the document header or from the document line item and placed in the field. The rules can be stored in the master record of an account which enables you to determine the standard sort sequence on an account-specific basis.January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 78General LedgerCompany Code Data (continued)Reconciliation accountsWhen you post to a sub-ledger, the system automatically concurrently posts to the corresponding reconciliation account in the general ledger In this way, the general ledger is automatically updated and remains in balance with the individual account totalsECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200878Sales to an individual customerYou use this to indicate G/L accounts as being reconciliation accounts. For each subledger account , you must keep at least one reconciliation account in the general ledger. When you post to an account in the subledger, the system automatically posts to the corresponding reconciliation account. The "Receivables from goods and services" account is an example of a reconciliation account for customers. Enter Customer in the Reconciliation account for account type field. Enter a Vendor in this field for a vendor reconciliation account. Using the reconciliation account procedure, it is possible to create a balance sheet and a profit and loss statement at any time, since the amounts posted to subledger accounts are also posted automatically in the general ledger. January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 79Subsidiary Ledger AccountsA/R, A/P, GR/IRGeneral Ledger Reconciliation AccountsA/R, A/P, GR/IR

General LedgerCompany Code Data (continued)

Debit CreditDebit CreditA/PDebit CreditA/RDebit CreditGR/IR$$$$$$$$$$$$$$$$GeneralLedgerECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200879When you post items to a subsidiary ledger, the SAP system automatically posts the same data to the general ledger at the same time. Each subsidiary ledger has one or more reconciliation accounts in the general ledger. These reconciliation accounts ensure that the balance of G/L accounts is always zero. This means that you can draw up financial statements at any time without having to transfer totals from the subledgers to the general ledger.

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 80Accounts Receivable Reconciliation Account Accounts ReceivableReconciliation950300Customer 142150Customer 123400Customer 135100Customer 189ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200880All customers (group of customers) are rolled into the Accounts Receivable Reconciliation accountsJanuary 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 81Accounts Receivable Integration

RevenueIncrease to A/RGoodsIssueSalesOrderIncome StatementBalance Sheet

CGSDecrease to InventorySDSales and DistributionECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200881The A/R system is integrated. MM/SD/FIRolls into Balance SheetJanuary 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 82Accounts Payable Reconciliation Account Accounts PayableReconciliation950250Vendor 100435200Vendor 100234100Vendor 100621300Vendor 100846ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200882January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 83Accounts Payable Integration

Increase to A/PDecrease to GR/IRGoodsReceiptBalance Sheet

Increase to InventoryIncrease to GR/IRInvoiceReceipt

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200883January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 84 Line Item DisplayAccount number 100999 Bank AccountCompany code C999PeriodDebitCredit DC bal. Balance C/f bal. 750,000.00 Period 1 5,250.00 3,540.00 1,710.00 751,710.00 Period 225,000.0015,000.00 10,000.00 761,710.00Period 1Doc. no.DT Doc.dateCurrencyAmount 1500000013KZ01/05/04 USD 1,800.00 -1500000014KZ01/06/04 USD 990.00 -100000012SA01/08/04 USD 750.00 1400000342DZ01/14/04 USD 5,250.00ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200884An account balance shows the: Opening balance (carry forward balance from the previous year) Total of all transactions per posting period, broken down into debits and credits (transaction figures)Using these figures the system also calculates the: Balance per posting period Accumulated account balanceIn addition to the above balances, the system displays the gross sales/purchases per period for each account. The balances from special G/L account transactions are also included in an account balance. These include bills of exchange and down payments. While displaying account balances, you can view document amounts posted in foreign currency in the respective local currency. You can also choose between: Account balances of both the items that are part of sales or purchases and the items that are not part of sales or purchases Account balances of only items that are part of sales or purchases Account balances of special G/L transactionsJanuary 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 85Unit 6, Group 1 ExercisesCreate Bank AccountCreate Accounts Receivable Reconciliation AccountCreate Trading Goods Inventory AccountCreate Operating Supplies Inventory AccountCreate Accounts Payable Reconciliation Account Create Goods Receipt / Invoice Receipt Reconciliation AccountCreate Output Tax AccountCreate Input Tax AccountCreate Retained Earnings AccountCreate Common Stock Account

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200885January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 86Create Trading Goods Consumption Expense AccountCreate Operating Supplies Expense AccountCreate Utilities Expense AccountCreate Purchase Price Difference Expense AccountCreate Information Technology Expense AccountCreate Miscellaneous Expense AccountCreate Cost of Goods SoldRun General Ledger List of Accounts Report

Unit 6, Group 2 ExercisesECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200886Financial Accounting (FI)- Rules -

Unit 8ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200887January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 88Business Process IntegrationRulesFIECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200888Finance RulesJanuary 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 89RulesDefines the parameters for Master Data and TransactionsDetermines functionality for Master Data and TransactionsRelatively fixedChanges as policy changesECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200889Master data does not change very oftenOrg data should not changeTransaction data (application data) changes every transactionRules are relatively fixed.

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 90R/3FIFinancialAccountingCOControllingPSProjectSystemWFWorkflowISIndustrySolutionsMMMaterials Mgmt.HRHumanResourcesSDSales and DistributionPPProductionPlanningQMQualityMgmt.PMPlant MaintenanceSMServiceMgmt.Client / ServerIntegrated BusinessSolutionECEnterpriseControllingAMFixed AssetsMgmt.Financial Accounting (FI)ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200890Green ones (and blue): LogisticsStart out with sales and distributionYellow HR was added later in SAPs life (1990)Red: Tracking side of house. (Financials)Purple:Workflow is the least understood by faculty and studentsAllow the movement of information in the enterprise to the people who need it. (e.g. Credit limit e-mails, updates)

Industry Solutions: Each install is tracked by SAP and the configuration is monitored by industry. This way SAP knows the whole set of answer of how industries works with their best business practices.

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 91Unit 8 OverviewPosting PeriodsTolerance Groups for Account PostingsAccounts Payable SettlementDocument NumbersECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200891January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 92Posting PeriodsBefore it is possible to post documents, it is necessary to define posting periodsFiscal years are divided into one or more posting periodsEach posting period is delimited by both a start and finish dateA common division of a fiscal year involves defining 16 posting periods -- 12 months and 4 quarter ending posting periods

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200892A fiscal year is divided into posting periods. Each posting period is defined by a start and a finish date. Before you can post documents, you must define posting periods, which in turn define the fiscal year. In addition to the posting periods, you can also define special periods for year-end closing.In order to assign business transactions to different time periods, you must define a fiscal year with posting periods. Defining the fiscal year is obligatory. You define your fiscal year as fiscal year variants which you then assign to your company code. One fiscal year variant can be used by several company codes. You have the following options for defining fiscal year variants:Fiscal year same as calendar year Fiscal year differs from calendar year (non-calendar fiscal year). The posting periods can also be different to the calendar months.When you record a document, you enter the posting date. When you post the document, the system uses the posting date specified to automatically determine the posting period. The posting period consists of a month and a fiscal year.These are both displayed in the document overview. The posting period determined is entered in the document and the transaction figures for this period are updated.

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 93Tolerances Groups forAccount PostingsInternal control amount limits that serve to define the maximum authorization levels for your employeesMust be at least one entry for every company codeCan be defined for an employee group with employees being assigned to a given group to effect the controlCan be undefined at the group level meaning that the control is effective for everyone who is not a member of a groupECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200893You can also additionally differentiate these settings by company code. Since the same rules usually apply to a group of employees, enter the values for employee groups.You can then enter amount limits and tolerances per employee group and company code.

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 94Tolerances Groups forAccount Postings (continued)Internal control amount limits that serve to define the maximum authorization levels for your employees with respect to: A single transaction A customer or vendor account line item Discount percentage granted to a line item Payment differences that can be accepted in settlement of an account (e.g., accounts payable)ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200894The system also checks authorizations and tolerances. An employee might only be authorized to post to certain accounts within one company code. You can define tolerances for each employee or for a group of employees. Tolerances include a maximum cash discount percentage rate, a maximum amount per customer or vendor line item and a maximum amount per document. January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 95Document NumbersAll posted transactions must have a unique number assigned to itUsually these numbers are system generatedThe numbers serve to specifically identify the business content of a transaction so that it may be recalled at a later timeThe actual system stored document number includes information respecting the year, date, and company codes

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200895In the SAP System, every document is assigned a number that identifies it uniquely within a fiscal year and company code. You can define number ranges as follows:You can define number ranges for each company code. Thus, each company code can use the same number interval. You can define number range intervals as year-specific.You define number ranges in the system separately for master records and documents. You can therefore use the same number range keys for both master records and documents.

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 96Document Numbers (continued)Before any documents can be posted to a company or company code, there must be a number range assigned to the document typeNew transaction document number ranges must be created at the start of each new fiscal year

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200896For each document number interval, you must specify a validity limit (year value).You can define the same number range for several fiscal years. After changing fiscal years, the system starts assigning numbers again from the lower limit of the interval. The same document numbers are assigned in each fiscal year, but are uniquely identified by the year specification.

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 97Define Posting Periods VariantOpen and Close Posting PeriodsAssign Posting Periods Variant to Company Code Create Tolerance Groups for Account PostingsSetup Payment ProgramCreate Tolerance Groups for Accounts Receivable and Accounts PayableCreate Financial Accounting (FI) Document Numbers

Unit 8 ExercisesECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200897Financial Accounting (FI)- Transactions -

Unit 9ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200898January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 99Business Process IntegrationFITransactionsECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 200899January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 100Transaction DataIncludes internal and external exchanges that describe business activitiesUnlike master data, aggregate transactional data is dynamic each transaction is unique

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 2008100January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 101R/3FIFinancialAccountingCOControllingPSProjectSystemWFWorkflowISIndustrySolutionsMMMaterials Mgmt.HRHumanResourcesSDSales and DistributionPPProductionPlanningQMQualityMgmt.PMPlant MaintenanceSMServiceMgmt.Client / ServerIntegrated BusinessSolutionECEnterpriseControllingAMFixed AssetsMgmt.Financial Accounting (FI)ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 2008101Green ones (and blue): LogisticsStart out with sales and distributionYellow HR was added later in SAPs life (1990)Red: Tracking side of house. (Financials)Purple:Workflow is the least understood by faculty and studentsAllow the movement of information in the enterprise to the people who need it. (e.g. Credit limit e-mails, updates)

Industry Solutions: Each install is tracked by SAP and the configuration is monitored by industry. This way SAP knows the whole set of answer of how industries works with their best business practices.

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 102Unit 9 OverviewDocument PrinciplesDocument TypesPosting KeysECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 2008102January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 103Document PrinciplesEach completed accounting transaction writes data to the database and creates a unique electronic documentEach document contains information such as:Responsible personDate and time of the transactionCommercial content including company codes

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 2008103DefinitionThe result of a posting in Financial Accounting. There are two types of documents: Original documents and processing documents.Examples of original documents:Receipts Invoices Checks Bank statementsExamples of processing documents:Accounting documents Sample documents Recurring entry documentsThe accounting document represents the original document in the system. The other processing documents can be used to simplify document entry. The document remains as a connecting unit in the system until it is archived.UseYou can only check whether postings are correct in the compact journal and general ledger by means of documents. Every posting must therefore have a document.Documents are the link between the business transaction and the posting in accounting. Only complete documents can be posted. A document is complete when its debit and credit items balance to zero. You must enter the minimum account assignments designated by the system: For example, document date, posting date, document type, posting key, account number, and amount. Data must also be entered in all other fields that were defined as required fields when making system settings.January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 104Document Principles (continued)An accounting document captures the entire transaction in a manner that facilitates recall for reporting purposesIt remains as a complete unit in the system until archivedOnce created, a document can not be deleted from the database

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 2008104Data is of no value unless you can generate report from them.

They can only be archived if completeAll line items cleared

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 105Document Principles (continued)The SAP R/3 document principle provides a solid framework for a strong internal control systemAudit trails allow an accountant to begin with an account balance on a financial statement and trace through the accounting records to the transactions that support the account balance or to trace individual transactions to the effected account balance(s) on a financial statement

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 2008105Once you create a document in financial accounting you cannot delete it. You must reverse it.Not all transactions are reversible

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 106Document Principles (continued)Each posted accounting document has a header

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 2008106This is the header screen you get to see.The part of a document that contains information valid for the whole document, for example, document date and number. It also contains controlling information such as the document type. If you dont want a field to show up, suppress it.

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 107Document Principles (continued)Each posted accounting document has at least two lines (e.g., debit and credit)

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 2008107You have to have at least 2-line items : Double entry systemYou can have as many as you want: Debits have to equal credits

This transaction is using master data. We did not enter the G/L account manually

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 108Document TypesA way to categorize different transactionsMany different document types are supplied in the systemDocument types are associated with number rangesAll documents of the same document type are stored in the system by document numberDetermine the type of account that can be posted to

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 2008108A key that is used to classify accounting documents and distinguish between business transactions to be posted. The document type is entered in the document header and applies to the whole document.UseThe document type has the following functions:Differentiating between business transactions. The document type tells you instantly what sort of business transaction is in question. This is useful, for example, when displaying line items for an account.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.Assigning document numbers. A number range is assigned to every document type. The numbers for the documents you create are taken from this number range. The original documents from one number range should be stored together. In this way, the document type controls document storage.

If you dont like the document type out there create a new oneNever change the defaults. You cannot go back

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 109Document Types (continued)SA General ledger account documentsDR Customer invoicesDG Customer credit memosDZ Customer paymentsKR Vendor invoicesKG Vendor credit memosKZ Vendor paymentsKN Vendor net invoices and credit memos

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 2008109Document types have already been defined in the standard system. The most important document types are these. January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 110Posting KeysDetermine whether the item to be posted is a debit or a creditDetermine the type of account that can be postedECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 2008110Two-character numerical key that controls the entry of line items. The posting key determines:Account type Debit/credit posting Layout of entry screens UseWhen you enter a posting, enter a posting key for each item. This key determines how the item is posted. Posting keys are defined at client level and therefore apply to all company codes. The posting key determines:The data you can enter in the line item How data you post is processed How the system updates the data you enterPosting keys are differentiated by customer, vendor and G/L accounts. Apart from the General Ledger Accounting (FI-GL) and Accounts Receivable and Payable (FI-AR/AP) components, there are also posting keys for asset and material accounts

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 111The posting key (PK) has a control function that pertains to the document line items. It determines the following:Account type for posting the line itemDebit or credit posting of line itemsField status for additional informationPosting Keys (continued)

ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 2008111Keeps track of line items and where these line items are posted to.The document type specifies which account types you can post to. The posting key specifies which account types you can post to. A posting key can only be entered for an account type which is permitted for that document type.

January 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 112Assets7075General Ledger4050Material8999Customers01Vendors23Common Posting KeysPosting Keys (continued)ECC 6.0January 2008 SAP AG and The Rushmore Group, LLC 2008112General Ledger40Debit entryDebitG/L accountCredit entryCreditG/L account

Assets70Debit assetDebitAsset75Credit assetCreditAsset

Material89Stock inwrd movementDebitMaterialStock outwd movementCreditMaterial

Vendors02Reverse credit memoDebitCustomerBank chargesDebitCustomer

Customers00Act assignment model01InvoiceDebitCustomerJanuary 2008 SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 113Unit 9 ExercisesReview Document TypesPost Initial Cash Investment by OwnersPost Purchase of Operating SuppliesDisplay and Review General Ledger Account Balances and Individual Line Items

ECC 6.0January 2008 SAP AG and The Rushmore Group