SAP FICO (EPISODE - 31) !!!

Nilkamal: - Yeah, absolutely perfect. Thank Manoj. Now as we are ready with two liability related accounts and one asset related account, we will learn about how to post a transaction or how to do a G/L entry in SAP FI module? The path for G/L transaction is:- SAP Easy Access -> Accounting -> Financial Accounting -> General Ledger -> Posting -> General Posting F – 02 -> Select ‘F4’ button and press ‘F2’ button to get the current date, which will be used as Document Date -> Select ‘SA’ as Document Type -> Give Company Code as ‘RBT’ - > ‘Posting Date’ will be the current day date -> ‘Period’ will be the current month period -> ‘Currency’ will be in ‘INR’ -> In the 1^st Line Item, the ‘PstKey’ will be 40 and the ‘Account Number’ will be ‘200000’ -> Enter ‘Field status’ as ‘G005’ -> Press ‘Enter’ button -> Enter ‘Amount’ as say ‘350000’ -> Press F4 and then press F2 -> In the next line item, enter ‘PstKey’ as 50 and Account No. as ‘100100’ -> Text of Field status is optional here but still enter ‘G001’ -> To balance debit and credit, enter ‘Amount’ as ‘*’ and ‘Text’ as ‘+’ -> Press ‘Enter’ button -> Go to Document in Menu Bar -> Select ‘Simulate’ button -> You can see the transaction ‘SBI A/C …To Share Capital A/c’ -> Press ‘Save’ button -> It displays a warning message ‘There is no line item category assigned to account 200000’ .

Dulal: - Sir, why there is a warning message? And why there are two line items in a single G/L entry?

Nilkamal: - Any transaction should have a minimum of two line items. One is for debit and the other one is for credit. And that warning message can be solved. For that you need to follow these steps:- SPRO -> SAP Reference IMG -> Financial Accounting -> General Ledger Accounting (New) -> Business transactions -> Document Splitting -> Activate Document Splitting -> Double click on ‘Deactivation for Company Code’ tab at left panel -> Select ‘Position’ key -> Give Company code ‘RBT’ -> Press ‘Enter’ button -> Select ‘Inactivate’ -> Press ‘Save’ button -> The message displays ‘Document was posted’. Now, once this activation of document splitting is done, you don’t need to do it again for the next G/L entry. This activation will remain for all the settings now. As it is the first G/L entry, that’s why, it displayed this warning message.

Suhash: - Sir, how can we view a document or a G/L account after doing several G/L entries?

Nilkamal:- To display a document, you need to follow the path :- SAP Easy Access -> Accounting -> Financial Accounting -> General Ledger -> Document -> Display FB – 03 -> Give Document No. as ‘1’ -> Company Code will be ‘RBT’ -> Enter ‘Fiscal Year’ as ‘2009’ -> Press ‘Enter’ button. Basically the transaction code in this case is ‘OBA7’. Always remember that for all credit items, there is a ‘-‘(negative) sign at the right side of the amount. Now, to view a G/L account, you have to follow the path:- SAP Easy Access -> Accounting -> Financial Accounting -> General Ledger -> Account -> Display balances FS-10N -> Give Account Number ‘200000’ -> Company Code as ‘RBT’ -> Fiscal Year as ‘2009’ -> Press ‘Execute’ button or press F8. To view the debit or credit side of an account, always double click on the concerned side because we selected line item display to see the details from index table only. Also to view the details of the document, select ‘Document Overview’ button on the Application Toolbar. Now, you people take a lunch break for 30 minutes and come back after that.

SAP FICO (EPISODE - 30) !!!

Nilkamal: - the account ID together with the house book ID, uniquely defines a House Bank and Accounting ID.

Chaitanya: - What is the role of this ‘Interest Indicator’ field then?

Nilkamal: - Here you need to enter an interest calculation indicator if the account is to be included in automatic interest calculation. After that there is a ‘Keyword/Translation’ where it explains the language of your account. Then there is ‘Information at Chart of Account level’. This is the setting which is done when the document is created or saved. Now come to the ‘Information at Company code level’ tab. Here you can view Chart of Accounts (COA) and controlling area. The combination of one COA for a unique company code will recognize a ledger account. Under this tab, there are three things to be taken care of. They are: - Document Control, Posting Keys and Document Principle. In Document Control, the system provides status to the fields in the documents through two ways. One is by Field Status Variant (configured in transaction ID: - OBC4) and assigned to the respective G/L account in transaction ID: - FS00. Another one is the Posting keys, which controls the document display.

Dulal: - but, sir, how are these posting keys controlling the document display?

Nilkamal: - See, these posting keys are those keys through which a system recognizes the debit or credit of an account. For G/L debit, the posting key is 40 and for G/L credit, the posting key is 50. The path for posting keys is:- SPRO -> SAP Reference IMG - > Financial Accounting -> FAGS -> Document -> Line Item -> Controls -> Define Posting Keys. The posting keys control how the line item to be entered and processed. See, you people need to understand the basic function of posting keys by asking some questions like: - Which side an account can be posted to? Which type of an account can be posted to? Which fields the system displays on the entry screen and whether an entry must be made in the field status or not? Accha, another thing you must take note of. It is known as Document Principle. The SAP FI system always recognizes the Document Principle to ensure that the sum of the debits must be equal to the sum of the credits.

Rinky: - Sir, now are we ready to open any G/L accounts? All the settings are done?

Nilkamal: - of course, we can now open several G/L accounts. Our G/L accounts will be ‘Retained Earnings’,’ Share Capital’ & ‘Bank account’. Enter the G/L account number as ‘100000’ and the Company code as ‘RBT’. The technique of creating this account is: - Go to ‘G/L Account’ tab -> Select ‘Create’ button -> Select Accounting Group as ‘Liabilities’ -> Select Accounting type as ‘Balance Sheet’ -> Write the Account Name as ‘Retained Earnings Account’ -> In ‘Control Data’ tab, select ‘balances only in local currency’ -> Set the ‘Line Item Display’ -> Set ‘Sort key’ as ‘001’ -> Select ‘Create/Bank/Interest’ tab -> Enter ‘Field Status Variant’ as ‘G001’ and then Press the ‘Save’ button. Similarly, we will create the ‘Share Capital’ Account also with the G/L Account number as ‘100100’. Now these two accounts of ‘Retained Earnings’ and ‘Share Capital’ are liability related accounts. But, the ‘bank account’ will be an asset related account. Can anyone tell me, how can we create a bank account? Somebody please try.

Manoj:- Sir, the procedure will be:- Enter G/L Account number as ‘200000’ -> Press ‘Create’ button -> Select Accounting Group as ‘Assets’ -> Select Accounting type as ‘Balance Sheet’ -> Write the name of the bank account as ‘SBI’ -> Select ‘Control Data’ tab -> Select ‘balances only on local currency’ - > Select ‘Line Item Display’ -> Select ‘Sort Key’ as ‘001’ -> Select ‘Field Status Group’ as ‘G001’ -> Select ‘Relevant to Cash flow’ and press the ‘Save’ button.

SAP FICO (EPISODE - 29)

Nilkamal: - Now, there is a ‘Reconciliation Account for Account Type’ field. First you need to know the essence of a reconciliation account. The reconciliation account is that account, which ensures the integration of the sub-ledger account into a general ledger. We will deal with reconciliation accounts later.

Ravi: - Sir, in this form, the system is asking for an alternative account number. What should we enter in the ‘Alternative Account Number’ field?

Nilkamal: - You can enter the account number from the Legacy System by using Legacy System Migration Workbench (LSMW). Say in Tally, your account number is 3401. Now, when you are transferring that account into SAP, the account number becomes say 67901. This account number 67901 will be your alternative account number. You can also add the account number from the country chart of accounts, if the corporate group uses a standard chart of accounts. Now, let us understand the ‘Account Management in Company code’ tab. When you click on the ‘Account Management in Company Code’ tab, you will find 5 key fields. They are: - ‘Open Item Management’, ‘Line Item Display’, ‘Sort Key’, ‘Authorization Group & Accounting Clerk’ and ‘Authorization Objects’. The ‘Open Item Management’ indicator determines that open items are managed for the accounts. Items posted to accounts managed on open item basis are marked as open or clear. The balance of these accounts is always equal to the balance of the open items. The ‘Line Item Display’ indicator enable line item display for the account. That is, a display of line items from one or more accounts.

Manoj: - but, Sir, what is a line item basically?

Nilkamal: - Line item is that part of a document which contains information on a single item. Here, an item includes the amounts, account number, the nature of the transaction whether it is a debit or credit and the additional information depending on the transactions to be posted. For every line item, an entry is saved in an index table. This entry contains the connection between the line item and the account. Say 3 transactions of 1000 bucks each have taken place. In the account transaction account, the total amount is showing 3000 bucks, but for this account transaction there are 3 line items in the index table displaying the amount of 1000 bucks each.

Paul: - What does this Sort Key field indicate?

Nilkamal: - It indicates the layoff rule for the allocation field for the document line item. It is the field to search data branchwise, regionwise or productwise. That’s why, the Sort Key is declared.

Chaitanya: - Sir, does this ‘Authorization Group’ feature allows the extended authorization protection for particular projects?

Nilkamal: - Yes, of course, it does. The authorization groups usually occur in authorization objects together with an activity.

Dulal: - Authorization objects means? What is their role here?

Nilkamal: - Authorization objects are a type of elements of authorization concept only. Authorization objects enable a client to define complex authorizations by grouping up to 10 authorization fields in an ‘AND’ logical gate relationship to check whether a user is allowed to perform certain action or not. To pass an authorization test for an object, the user must specify the authorization check for each field in the object. In simple words, it assigns the roles for authorization to different users. Now, let us learn about the next tab, that is the ‘Joint Venture Data in Company Code’. Under this tab, there is a ‘Recovery Indicator’. In modern economic scenario, you will find that the global companies that belong to several joint ventures have their incurred costs shared among different recovery indicators, which can be settled through periodic settlement programs. In SAP FI module, we can define the recovery indicators at 3 levels. They are: - Document Type, Cost Element and Cost Object. After defining the recovery indicators, we need to declare the bank charges or interests in the tab ‘Create Bank/ Interest’. Under this tab, you need to assign a ‘Field Status Group’ and all the posting will be done automatically only. For some line items, there is an indicator ‘Supplement to auto-postings’, through which the automatically generated line items can be supplemented manually. The ‘Relevant to Cash flow’ field determines that the G/L account is a cash flow account.

Arindam: - Sir, what is House Bank and Accounting ID?

SAP FICO (EPISODE - 28)

Nilkamal: - Oh! You people have come back from the break. Accha, tomorrow, there will be no class because I need to meet a client in Warangal district. Just now, this client called me up on my mobile phone. Anyway, as there will be no class tomorrow, so, I will take an extra 2 hours session today. Don’t worry; I will give you a break after 1 hour to have your lunch. So, where were we?

Chaitanya: - Sir, we are going to learn about the ‘Accounts Control in Company Code’ tab. After clicking on this tab, we are seeing ‘Account Currency’ field. What does it indicate?

Nilkamal: - It indicates the currency in which this account is held. If a currency other than the company code currency is specified, the users can post items in that currency only to this account. For example, say, if the Company code is in INR, then the A/C Currency code will be in INR if you want to post it in any currency; it will be USD if you want to post it only in USD; it will be in Euro if you want to post it only in the Account Currency which is Euro in this case. Always remember that if the Company Code currency is strictly specified, then users can post items in any currency to this account.

Paul: - What is this Exchange Rate difference key and Account Determination function?

Nilkamal: - Exchange Rate difference key is a key for account determination to perform the valuation of the amounts posted to the Balance Sheets in foreign currencies. Account Determination is an automatic function that determines the accounts for posting amounts in financial accounting.

Arindam: - Sir, this is just a computer, not a human. In this automation process, how the system understands or valuates the foreign currency automatically when any financial transaction entry takes place?

Nilkamal: - I can explain you, but will you understand it? You are not a CA guy; anyway, let me explain it. See, for the valuation of foreign currency balances, the system uses this Exchange Rate key to find out the accounts for gains and losses from the automatic valuations that take place at the back-end. Now, there is a customized program within that SAP FI module where ABAPers had clearly specified which accounts valuation differences are to be posted to, under the exchange rate difference key in the system. Say a sales order has been completed. Sales can take place in two ways. One is Cash Sales and another is Credit Sales. In Cash Sales, the G/L entry will be: - ‘By Cash…. To Sales’ and in credit sales, the G/L entry will be: - ‘By Customer Credit… To Sales’. In Credit Sales, the actual realization of money is not automatically getting reflected to the accounts. It is still due. Say the entire sales were for 10000 bucks, where foreign currency is involved. As the foreign currency transaction is involved, you need to keep some exchange rate provisions. Say the provisions kept is another 1000 bucks. Therefore, the G/L entry will be: - ‘By Exchange Rate Provisions … To Exchange Rate Difference’. Now, when the client pays the due money in the credit sales within the payment deadline day, the 1000 bucks that was kept for provisions will add as a profit to the balance sheet after actual realization of the money in the accounts. At that point, the G/L entry is just reversed as: - ‘By Exchange Rate Difference … To Exchange Rate Provisions’. This is a very complex scenario. It takes place when you are trading with a foreign client in foreign currencies and doing credit sales.

Rinky: - Sir, in this form, there is a checkbox to select ‘Posting without tax allowed’. What is that?

Nilkamal: - Tax category means whether the tax applies to the G/L account or not. Say you made a sale of 1000 bucks and there is sales tax of 10% on it. Then the G/L entry will be: - ‘By Sales Account … To Sales, To Tax Payable’. Before any G/L entry, you need to ask the question that is it a tax relevant G/L account. The ‘Posting without tax allowed’ indicator indicates that the account can still be posted to, even if the tax code has not been entered.