1. finance
2. bank
3. bank account

FI
Financial Accounting
Quarles: Flya Kite
Financial Accounting
External Accounting
Stockholders
Cash Flow
Profit & Loss
Balance Sheet
Bankers, Lenders
External Auditors
IRS, Taxing Authority
Quarles: Flya Kite
SEC
FI/CO
Organizational Structure
Elements
Client
Company Code
Chart of Accounts
Fiscal Year Variant
Credit Control Area
Quarles: Flya Kite
3
Client
Highest hierarchical level in an SAP
system
A complete database containing all the
tables necessary for creating a fully
integrated system
Master records are created per client
Quarles: Flya Kite
4
A COMPANY CODE IS...
A BALANCED SET OF BOOKS
Quarles: Flya Kite
5
Company Code
A required structural element
A legally independent entity
The smallest organizational unit for
which accounting can be carried out
Where business transactions are processed
Where accounts are managed
Where legal individual financial statements,
such as the balance sheet and the profit and
loss statement, are created
Quarles: Flya Kite
6
Chart of Accounts
A listing of the accounts
A chart of accounts must be assigned
to every company code
Several company codes can use the
same chart of accounts
– A different chart of accounts can be used
if a different grouping of the chart of
accounts is required
Flya Kite uses FICH
Quarles: Flya Kite
7
Fiscal Year Variant
Used to define the fiscal year for the
company
– Standard year = 12 periods
– Special periods = up to four
Allow additional closings of the books during
or at the end of the year
Quarles: Flya Kite
8
Credit Control Area
An organizational unit or area of
responsibility created to control
customer credit limits
A company code is assigned to one
and only one credit control area
Multiple company codes can be
assigned to one credit control area
Quarles: Flya Kite
9
CLIENT
CHART OF
ACCOUNTS FICH
CREDIT CONTROL
AREA = FIFL
COMPANY CODE
FIFL
Quarles: Flya Kite
10
Master Data
 Describes
items or objects used in a
business such as accounts,
materials, vendors, customers
 The information usually remains
unchanged over an extended period
of time
 Each master data record is unique in
name or number
Quarles: Flya Kite
11
FI Master Data
MASTER
DATA
GL
G/L ACCOUNTS
Quarles: Flya Kite
AP
AR
VENDORS
CUSTOMERS
12
G/L Master Records
A master record must be created for
every G/L account
– Business transactions are posted to G/L
accounts
– Line items are displayed by G/L account
Account number 10000_ _ _ Bank Account
Account number 20000000 Accounts Payable
Quarles: Flya Kite
13
G/L Master Records
Chart of Accounts
information
– G/L account number
– G/L account name
– Account type: Balance
sheet or Income
Statement
– Account group: Info that
controls creation of the
master record in the
company code
Quarles: Flya Kite
Account number 10000000
Chart of accounts
Balance sheet account
P&L statement acct type
Account group
14
Account Group
Identifier that controls which fields
must be entered when the account is
created
Can determine a valid number
interval for the G/L account
Must be created before creating G/L
master records - configuration data
Quarles: Flya Kite
15
Account groups
Chrt/accts Acct group
From acct To account Description
FLCH
FLCH
FLCH
10000000
60000000
11000000
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BSA
PLA
RAA
39999999
79999999
30000000
Balance sheet
P & L accounts
Reconciliation
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G/L Master Records
Contains Company Code information
– Account Currency
– Tax Category
Used for country specific taxes during pricing
– Reconciliation Account for Account Type
– Open Item Management
Whether each item in an account must be used
to clear other line items in the same account –
each line must zero out before it can clear
– Line Item Display
Quarles: Flya Kite
17
Company Code Information
Sort key
– Necessary when Line Item display is
selected
– Determines the field that will be used to
sort the line items
Posting date
Document date
Cost center
Others
Quarles: Flya Kite
18
Company Code Information
Reconciliation account
– Accounts receivable, Accounts payable,
Fixed Assets, etc.
When you post to an account in the sub-ledger,
the system automatically posts to the
corresponding reconciliation account
The general ledger is automatically updated
Quarles: Flya Kite
19
Reconciliation Account
Customers Subledger
Customer1
Customer2
1000
2000
Accounts
Receivable
3000
Reconciliation Account
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20
Reconciliation Account
Vendors Subledger
Vendor1
Vendor2
3000
5000
Accounts
Payable
8000
Quarles: Flya Kite
Reconciliation Account
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Company Code Information
Field status group
– An identifier which controls which fields
appear on a G/L document which uses this
account - configuration data
– Sets screens for entering data so
they are specific to the account or to
the transaction
Quarles: Flya Kite
22
Master Data
MASTER
DATA
GL
AP
AR
G/L ACCOUNTS
VENDORS
CUSTOMERS
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23
Accounts Payable
Master Records - Vendors
A
master record must be created for
every vendor
 Centralized data for both MM & FI
General data
Address
Control data
Payment
transactions
Quarles: Flya Kite
Company
code data
Account
management
Payment
transactions
Purchasing org
data
Purchasing
data
Partner
functions
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Vendor Master
General data
Address screen
Vendor Name
Search Term
Address screen
Control
Payment transactions
Street address, City, Postal code
Country
Language
Telephone, Fax, Data numbers
Quarles: Flya Kite
25
Master Data
MASTER
DATA
GL
AP
AR
G/L ACCOUNTS
VENDORS
CUSTOMERS
Quarles: Flya Kite
26
Account Receivable
Master Records - Customers
A
master record must be created for
every customer
 Centralized data for both SD & FI
General data
Address
Control data
Payment
transactions
Quarles: Flya Kite
Company
code data
Account
management
Payment
transactions
Sales area data
Sales
Shipping
Billing
...
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GR/IR account: a suspense
account
Purchase Requisition
No Impact on Finance
Purchase Order
Integration MM- FI
Goods Receipt
Via Automatic Account
Assignment
Goods Receipt
Inventory
Dr
$150
Quarles: Flya Kite
Cr
Expenses
or
Dr
$150
Cr
GR / IR
Dr
Cr
$150
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GR/IR account
Invoice
Receipt
GR/IR
Dr
Cr
Payment
Vendor
Dr
$150
$150
Quarles: Flya Kite
Cr
$150
Cash
Dr
Cr
$150
$150
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Customer Master
Address screen
Control data screen
Address screen
Customer Name
Marketing screen
Unloading points screen
Foreign trade screen
Contact persons screen
Search Term
Sales screen
Shipping screen
Street address, City, Postal code
Billing screen
Taxes screen
Country
Output screen
Partner functions screen
Language
Telephone, Fax, Data numbers
Quarles: Flya Kite
30
FI Transactions
Quarles: Flya Kite
Procurement Process
Purchase
Requisition
Vendor
Outline
Agreement
or
Scheduling
Agreement
Demand
Accounts
Payable
Quarles: Flya Kite
Invoice
Verification
Goods Receipt
& Inventory Mgt.
Purchase
Order
32
Document
Document Principle
1000010
In SAP, transaction postings are
always stored in document form
The document remains as a complete
unit in the system until it is archived
Only complete documents can be
posted
A document consists of a document
header and at least two line items
Quarles: Flya Kite
33
Tolerances Groups for Account
Postings
Amount limits for your employees which
control
– the maximum document amount the employee
is authorized to post
– the maximum amount the employee can enter
as a line item in a customer or vendor account
– the maximum cash discount percentage the
employee can grant on a line item
– the maximum acceptable tolerance for payment
differences for the employee
Quarles: Flya Kite
34
Tolerance Group for A/R & A/P
Handles differences in payment and
residual items which can occur during
payment settlement
Allocate a tolerance group to each
vendor in the master record
– Tolerances up to which differences in
payment are posted automatically to
expense or revenue accounts when
clearing open items
Quarles: Flya Kite
35
Controlling
CO
Where the company “really” finds
out what is going on!
Quarles: Flya Kite
Cost Element Accounting
Which costs are incurred ?
Product related costs
(Direct , traceable costs)
Material
Labor
Overhead costs
(Indirect costs)
Admin wages
Depreciation
Interest
Cost Center Accounting
Product Cost
Accounting
What for?
Product
Quarles: Flya Kite
Where are the costs incurred?
Purchasing
Manufacturing
Administration
Sales
37
Cost Elements
CO
FI
General ledger accounts
P & L accts
Primary cost elements
Bal. sheet accts
Expense accts
Secondary
cost elements
Revenue accts
Quarles: Flya Kite
38
Primary Cost Elements
A
way to identify which type of cost Salaries, utilities, selling expenses
 Cost that arise from consumption of
goods/services from outside of the
enterprise
 Must be created in the GL chart of
accounts in FI
 Each posting to a cost element must
be assigned either to a cost center or
an order
Quarles: Flya Kite
39
Secondary Cost Elements
Used exclusively in CO for allocations and
settlements
 Internal cost allocations
 Created and exist ONLY in CO
 Cannot exist in FI
 The internal value flows such as allocations
and overhead calculations
 Secondary cost elements are allocated to
cost objects within CO
 Represent activity values produced in
internal cost allocations

Quarles: Flya Kite
40
Cost Centers and Cost Elements
 Closely
linked in SAP
 Each posting to a cost element is
assigned either to a cost center or an
order
 Data is subdivided between both
cost centers and cost elements for
analysis
 Cost Centers = where
 Cost Elements = which
Quarles: Flya Kite
41
Distributions
A
method of allocating primary costs
 Primary cost element is the same in
the sender and receiver
Cost element retains its character:
same element in receiver as it was
in sender
 Sender cost centers and receiver
cost centers are documented in the
CO document
Quarles: Flya Kite
42
Distributions
Identity of the cost
in the Sender Cost
Center
Rent Expense
$10,000
Cost center A060
Quarles: Flya Kite
Primary Cost
Element
Distributed
Rent Expense
780000
Identity of the cost is
the same in the
Receiver Cost Centers
Sales &
Mktg
Rent Exp Mfg
$2,500
Rent Expense
Adm
$5,000
Rent
Expense
$2,500
Nature of cost (i.e., rent
expense) comes across
to receiver
43
Assessments
A
method of allocating both primary
and secondary costs
Iterative or hierarchical
 Primary costs are grouped together
and transferred to receiver cost
centers as a single secondary cost
element
 Sender cost centers and receiver
cost centers are documented in the
CO document
Quarles: Flya Kite
44
Assessments
Secondary Cost
Sender Cost Center
Receiver Cost Centers
Element
Information Systems
Costs = $100,000
(wages, paper,
depreciation, etc)
Cost center A070
Allocated
IS costs
800000
Sales &
Mktg
IS Assessment
$25,000
Admin
IS Assessment
$25,000
Mfg
IS
Assessment
$50,000
Nature of costs is
unknown to receiver
Quarles: Flya Kite
45
FI/CO Transactions
EXERCISE FI/CO01: CREATE GENERAL LEDGER
B/S ACCOUNT
– We will create a bank account manually. A bank
account is an asset account located in the Balance
Sheet
EXERCISE FI/CO02: CREATE GENERAL LEDGER
GR/IR ACCOUNT
EXERCISE FI/CO03: CREATE P/L ACCOUNTS
– Now that the vendor account has been created, the
corresponding rent expense account is to be created
in your chart of accounts using a reference account.
Also, a utilities expense account is to be created.
Using a reference account copies much of the detail
data from the reference account to the account being
created thus saving time making repetitive entries.
Quarles: Flya Kite
FI/CO Transactions
EXERCISE FI/CO04: CREATE GENERAL LEDGER
P&L ACCOUNTS
– To process billing we will need Profit & Loss
Statement accounts for Sales Revenue and Sales
Discounts
EXERCISE FI/CO05: RUN GL ACCOUNTS REPORT
– This report will give you a summary of all
accounts assigned to your company code.
EXERCISE FI/CO06: CREATE PRIMARY COST
ELEMENTS
– Primary cost elements: are costs that arise through the
consumption of goods and services that originate from
outside the company. They represent the link between FI
and CO. This exercise creates the linkage between FI cost
elements (GL accounts in FI) and the cost element
categories to which they will link in CO.
Quarles: Flya Kite
FI/CO Transactions
EXERCISE FI/CO07: CREATE VENDOR
MASTER RECORD
– Flya Kite has rented new office space. The
accountant in charge is requested to create a new
vendor account for the real estate company.
EXERCISE FI/CO08: G/L DOCUMENT ENTRY
– You receive the utility bill for the month for the
plant and it must be paid immediately. The bill is
for $1,000. The expense must be recorded in the
General Ledger. It will be initially charged to the
Administration cost center and charged out to
manufacturing cost centers later.
EXERCISE FI/CO09: DISPLAY ACCOUNT
BALANCES (OR LINE ITEMS)
Quarles: Flya Kite
FI/CO Transactions
EXERCISE FI/CO10: POST VENDOR INVOICE
– Ross’ Rockin Rentals has sent the invoice for the
first month’s rent of $350. Please post the invoice
using the accounts you have created in your
Company code.
EXERCISE FI/CO11: DISPLAY ACCOUNT
BALANCES (AND/OR LINE ITEMS)
EXERCISE FI/CO12: POST OUTGOING
PAYMENT
– The invoice of Ross’ Rockin Rentals is due for
payment now. You are requested to clear the
invoice amount by posting an outgoing payment
using the bank account (no. 10000_ _ _) of your
chart of accounts.
Quarles: Flya Kite
FI/CO Transactions
EXERCISE FI/CO13: POST OUTGOING PAYMENT
– The invoice of Widgets & Things (created in the
Procurement Logistics exercises) is due for payment
now. You are requested to clear the invoice amount
by posting an outgoing payment using the bank
account (no. 10000_ _ _) of your chart of accounts.
EXERCISE FI/CO14: RECEIVE PAYMENT FROM
CUSTOMER
– A sale to a Crosby Trinkets was processed and billed
in the Sales Logistics system. That customer has
now received the invoice and sends you payment.
The payment will be posted to his G/L account.
Quarles: Flya Kite
FI/CO Transactions
EXERCISE FI/CO15: CREATE DISTRIBUTION CYCLE
– Distribution accomplishes the charging of primary costs from a
collection cost center to all of the cost centers that benefit from
the incurrence of that primary cost. Periodically, usually at the
end of the month, the primary cost element will be allocated
(charged) to the receiving cost objects. The distribution process
distributes the balance(s) from the original sender(s) to the
receivers. The original sender account is credited and the
original receiver account is debited by the distribution. In this
manner the distributed primary cost retains its identity in the
receiving cost object’s expense list.
EXERCISE FI/CO16: REVIEW ACTUAL LINE ITEM REPORT
– This exercise allows you to see how the rent expense cost
element has been distributed to the various receiving cost
objects using the statistical key figure set up as the basis for the
distribution.
Quarles: Flya Kite
FI/CO Transactions
EXERCISE FI/CO17: CREATE ASSESSMENT CYCLE
– With assessment both primary and secondary
postings can be allocated. You can define cost
allocation by assessment if the composition of costs
is not important for the receiver – for example,
receiver cost centers rarely require detailed
breakdowns of cafeteria costs. In our case, certain
charges from the local utility company are known to
be exclusively attributable to the Manufacturing cost
centers. Therefore, once a month the utility charges
are assessed from the Administration cost center to
the Manufacturing cost centers.
EXERCISE FI/CO18: REVIEW ACTUAL LINE ITEM
REPORT
– Review how the utility expenses have moved from
cost center to cost center as assessed costs with no
indication as to coming from the utilities cost element
750000.
Quarles: Flya Kite