SAP FINANCIALS

What is ERP?
ERP stands for Enterprise Resource Planning. ERP is a way to
integrate the data and processes of an organization into one single
system.

What is SAP ERP?

The ERP software application from SAP helps to improve operational
efficiency and productivity of business processes of the enterprise.

SAP ERP is a world-class, fully integrated application that fulfills the

core business needs of midsize companies and large organizations
across all industries and market sectors. It helps enterprises like
yours perform financials, human capital management, procurement
and logistics, product development and manufacturing, and sales and
service, supported by functionality for analytics, corporate services,
and end-user service delivery.

What is SAP ?
SAP stands for Systems Applications and Products in Data
Processing. SAP application provides the capability to manage
financial, asset, and cost accounting, production operations and
materials, personnel, plants, and archived documents.

1
This unit deal with the navigation of SAP and helps you through the
SAP interface.

SAP NAVIGATION COMPONENTS

An SAP screen can contain the following simple screen
elements:

Command field: You can start applications directly by entering

their Transaction Code in the command field (this is hidden as
default). You can find the transaction code for an application
either in the overview menu on the SAP Easy Access screen, in the
status bar (see below).

Menu bar: The menu bar is the top line of any primary window in
the SAP system. The menus shown here depend on which
application you are in. These menus may also contain cascading
menus.

2
Standard toolbar: The pushbuttons in the standard toolbar are
shown on every SAP screen. If they are not available in an
application, push buttons that you cannot use on that screen are
deactivated. If you place the cursor over a pushbutton for a short
time, the system displays a flag with the name or function of the
pushbutton. If appropriate, the corresponding function key setting is
also displayed.

Title bar: The title bar names the function that you are currently in.

Application toolbar: This shows the pushbuttons available in the

application that you are currently in.

Checkboxes: Checkboxes allow you to select several options from a

group of fields.

Radio buttons: You can only select one option.

Tab: This allows you to organize several screen areas to improve the
clarity.

Status bar: The status bar displays information on the current system
status such as warnings and errors. You can also change the
display variant to show, for example, the transaction code of the
transaction you are currently in.

Other elements include, for example, input fields and pushbuttons.

3
4
5
SAP CLIENT:
The client is the highest level in the SAP System hierarchy. Clients
are a commercially, organizationally, and technically self-contained
unit within an SAP System and definition of the same is obligatory.
Clients have their own master records and set of tables.
Specifications that are made or the data that is entered at this level
are valid for all company codes and for all other organizational
structures.
SAP Software contains only tables and charts (Approx. 28,000).
Client 000
This client is the SAP reference client. It is constantly extended and
must not be changed by customers. It can be used as a back-up
copy.

Client 001
Client 001 is a copy of client 000, with the exception that customers
can make changes here (Customizing).

Client 066
Client 066 is reserved for SAP access to customer systems to
provide remote diagnosis services such as Early-Watch® and Going
Live Tests.

Client 000 contains the following default settings:

Organization-specific data
Client 000 contains an example for each organizational unit. The key
is uniform, 01, 001, 0001, and so on.

Organization-independent data
Client 000 contains extensive default settings so that you can actually
start operating with a lot of these settings. In the Implementation
Guide (IMG), an attribute indicates which settings have to be made.

Log On Clients:
You log on with a three digit client key. The client must contain a user
master record. Ex: Client 800/600/500.

6
CONFIGURATION MANUAL
In SAP, Two menus; 1. SAP Menu 2. SAP IMG Menu

SAP Menu: This will be used by SAP Customer for SAP End user operation
(Production Client).

SAP IMG Menu: This menu will be used by Consultants for customization. IMG
means Implementation Guide.

1) DEFINE COMPANY : /NOX15

(Defining Company is not a configuration. Here just we type Head Office Address
with codification to link to all Company Codes (Branches) to get consolidation report
of all Branches.)

(Transaction Code can be entered in Command Field with prefix of /N for all
Transaction Codes. Here prefix /N will close the current session and go to next
session. In case of /O the existing session (screen) will be minimized and can go to
next session. We can open maximum 6 sessions in /O mode.)

The Organizational Structure is defined within the Corporate Structure segment of

the IMG. Organizational Units can be created directly or by copying and, if
necessary, modifying existing Organizational Structures. Establishing the
Organizational Structure in the system tends to be the responsibility of the FI/CO
team on implementations. It must be created before other modules begin their work
because they are dependent on the Company Code definition.

In SAP, defining Company is optional. But defining Company Code is compulsory.

Here Company means, in SAP Language we call it as Internal Trading Partner. After
defining Company Codes (branches of the Company), we assign all Company
Codes to Main Company for Consolidation purpose.

Path: SPRO (IMG)> Enterprise Structure>Definition>Financial

Accounting> Define Company
Select ‘New Entries’

7
 Company HALDL (Alphanumeric Character limits: 6)
Company Name Hindusthan Aeronautics Limited
(Fill up all other details if available)
City New Delhi
Country IN
Language EN
Currency INR
SAVE

2) DEFINE COMPANY CODE :-/NOX02

A Company Code is an independent accounting entity in R/3, for example, a

company within a corporate group. It is designated with a four-digit alphanumeric
key.
Balance sheet and profit & loss statements required by law are created at the
company code level.

8
Company Code is important in SAP FICO Configuration. For example BHEL is
Company Code for Bharath Heavy Electricals Ltd., In every step of configuration and
reporting in SAP, Company Code is compulsory. Normally Company codes will be
defined numerically. (2210, 5510, 2000, 3000 and the like) Here we have referred
2500 as Company code for HAL International Ltd.,

Path: SPRO> Enterprise Structure> Definition>Financial Accounting>Define

Copy, Delete, Company Code. Double Click on ‘Edit Company Code Data’

Steps :- Select New Entries

Company Code 2500
Description HAL International ltd.
City Bangalore
Country IN
Currency INR
Language EN
Save
In big screen, enter company name and address
Enter Country IN ( it is an mandatory entry )
Enter

9
2) Edit Copy Delete Check Company Code (TC: /NEC01)

Same path as above.

We go to this option only in the following cases. 1) To copy foreign company
Ledgers. (Pre-defined in SAP). 2) To copy one Company Code to another company
code (We have done configuration of Bangalore Co. Code and same configurations
want to copy to Hyderabad company code.) 3) to delete Company Code.

3) Assign Company Codes to Company /NOX16

Select ‘Position’
Type ‘Company Code(s)’
Assign Company (HALDL) to all Company Code(s). And SAVE.

10
 Business Area

Business Area will be defined to get segment wise reports of Company activities.
These Business Areas and Profit Centre Accounting are meant only for company
internal reporting purposes. End-user has to define Business Area for each
transaction, while making entries. Business Area is optional for any Company, may
be Product-wise (Soap, Detergents etc.,) or Region-wise (Bangalore, Hyderabad,
etc.,). Business Area is independent. Once defined can be used by any number of
company codes. Business area and Profit Centre Accounting both are meant for
internal reporting purpose.

Business Area means how much business done in this Area (Additional Reporting).
Area may be region/Products/Units. This area will be decided by SAP Customer
employees as per their company policy for reporting.

If company has under-taken diversified small business, example Real Estate.

Company can use Real Estate as Business area.

11
3) Define Business Area T C:/NOX03
Path :-SPRO > Enterprise Structure > Definition >Financial A/cing >
Define Business Area
Select New Entries

Business Area Description

1100 North Bus Area
1120 South Bus Area
TURB Turbine Bus Area
SOAP Soap Bus Area SAVE

Fiscal Year Variant

Fiscal Year Variant: V3 is system defined Accounting year stands for Apr to March
+ 4 Special Periods.(suits Indian type industries). 4 Special Periods is meant for
making entries like posting audit, any adjustment entries, Closure entries, and the

12
like. After March (12th period), system will not allow to make entries for the month of
March as Marcvh period is closed for posting. End-user has to post entries related to
March by mentioning in period field 13/14/15/ or 16. All these entries will go to March
Period only. Special posting periods 13,14,15 & 16 is extension of March month
only.

K4 Stands for Jan to Dec Accounting Year with 4 Special Periods, and most of the
foreign countries refer K4.

(If you want to create your own Accounting Year and assign to Company Code, TC:
/NOB29. Select New Entries and define any 2 characters, number of posting periods
mention 12 and Spl. Posting periods as 4 and Save. Now select your Variant (2
Characters), and click on ‘periods’, left side. Select “New Entries”.

Here you have to define -1 for periods January, February and March, which
indicates data belongs to previous year for reporting).

4) Assign Fiscal Year Variant to company code T C: /NOB37

Path :-SPRO >Financial A/cing> Financial A/cing Global Settings>Ledgers>Fiscal
year & posting period>assign company code to fiscal year Variant
.
Select Position
Company Code 2500
Enter V3
Save

13
Chart Of Accounts:

 Operating chart of accounts

The operating chart of accounts contains the G/L accounts that

you use for posting in your company code during daily
activities. Financial Accounting and Controlling both use this
chart of accounts.

You have to assign an operating chart of accounts to a

company code.

 Group chart of accounts

The group chart of accounts contains the G/L accounts that are
used by the entire corporate group. This allows the company to
provide reports for the entire corporate group.

The assigning of an corporate group chart of accounts to a

company code is optional.

14
  Country-specific chart of accounts

The country-specific chart of accounts contains the G/L

accounts needed to meet the country's legal requirements. This
allows you to provide statements for the country's legal
requirements.

The assigning of an country-specific chart of accounts to a

company code is optional.

5) Edit Chart of Accounts T C:/NOB13

Path :-SPRO > Financial A/cing > G/L A/cing > G/L A/c Master A/c
Preparations > Edit Chart A/c List

(Chart of Accounts: means list of ledgers .)

Select New Entries

Chart of Accounts 2500
Description Chart of A/c for 2500
Maintain language English
Length of G/L A/c no. 6
(6 stands for No. of digits assigned for ledger
creations. Maximum 10 digits can be defined in SAP.)

Save

15
6) Assign Chart of A/c to company code T C :/NOB62
Path: - same as above
Select Position

Type company code 2500

Enter
Type company code (2500) in the first column of chart/a/c.
Save

16
 Define Account Group

7) Define Accounts Group

Path: - same as above T C: /NOBD4

Select New Entries

Chart of A/c Name From A/c No To A/c No

A/c Group
2500 SCPL Share Capital A/c 100000 100099
2500 RSPL Reserves & Surplus 100100 100199
2500 SCLN Secured Loans 100300 100399
2500 UNSL Unsecured Loans 100400 100499
2500 CLPR Current Liabilities 100500 100599
2500 FAST Fixed Assets 200000 200099
2500 CAST Current Assets 200100 200199
2500 ACDN Accumulated Depreciation 200200 200299
2500 SALE Sales 300000 300099
2500 OTHR Other Income 300100 300199
2500 INCR Incr/Decr in Stock 300200 300299
2500 RMCN Raw material consumption 400000 400099
2500 PRSN Personnel staff cost 400100 400199

17
2500 MFRG Manufacturing Expenses 400200 400299
2500 ADMN Administrative Expenses 400300 400399
2500 INTR Interest 400400 400499
2500 DEPR Depreciation 400500 400599
Save

While assigning From & To numbers for Accounts group, starting number
1=Liabilities, 2=Assets, 3=Income and 4=Expenses category. This Account Group
represents P&L Account & Balance Sheet.

TO COPY ACCOUNTS GROUP (within SAP software): /NOBD4

1. Identify the Chart of Accounts which you want to copy. Say, for example
2500. New Chart of Accounts may be 2501
2. Select Position
3. Type in Chart of Accounts “2500”, Ignore Accounts Group, Enter
4. “2500” Accounts Group will be displayed in proper manner.
5. Select all Accounts Group one by one by clicking (by Mouse) on 1st column
(the square box before Chart of Accounts column).
6. Now, press F6
7. Now it is copied to screen. Replace the existing Chart of Accounts column
(“2500”) by your new chart of accounts 2501, very carefully. While executing
this process, do not hit enter key.
8. After all replacing, now hit Enter key.
9. Now Save the Data.

18
 RETAINED EARNINGS ACCOUNT:

Profit & Loss Account

Dr. Cr.

To By

Expenses Ledgers Income Ledgers

Total 8,00,000 Total 10,00,000

Balancing Amount 2,00,000

(Net Profit)

This Net Profit should be transferred to

Balance Sheet Ledger: Retained Earnings
A/c.
This transfer function will done by Key “X”

19
 Balance Sheet
Liabilities Assets

Retained Earnings A/c 2,00,000

8) Define Retained Earnings A/c

Path: -Same path as above T C: /NOB53
Chart of A/c Company Code 2500
P&L A/c A/c No.
X 100100

Save, (message: “Account 100100 is not created”, this means simply we are
assigning Retained Earnings Ledger Number and we have not created any Ledger.
Once we start creating General Ledger, first create this Retained Earnings Account
as it is SAP Processing Ledger.) Now, ignore the message and enter

Here we have defined Account No. 100100, because this Retained Earnings A/c
ledger falls under Reserves and Surplus Account Group, hence we have defined first
Ledger Number of Accounts Group.

Here, ‘X’ is SAP delivered key. It activates carry forwards of Profit to Balance Sheet
and it also activates to create P&L Ledgers.

9) Define Posting Period Variant T C:/NOBBO

Path: - SPRO>Financial A/cing>Financial A/cing Global Setting>Ledger>fiscal
year & Posting Period>Posting period>Define variant for Open Posting

20
 Period
Select New Entries
Variant Name
2500 Variant for 2500
Save

Open & Close Posting Periods

10. Open & Close Posting Periods

(Here we are opening Accounting Periods for posting vouchers. Here In-
charge will open in which month End user has to post vouchers)

Path: - Same as above T C :/NOB52

Select New Entries
Variant A From To Per Year Per Year Per Year Per Year
2500 + 1 2017 12 2018 13 2018 16 2018

Save
Maintaining Posting Periods
For technical reasons, for each posting period variant you need an entry .+.
that is valid for all account types. The columns for the account number
interval must be empty.

21
 The period intervals defined for the .+. entry specify the periods that can be
posted to in a variant. When you enter the posting date in the document
header, the system uses the entry for the account type .+. to check whether
the period determined can be posted to. If all account types are to be open at
the same time, the minimum entry .+. is sufficient.
(Practically this posting periods will be open by each month-wise. In the
period 1 column define Current Month and Current Year and period 2 define
Current Month and Current Year with ‘+’ mark in Account Type and Save.
Now End user can make entries only in that Current Month and not permitted
to post in the previous/next month. And for special posting periods there will
be no such restrictions.) Open Posting Period for Current Month only:

Assign posting period variant to company code

Different Company Codes can be assigned with same posting period variant
provided, all Company Codes uses the same Accounting year.

11) Assign posting period variant to company code

Path: - Same as above T C: /NOBBP

22
Select Position
Company code 2500
Enter
Type Company code 2500
Save

Document Type:

11a) Define Document Type: (TC:/NOBA7) These Document Types are system
defined. If required, we can define our own Document Type. In Accounts
language, we call types of Vouchers. For ex: Purchase Voucher, Sales voucher,
Debit Memo Voucher, Credit Memo Voucher and the like. Once we receive the
Vouchers, we mark manually the Voucher numbers and then we make entries in
computer. In SAP Language we call Vouchers as Document Type. And these
Document Types should be assigned with No. Ranges (Without this No. Range,
the system will not allow you to make any entries.) Purpose of No. range is, the
system will do automatic numbering for all the entries. But while defining number
ranges for each document type, we have to define respective document type
number while defining number ranges in number column. These Document

23
 Types we are going to treat in A/cs Payables, A/cs Receivables and Asset
Accounting.

2) Define Tolerance Group for G/L A/c T C :/NOBA0

Path: -SPRO>Financial A/cing>G/L A/cing>Business Transaction>
Open Item Clearing>Clearing Differences>Define Tolerance Group for
G/L A/c
Example: we have made provisional entries as TDS Payable Rs. 5000
(Credit ), while executing payment of TDS , permitted difference is Rs.
100 (Below case), we can execute TDS Payment Rs. 4900 (Debit). Is
allowed.Less than Rs. 4900, system will not allow to post.

Select New Entries

Co.Code Group Description Debit Credit % Dr % Cr
2500 Tolerance 100 100 1 1
group for
2500
Save

24
 Define Tolerance Group for Employees:

12a). Define Tolerance Group for Employees. TC:/NOBA4

(This configuration depicts permitted postings for Endusers)
Select New Entries
Enter Company Code
Ignore Tol Group
In per document column enter 9999999999
In item document column enter 99999999
In percentage column enter 5%
Now Save data.

This configuration enables end-users to make entries.(Employees means here SAP-

End Users. Through this option we can control End-Users postings per Document.
For example, if we define 1,00,000 in amount per document field, End user will not
be able to post amount more than 1,00,000 per voucher/document.)

We can assign as per category-Accounting Clerks, Accounts Manager

(Transaction Code:/NOB57), the tolerances by defining tolerance group will

25
be assigned to respective category. For example: Tolerance group ABC1 and
configure the following tolerances:

(We do this authorization of SAP End user postings at the time of Go-Live.)
Accounting clerks:

500,000 units of local currency per document

100,000 units of local currency per open item

5% cash discount

We can define tolerance group ABC2 and assign following tolerances:

Accounting manager:

1,000,000 units of local currency per document

500,000 units of local currency per open item

10% cash discount

26
 Field Status Variant::

Field Status Variant: Here we copy all voucher fields from SAP source, for end-user
operation purpose (to post Voucher entries), this is more concerned with Document
type where all voucher formats will be copied to our Company code. Here we can
make fields as Suppress (fields will not be displayed), required (mandatory fields) or
Optional, as per company policy for reporting option and entry option.

13) Maintain Field Status Variant T C: /NOBC4

Select 0001 (Select means you have to click before 0001 column) and then
Press F6
Delete 0001, and type 2500 (Company Code) Enter

Click on Copy All Enter & Save

Select 2500 (Company Code )
Double click on “Field Status Group” (left side)
Double click on “ General Text (G001)”
Double click on ‘General Data’ (Blue Line)

27
Select Required Entry Radio Button for Text
Select next group icon (to the left top)
Select Required Entry for Business Area
Save
Do the same procedure for G005 also.

14) Assign Field Status Variant for Company Code T C:/NOBC5

Select Position
Type 2500 (Company Code)
In Field Status Variant column Type 2500 (Company Code)
Save.

15) Defining No. Ranges for Document Types:

TC:/NFBN1/NOBA7

(You can define in FBN1 if you know document type number directly.)

01 (system defined) and Document Type SA, both are same, stands for G L Entries.

X1 stands for Recurring Entries (means End-user use this option to make entries
which will occur every month, like Rent payments, loan Payments, where the End
users store ready-made journal entries in SAP, and while making entries, just they
will change Date and post it.)
X2 stands for Sample Document entries. (This option will be used by End-user for
storing Provisional Entries).

Go to document type (/NOBA7), select “position”. type Doc. Type SA, Enter. Select
SA, click on 2nd icon (Details icon). Remember No. Range 01 (system define), now
click on No. range information.

Enter Co. Code: 2500

Select 2nd Interval (Change Interval button)
Select Interval Button (Insert Interval button)
In No. column type 01 (G L Entries))
Year: 2017

From No. (keep cursor in this column and press F4. You will find Intervals starting
with No.1, just hit Enter key.) Now move the cursor to To No. column. Delete
99999999 and type 1000 or any increasing No. In the next column, don’t type
anything (in 0 column). This 0 column gives the status of entries. (i.e. number of

28
entries made.) Just move the cursor from box. Now hit Enter key and Save. Ignore
messages and hit Enter.

29
GENERAL LEDGERS CREATION: /NFS00

General Ledger contains two segments:

1. Chart of Account Segment

2. Company Code Segment.

30
31
To create General ledgers, type Transaction Code /NFS00 in Command Field. You
have to enter first G L Account No. to create and type Company Code and then
Select to the right 3rd icon (create).

Then you have to select icon in Accounts group field by clicking on it. Select right
Accounts Group for each Ledger. For example to create Cash Account Ledger,
Select Current Assets group. And then in Short Text (mandatory) type Ledger Name:
Cash Account. The long text can be used if Ledger name is too long. Then click on
Control Data Tag, Select Local Currency Check Boxes (for Balance sheet Ledgers).
(When you are selecting Open Item Management Check Box, select this local
currency check box also.). Select Line Item Display check box for all types of
Ledgers. Define sort key as the case may be. Click on Create/Bank/interest Tag,
Enter in Field Status Group Field G001/G005/G067 as the case may be, depending
on nature of ledgers. Now, Save. (While configuring Ledgers, carefully read Page
No. 34).

15) Creation of General Ledger A/cs T C:/NFS00

G/L A/c Ledger Name Sort Fld,Sts, Select Check

No Key Group Box
100100 Retained Earnings A/c 001 G001
100000 Equity Share Capital 001 G001
200100 Cash A/c 001 G005 Relevant cash
flow
400100 Salaries A/c 001 G001
400300 Rent A/c 001 G001
100500 O/S Exp 001 G001 Op.Item Mgt
100300 IDBI loan A/c 001 G005 Relevant to
Cash Flow
400400 Interest A/c 001 G001
100505 TDS Tax Payable A/c 001 G001 Op.Item Mgt
100506 Surcharge Tax Payable 001 G001 Op.Item Mgt
100507 Edn Cess Payable A/c 001 G001 Op.Item Mgt

32
G/L A/c Ledger Name Sort Field Reconciliation
No Key Status A/c Type
Group
100501 Sundry Creditors A/c 012 G067 Vendor
200120 Inv. Raw Material A/c 001 G006
200101 ICICI Bank A/c 001 G005 Relevant
cash flow
200150 Adv to Vendors A/c 012 G067 Vendor
300101 Cash Discount Received 001 G001
A/c
200111 Sundry Debtors A/c 031 G067 Customer
300000 Sales A/c 001 G029
100502 Adv From Customer A/c 031 G067 Customer
100503 Output Vat A/c 001 G001
200125 Input Vat A/c 001 G001
200010 Land A/c 018 G007 Asset
200011 Building A/c 018 G067 Asset
200012 Plant & Machinery A/c 018 G067 Asset
200013 Furniture & Fixtures A/c 018 G067 Asset
200014 Vehicle A/c 018 G067 Asset
200015 Capital Work in Progress 018 G007 Asset
A/c
200211 Acc Depn Building 018 G067 Asset
200212 Acc Depn Plant & M 018 G067 Asset
200213 Acc Depn Furniture 018 G067 Asset
200214 Acc Depn Vehicle 018 G067 Asset
300100 Asset Sale 018 G052
300110 Clearing A/c-Rev 018 G052
300111 Profit on Asset Sale 018 G052
400310 Loss on Asset Sale 018 G001
400311 Loss Due to Scrapping 018 G001
400500 Depreciation A/c 018 G001
200160 Sundry Debtors Bill of 031 G067 Customer
Exchange A/c

33
GENERAL LEDGERS CONFIGURATION:
1. Balances in Local Currency: Select this checkbox for all Balance Sheet
Ledgers except Sundry Creditors, Sundry Debtors and related ledgers (where
foreign exchange is involved). This selection is optional for other Ledgers. If you are
selecting Open Item Management Checkbox, select this balances in Local Currency
checkbox also.

2. Tax Category Checkbox: Define * (star) here to activate VAT for Sales and
Purchases Ledgers. This should be done after configuring VAT.

3. Reconciliation Account Type: Select this checkbox only in case of

Reconciliation Accounts. i.e., for Sundry Creditors Ledgers select Vendors, for
Sundry Debtors Ledgers select Customers and for Assets Ledgers select Assets.
Select in Field Status Group G067 for all Reconciliation Accounts.

4. Open Item Management Checkbox: Select this Checkbox only for

Ledgers “to be cleared”. For example, ledgers like Payables, Receivables,
Outstanding Expenses, GR/IR Accounts and Clearing Accounts. Ledgers to be
cleared in a short while- like Auditors Fees Payable, Bonus Payable, Rent Payable
and the like select this Open Item Management Check Box.

GR/IR Account (under MM Module): Goods Receipt and Invoice Receipt Account.
Once we receive materials, we check with Invoice & Quotation whether materials
supplied as per Invoice, i.e., quantity, quality, etc., at this stage, we make part
payment to Vendor. Any shortage or low quality in materials supplied, we hold the
payment. Once it is cleared from Vendor, we make balance payment.
GR/IR Account is the best example for ‘Open Item Management’. It is a temporary
Account.
5. Line Item Display Check box: Select this Checkbox for all types of
Ledgers, as it gives Date-wise Ledger printout, which is must for
Reconciliation/Date-wise Verification of Accounting entries.
6. Sort Key: System defined. Select 001 for all general types of Ledgers. 012 for
Sundry Creditors Ledgers, 031 for Sundry Debtors Ledgers and 018 for Assets type
ledgers. This Sort Key indicates how we want report.
7. Field Status Group: Types of ledgers:
- for Cash/Bank type Ledgers select G005 and Relevant to Cash Flow check
box
- Reconciliation Accounts: Select G067 (or G012) for Sundry Creditors,
Sundry Debtors and Assets Ledgers.
- Any other types Ledgers select G001.
- For Assets having no depreciation G007
- For Sales/Revenue type of Ledgers select G029.

34
To display already created Ledgers:

In FS00 option, select in tool bar Settings-Hierarchy Display. Then in Pop-up box
select Display Accounts Radio Button and hit enter 2 times. Now, in Command Field,
type /NFS00 and Enter. Now you will find Accounts Group in left hand side. To
display Ledgers created, click on A/cs Group icons. To close this option, select
Settings-Hierarchy Display, in pop-up box select Do not Display Accounts Radio
Button and hit Enter 2 times. Now in Command Field type /NFS00 and Enter. You
will come to normal screen.

G L Entries:
(Post Key 40 stands for Debit, Post key 50 stands for Credit, system defined)

Now Journal entry: Rent A/c Dr 5000

To Cash A/c 5000
(Being Rent paid for the month of…..)
TC:/NF-02
Enter Doc Date (current Date/Voucher Date), Posting Date (on which date you are
making entry)(Press F4 first and then press F2 to get current Date.)

Postkey 40 Account (Press F4, Enter and select which Account you want to Debit
(Rent A/c), Enter
In Amount 5000
Business Area: (click on icon in the same field, and select. But the same Bus Area
should be selected in the Credit entry also.)
Text: (narration) Rent Paid for the month of …..
Postkey 50 Account (same procedure and select A/c to be credited (Cash A/c)
Enter
In amount * (This ‘Star’ copies amount from Debit entry)
Bus Area : (same as in Debit entry)
Text: + (This ‘+’ copies text from Debit entry)
Enter. In top (Tool Bar) Select Document-Simulate
Journal entry will be displayed.
To post, Save.
Document is posted.

35
To view Ledger: TC:/NFS10N
Enter G L A/c No. (For which you have made entry)
Co. Code 2500
Fiscal Year 2017
Bus Area :( which you have selected while making entries)
In Top left you will find one clock-type icon, click on this (Execute) icon.
Ledger will be displayed.

BLOCKING G L MASTER:

(Purpose of this blocking is no End-user should make entry to these Ledgers which
they are not authorized to make entry.)
In TC:/NFS00 option, first type in G L A/c No. field, which Ledger(s) you want to
block and select in Top-G L Account-Block
You will be displayed with blocking option.
Select all Check Boxes and Save.
Try to make entry to these Ledger(s) through TC:/NF-02.
To remove Blocking, same procedure deselect all the Check Boxes and Save.

EXERCISE:

TO COPY COMPANY CODE TO COMPANY CODE

This configuration is to copy General Ledgers and No. Ranges from

one company code to another. By doing this configuration, one can
save time in creating General Ledgers and No. Ranges, for new
company code. But both the company codes should have same
accounting year.
Here Source Company Code means from which company code you
want to copy. (In the source company code, you should have done G
L Creations and No. Ranges.)
Procedure:
1. Create New Company Code
2. Go to /NEC01
Select 2nd Icon.
From Co. Code : (Select Source Co. Code to Copy)
To Co. Code: (New Co. Code)

36
 Enter.
3. Message: Copy GL Accounts? Select “Yes”
4. Message: Copy No. Ranges? Select “Yes’
5. Assign Source Co. Code Ch of Accounts to New Co. Code /NOB62
6. Assign Field Status Variant of Source Co. Code to New Co. Code
(/NOBC5)
Now in New Company code, view Ledgers : Go to /NFS00
View No. Ranges copied: Go to /NFBN1
Assign V3 through /NOB37 and in /NOBBP, assign posting period
variant of copied co code to new co code.

Customization of Foreign Company Code:

1. Create Co. Code for Australia-based company.Code: AB10

2. /NEC01. Select 2nd Icon (copy organization object).
3. From: 1000 To: AB10
4. copy G L ? Select “Yes”
5. Change local Currency? “Yes” Define AUD
6. Ignore messages, hit Enter.
7. Transport No. Ranges? “Yes”. Enter
8. Assign Accounting Year K4 for Co. Code AB10
9. /NOB62. Assign in both the columns INT and GKR to Co. Code AB10
10. Assign Posting period Variant 1000 to Co. Code AB10
11. /NOBC5, Assign 1000 to Co. Code AB10
12. /NFS00. Check General Ledgers in AB10..

Handling customization issues

1. Create New Company Code.

2. Go to /NFS00, try to create G L A/c No. 100100 in New Co. Code. Note down
the error. Solve the issue. After solving issue, again go to /NFS00, try to
create Ledger. Note down error and solve it.
3. Once you are able to create General Ledgers, create 1. 100100 Retained
Earnings A/c 2. 200100 Cash A/c 3. 400300 Rent A/c.
4. Now go to /NF-02, try to post entry Rent A/c Dr. to Cash A/c. Note down error
and solve it.

37
Client-level configuration: Configurations done at client-level, can be assigned to
any company code(s), if it is matching the requirement. Example: Chart of Accounts,
Fiscal Year Variant, Field Status Variant, Interest ID, Tax Types, Account group for
Vendors/Customers, etc.,
Company code level configuration: Configuration done at company code level
cannot be assigned to any company code. Example: General Ledgers,
Vendor/Customer Name, etc., But can be copied to other company code(s).

FOREIGN CURRENCY POSTING

This foreign currency posting is not a configuration work, but the system will not
accept any foreign currency conversion entries until you define foreign currency
rates.
G = stands for Standard Translation at Bank Buying Rate
B = stands for “ “ Bank Selling Rate
M = stands for “ “ Average Rate
P = stands for “ “ Cost A/c planning
(Whole activation and defining foreign currency rate depends on Date)

Define Translation Ratio for Currency Translation:

38
TC:/NOBBS
Select “Y” for the message.
Select New Entries

ExRate From To Valid From Ratio From Ratio To

Type
G USD INR 01.04.2017 1 1
B USD INR 01.04.2017 1 1
Save. (Here, Ratio 1 activates the system for calculation)
Here we are activating USD. If Company having any business transaction with Japan
activate Yen, for Australia, activate here AUD and the like. Then only we can define
rates in Exchange rates.

Enter Exchange Rates:

(This will be done by the End-users on everyday/defined days.)
TC:/NOB08
Select New Entries

ExRate Valid From Indirect From Direct To

Quotation Quotation

M Current Dt. (Blank) USD 47 INR

Save.
(Normally Companies prefer M Type Exchange Rate.)

To enter translation Ratio:

TC:/NOBA7
Select Position
Enter Doc Type: SA
Select SA
Select in top Details Button

Under Default Values- Ex Rate type:M

Save.

Now pass an entry (F-02) with changing currency from INR to USD (below Company
Code) and view ledger also.

39
 INTEREST CALCULATION

There are two types of interest calculation

1) Balance Interest Calculation: S type –used for G/L A/cs (If the Co. has taken
loan from Bank, to calculate Interest amount to pay .)
2) Item Interest Calculation: P type –used for Vendors/Customer (If payment is
overdue from Customers or due from Vendors here we define Interest.)
(Interest indicator may be defined by any 2 characters. For each Rate of Interest,
you have to define different Interest IDs and separate Loan Ledgers)
General Ledger A/c Balance Interest Calculation
1) Define Interest Calculation type T C: /NOB46

40
 Select New Entries
Interest Indicator No. or Name SI
Name 12% P A
Interest Calculation type: S Save

2) Prepare A/c Balance Interest Calculation T C:/NOBAA

Select New Entries
Interest Indicator SI
Interest Calculation Frequency 01
Calendar type G
Select Balance plus Interest check box
Save
3) Define Reference Interest Rate T C: /NOBAC
Select New Entries
Reference Interest Rate SI12%
Short or Long text 12% PA
Date From 01/04/2017
Currency INR
Save

4) Define Time Dependent Terms T C: /NOB81

Select New Entries

Interest Indicator SI
Currency INR
Effective From 01.04.2017
Sequential Number 1
Text Select Credit Interest Balance Interest Calculation method
Reference Interest Rate SI12%
Select Next Screen Button
Interest Indicator SI
Currency INR
Effective From 01.04.2017
Sequential Number 2
Text Select Debit Interest Balance Interest Calculation method
Reference Interest Rate SI12%
Save

41
5) Define Interest Rate Values T C: /NOB83
Select New Entries
Reference Interest Rate SI12%
Effective From 01.04.2017
Interest Rate 12
Save
6) Creation of G/L A/cs: 1)G L A/c No. 100300(Under A/cs Group: Secured
Loan) IDBI Loan A/c (After defining FSG:G005, Define Interest Indicator ‘ SI’. 2)
G L A/c No. 400400 Interest Paid A/c (under A/cs Group: Interest) 3) G L A/c
No. 200101 UTI Bank Curr A/c (under Current Assets)
If you have already created above ledgers, just assign Interest Indicator to Loan
Account Ledger.)
7) Prepare G/L A/c Balance Interest Calculation T C: /NOBV2
Select Symbol button
Select Account button
Chart of Account 2500 Enter
0002 INR 400400
2000 INR 200101
Save. (These 0002 (Interest paid) and 2000 (G L Account paid) are system defined.)

(To know the results of Interest calculation, we have to make 2 entries: 1. Loan
received from Bank and 2. Repayment of loan. But you have to make these
entries in the previous month, (If you are in Sept. month make these two
entries on 1st of Aug loan recvd and loan repaid on 30th of Aug. Reason is, you
have to calculate Interest for one month. Your Entry, Loan received and loan
repayment should have at least 30 days gap.)

8) a) Pass a journal entry for receiving loan T C:/NF-02

Posting Key 40 Stands for Debit and Posting Key 50 Stands for Credit.
Document Date 01.08.2017 (one month previous date )
Posting Date 01.08.2017
Document Type SA Company Code 2500
Posting Key 40 200101 Enter
Amount 100000
Business Area (Select from system)
Text being loan received from IDBI bank

42
Posting Key 50 Loan A/c no.100300 Enter
Amount *
Business Area (Select from system)
Value Date: 01.08.2017 Text +
Enter
Document-Simulate- Save

b) Pass a journal entry for repayment of loan installment

Document Date 31.08.2017
Posting Date 31.08.2017
Document Type SA Company Code 2500
Posting Key 40 IDBI loan A/c 100300 Enter
Amount 12500
Business Area Select from system
Text being 1 installment paid to loan a/c
st

Posting Key 50 200101 Enter

Amount *
Business Area (Select from system)
Value Date: 31.08.2017 Text +
Enter
Document-Simulate- Save
(Note: Business Area should be the same)
9) To Run Interest Calculation T C: /NF.52
Chart of Accounts 2500
G/L A/c No 100300 (Loan A/c)
Company Code 2500
Calculation Period From 01.08.2017 To 31.08.2017
Currency INR
Select Standard Interest Calculation
Select Additional Balance
Select Post Interest Settlement
Select Update Master
(Session Name: This is a temporary name just to run the interest cycle and once
interest is posted this session name will disappear. Hence you can define any
numeric or alphabetic as session name.)
Session Name {Variant} 1456 Save
Variant 1456
Description Interest for the month Save
Execute (Click on left top clock type Icon). (Now SAP will display chart relating to
entries made and interest amount to post)

43
In Toolbar select System-Service-Batch Input-Session (Click on Session)
Select Variant (Session name) 1456
Select Process
Select Radio Button Display Errors Only
Select Process (If you have made Business Area as mandatory, system will
display voucher entry or else select “Exit Batch Input Session”.)
Enter Text Being Interest Posting
Posting Key 50 Loan A/c 200101 Enter
Enter Business Area Enter
Enter Text Being Interest Posting for the month
Posting Key 40 Interest A/c 400400 Enter
Enter Business Area Enter
Amount *
Text + Enter
Enter Business Area Enter & Save
Select Exit Batch Input Session

To verify your entries go to T C: FS10N

G/L A/c No. 400400 (Check 200101, 100300 also)
Company Code 2500
Fiscal Year 2017
Business Area {Business Area should be the same }
Execute(click on Clock type Icon on top left) you can see the report on your screen.
For repeated practice of Interest Calculation, in the same Co. Code create same 3
General Ledgers, i.e., Bank Loan A/c, Bank Current Account and Interest Paid A/c
with different G L numbers. Ex; You have already practiced with 100300 Bank Loan
A/c, 200101 Bank Current A/c and 400400 Interest paid A/c. Now create GLs
100301, 200102 & 400401.

44
ACCOUNTS PAYABLE

45
K=stands for Vendor A= stands for Document

R=stands for Invoice Z=stands for Payment

KR=stands for Vendor Invoice (Purchase entry)

KA=stands for Vendor Document (Down payment)

KZ=stands for Vendor Payment (Outgoing payment)

(Accounts Payable & Accounts Receivable is Sub-Ledgers. For these Sub-Ledgers,

main General Ledgers are Sundry Creditors and Sundry Debtors respectively.)

46
Determination of requirements: The user department responsible can manually pass
a requirement for materials to the Purchasing department via a purchase requisition.
If you have set a MRP procedure for a material in the material master, the R/3
System automatically generates a purchase requisition.

Determination of the source of supply: The R/3 System helps the buyer determine
possible sources of supply. You can use determination of the source of supply to
create requests for quotation (RFQs) and then enter the quotations. You can also
access existing purchase orders and conditions in the system.

Vendor selection: The system simplifies the selection of vendors by making price
comparisons between the various quotations. It automatically sends rejection letters.

Purchase order processing: The system facilitates data entry by providing entry
aids when you are entering purchase orders.

47
 Purchase order monitoring: The buyer can monitor the processing status of the
purchase order online at any time and can determine whether goods or an invoice
have been received for the relevant purchase order item. The system also supports
reminder procedures.

Goods receipt: The system compares the goods receipt quantity with the purchase
order quantity.

Invoice verification: Vendor invoices are checked for accuracy of prices and
contents.

Payment Processing: Financial Accounting normally deals with Vendor Payments.

Vendor Master Data Creation:

Here we have to define types of Vendors by creating Account Groups. This will help
in controlling and copying Vendors. For example for computer suppliers, we can
create one group, for materials suppliers, one group and the like.

1) Creation of Vendor A/c Groups TC : /NOBD3

48
The Account Group:

- Controls the numbering for the Customer/Vendor Master Record. A Number Range
is assigned to an Account Group. Number Ranges can be defined that either allow
the system to automatically assign a number to a master record or allow the user to
manually assign a number to a master record. Number

- Determines which fields will appear on data entry screens along with their data
entry status.
- Is used to designate one-time accounts.
- You can define several Account Groups for Customer master records.
- Each Customer master record can be assigned to ONLY ONE Account Group.

Select New Entries

Type Account Group CMP ( any alpha numeric character )
Description Computer Vendors for 2500
Double click on Company Code Data
Double click on Account Management
Make Reconciliation A/c Required Entry
Make Cash Management Suppress Save
Select Next Entry button
Give Account Group MAT ( any alpha numeric character )
Description MM Vendors for 2500
Double click on Company Code Data
Double click on Account Management
Make Reconciliation A/c Required Entry
Make Cash Management Suppress Save

2) Define Screen Layout for the Company Code

Path : IMG>Financial A/c>A/c Receivable & Payable>Vendor A/c >Master
Data>Preparation for creating Vendor Master Data>Define Screen Layout for the
Company Code
Select New Entries
Type 2500 (Company Code ) Save

3) Create No. Range for Vendor Account Group TC: /NXKN1

Path : IMG>Financial A/cing>A/c Receivable & Payable>Vendor A/c>Master Data>
Create No. Range for Vendor A/c group

49
Select Change Interval button (second Interval button)
Select Interval button
In No. column enter (for ex: 10) any free numbers (Refer already created No.
Ranges list and identify the No. which is not defined. You have to define new No. in
No. column.) After entering No., in From Number column Press F4 Select any free
interval and enter. In To Number column delete all 9s and type any increasing
number (for ex: 1 to 1000). Don’t type anything in current (0) column as this column
gives status of entries made. Move the cursor out of box and Enter and then Save.
Ignore messages and Enter. (Wherever you come across creation of No. Ranges,
same procedure you have to follow.)
Again select Interval button
Type the number 11in No. column, (or any free number). In From column, press F4
and hit Enter. Now move the cursor to To column, delete all 9s and type any
increasing number and move cursor from Box and hit Enter and Save. Ignore
message and hit Enter.
Follow the above procedure for creation of No. Ranges depending on No. of
Vendor Groups created. (If you have created 3 Vendor Groups, create 3 No. Ranges
and assign No. Ranges to Vendor Groups.)

4) Assign No. range to Vendor A/c Groups

Path: IMG>Financial A/cing>A/c Receivable & Payable>Vendor A/c >Master Data>
Assign No. range to Vendor A/c Groups T C: /NOBAS
Select Position
Type the A/c Group No. MAT Enter
FI Vendors for 2500 (Assign 1 No. created in No. Ranges column)(for ex:
st

10) Save
Select Position type A/c Group CMP
MM Vendors for 2500 (Assign 2nd No. created in No. Ranges column)(for ex:
11) Save

5) Define Tolerance for Vendor A/c TC : OBA3

Select New Entries
Type in Company Code field 2500
Ignore Tolerance Group, Save

6) Creation of two G/L A/cs TC FS00

a) Sundry Creditors (No. 100501) under Current Liabilities
b) Inventory Raw Material A/c (200120) under Current Assets

50
 RECONCILIATION ACCOUNT:

7) Creation of Vendor Master Data T C:/NXK01

Vendor Blank (Don’t type anything here.)

Company Code 2500
Account Group MAT - Enter
Title Company
Name Payal Solutions
Country IN
Select Next screen button (or hit Enter until you get Reconcln A/c
Field)
Reconciliation A/c 100501 (Sundry Creditors)
Sort Key 012
Select Next screen button or hit Enter
Select Check double invoice check box Save

51
Contents of Customer/Vendor Master Data:

We can create only Financial Vendors through /NFK01. (Auditors, Insurance, etc.,).
These Vendors will not be accessed to other Modules.

Define Document Type TC:/NOBA7

Select Position
Enter Document Type KR Enter
Select KR Select Details button Icon (2nd Icon )
Select No. Range Information button
Type Company Code 2500
Select change Interval button
Select Interval button
Type No. 19 ( it is system defined )
Year 2017 From No. & To No.
Select Back arrow three times
Deselect KR & Select KZ Select details button
Select No. Range Information button
Type Company Code 2500
Select change Interval button
Select Interval button

52
Type No. 15 ( it is system defined )
Year 2017 From No.--------------- To No.--------- Enter & Save
Select Back arrow three times
Deselect KZ & Select KA (Do the same operation for Document type KA No. 17 )

HOUSE BANKS AND BANK ACCOUNTS

Each of the Bank Accounts created within a House Bank must be assigned a
unique freely definable five-character Account ID.
• The Account ID is used for the Payment Program specifications and in the account
master records to make a reference to the bank account.
• A G/L Account master record must be created for each Bank Account. The House
Bank and Account ID must be entered in the G/L Account master record to ensure
that accounting transactions involving the Bank Account will be reflected in the
General Ledger.

53
House Bank Configuration:
Create ICICI Bank Current A/c in G/L A/c No.200101 TC:/NFS00
(If Company have 5 Bank Current A/cs, create 5 General Ledgers then define House
Banks respectively.)

Creation of House Banking & Assigning of G/L A/c No. in House Banking
TC:/NFI12

Enter
Select New Entries button
House Bank ICICI
Bank Country IN
Bank Key 147854748 (Current account number)
Select Create button
Bank Name ICICI Bank A/c
Street M G Road
City Bangalore
Branch Main Branch Enter & Save

Double Click on Bank A/c (Left side)

Select New Entries
Give A/c ID IC25
Description ICICI Bank A/c
Give G/L A/c No. 200101
Currency INR Save

Now, go to /NFS00, edit GL A/c No. 200101. In 3rd Tab (Create/bank/interest), in

House Bank and Account ID assign the same for posting automatically for G L
Account.

Creation of Cheque Lots T C:/NFCHI

Type Company Code 2500
House Bank ICICI
Account ID IC25
Select Change button (Top left Pencil Mark) and then Select Create button

Lot No. 10 (or any number)

Cheque No. From 100100 To No, 100200

54
(If you want to use the Cheque Nos. for manual operation, select Non-sequential
Checkbox. If you are using cheque lot for Automatic Payment Program, then don’t
select Non-sequential Check Box.)
Short Information ICICI Bank A/c
Purchase Date ( Any Previous Date ) Enter & Save

Purchase Invoice Posting T C:/NF-43

Document Date ( Current Date ) Document Type KR
Posting Date ( as above ) Company Code 2500
Currency INR
Posting Key 31 A/c No. ( Vendor A/c ) Press F4 & select Vendor
Enter
Amount 100000
Business Area ( as your selection it should be the same for the
transaction )
Text ( narration ) Purchase Invoice Posting Payal Solutions.
Posting Key 40 ( G/L debit Purchase A/c)
Account No. 200120 ( Inventory Raw Material ) Enter
Amount *
Business Area ( as your selection it should be the same for the
transaction )
Text + Enter
From Menu Select Document>Simulate- Save

Vendor A/c Line Item Display T C:/NFBL1N

Vendor A/c No. (Press F4 & select Vendor)
Company Code 2500
Select All items radio Button
Execute

Outgoing Payment (Manual) TC F-53

Document Date ( Current Date ) Document Type KZ
Posting Date ( as above ) Company Code 2500
Currency INR
Under Bank Data
Account 200101 (Select House Bank G L Account)
Business Area ( as your selection it should be the same for the transaction )
Amount 100000
Value Date Current Date

55
Text (Outgoing Payment for Payal Solution)
Under Open Item Solution
Account No. (Press F4 & Select Payal Solution)
Select Process Item button
From Menu Select Document-Simulate- Save
Note down the Document No. (For manual cheque update)

Go to TC FBL1N & check the cleared items

Vendor A/c No.
Company Code 2500
Select Cleared Item Clearing date (current date)
Execute

Manual Cheque Updating T C FCH5

Type Payment Document No.
Paying Company Code 2500
Fiscal Year 2017 House Bank ICICI
Account ID IC25 Cheque No 100010
Save
Go to Cheque Registrar TC FCHN
Paying Company Code 2500
House Bank ICICI
Account ID IC25 Execute

EXERCISE:

ADVANCE PAYMENT OR DOWN PAYMENT

1) Create G/L A/c: Advance to Vendors (A/c No.200150) TC:/NFS00

(Assign FSG G026) In Go26, under “Taxes” suppress all withholding taxes
fields)

2) Define Alternative Reconciliation A/c for Down Payment TC:/NOBYR

Path : FI>Reconciliation A/c Paying>Business Transaction>Down Payment
Made>Define Alternative Reconciliation A/c for Down Payment-
Double Click on A
Chart of A/c 2500
Reconciliation A/c No. 100501 ( Sundry Creditors )

56
 Special G/L A/c No. 200150 ( Advance to Vendors ) Save & Enter

3) Advance Payment Posting T C:/NF-48

Document Date ( Current Date ) Document Type KZ
Posting Date ( as above ) Company Code 2500
Currency INR
Vendor A/c No. (Press F$ and select Vendor) ( Payal Solution )
Special G/L Indicator (A)
Under Bank Data
Account 200101
Business Area ( as your selection it should be the same for the transaction )
Amount 40000

Value Date Current Date

Text Advance Payment Posting
Enter
Amount *
Business Area ( as your selection it should be the same for the
transaction )
Text + Enter
From Menu Select Document>Simulate-Save

4) Go to FBL1N & check the Vendor A/c open item

Vendor A/c No. ( Payal Solution )
Company Code 2500
Select Normal + Spl. GL Trans. Check Box
Execute

5) Purchase Invoice Posting T C F-43

Document Date ( Current Date ) Document Type KR
Posting Date ( as above ) Company Code 2500
Currency INR
Posting Key 31 A/c No. ( press F4, Enter, select Vendor A/c )
Enter
Amount 100000
Business Area ( as your selection it should be the same for the
transaction )
Text ( narration ) Purchase Invoice Posting Payal Solutions.
Posting Key 40

57
Account No. 200120 ( Inventory Raw Material )
Amount *
Business Area ( as your selection it should be the same for the
transaction )
Text + Enter
From Menu Select Document-Simulate-Save

Transfer of Advance from Special General Ledger A/c to Normal General

Ledger A/c by Clearing Special General Ledger A/c
Path : Sap menu>FI>A/c Payable>Document Entry>Down Payment>Clear
TC F-54
Document Date ( Current Date )
Posting Date ( as above )
Vendor A/c No. (select same vendor)
Text Advance Transfer Posting
Select Process Down Payment button
Double click on Transfer Posting highlight button (Last column) Save

Go to FBL1N & check the Vendor A/c open item

Vendor A/c No. ( Payal Solution )
Select Normal Items check box Execute

Now, for balance amount (Rs. 60,000) pass manual outgoing payment entry.
(/NF-53).

58
 MAINTAIN TERMS OF PAYMENTS

MAINTAIN TERMS OF PAYMENTS

Path : IMG>FI>A/c Receivables & Payables>Business Transaction>Incoming

Invoice/Credit memo>Maintain terms of Payment TC:/NOBB8

Terms of Payment: This will arise when the company having special Agreement with
Vendors/Suppliers regarding payment terms. In the Agreement, it is agreed that
once the materials supplied, if Company makes payment within 10 days, Vendor will
offer 2 percent Discount, if payment is made within 20 days then discount will be 1
percent and after 30 days no discount. This has to be defined in terms of payment
configuration. In Payment Terms field you can define any name, but it is
recommended to define the Vendor Name itself for easy identification purpose.

Select New Entries

Payment Terms Payal (Any name, should be assigned to respective
vendor master later)
Own explanations Terms of payment for 2500

59
Select Vendor check box
Deselect Customer check box
(if the party is Vendor as well as Customer to the Company, select both vendor &
customer check box orf he is only a Vendor, then select only Vendor Check box)
Now, under “default for baseline date” select “Document date” (Discount should
calculate from Voucher date)

Term Percentage No.of Days

1 2 10
2 1 20
3 - 30

Save

Once this has been configured, this Payment of Terms should be assigned to
Vendor Master. Enter Transaction code: /NXK02 and Enter. Select the Vendor by
clicking Dropdown Menu in Vendor field. After selecting, select Payment
Transactions in company Code data. In Payment Terms field enter Payal or any
Name (as you defined in Terms of Payment configuration.)

1) Creation of General Ledger Cash Discount Received A/c (A/c No.300101)

TC:/NFS00
2) Define A/c for Cash Discount Taken /NOBXU

Path : IMG>F>-A/c Receivables & Payables>Business Transaction>Outgoing

Payment>Outgoing Payment with Global Setting> Define A/c for Cash Discount
Taken TC: /NOBXU
Chart of A/c 2500 save
Account No. 300101 (Cash Discount Received ) Save

3) Purchase Invoice Posting T C F-43

Document Date ( Current Date ) Document Type KR
Posting Date ( as above ) Company Code 2500
Currency INR

Posting Key 31 Oress F4, select vendor ( assigned Terms of payment))

Enter
Amount 100000

60
Business Area ( as your selection it should be the same for the
transaction )
Text ( narration ) Purchase Invoice Posting Payal Solutions.

Posting Key 40 ( G/L debit Purchase A/c)

Account No. 200120 ( Inventory Raw Material ) Enter
Amount *
Business Area ( as your selection it should be the same for the
transaction )
Text + Enter
From Menu Select Document-Simulate-Save

4 Outgoing Payment TC F-53

Document Date ( Current Date ) Document Type KZ
Posting Date ( as above ) Company Code 2500
Currency INR
Under Bank Data
Account 200101
Business Area ( as your selection it should be the same for the transaction )
Amount 98000
Value Date Current Date
Text ( Outgoing Payment for Payal Solution )
Under Open Item Solution
Account No. ( payal Solution )
Select Process Item button
Double Click in column next to amount.
Select Document-Simulate
Double click on blue font line item
Text: Cash Discount received Save

View GL Report : TC /NFS10N

GLNO : 300101

61
 AUTOMATIC PAYMENT PROGRAM TC:/NFBZP

Outgoing Payment Program - An automatic process that reviews all Open Items of
selected Vendors, ranks these Open Items based upon Payment Terms and Days
Outstanding; creates a Proposal Run; and runs the Print Program.

• Payment Method - A field that specifies the acceptable types of payment such as
a check, bill of exchange or wire transfer.
• Payment Block - Functionality within the system that prevents an Open Item from
being paid.
• Paying Company Code - The company which physically pays for the Open Items
or from where the money is drawn.

62
(This automatic payment program will be used to make payment to large number of
Vendors. To run this program, you should have Vendor Masters, purchase entry, you
should have defined House Bank with check Lot and cheque Numbers.)

TC: /NFBZP

1) Set up payment method in country for payment transactions

Path : IMG>FI>A/c Receivables & Payables>Business Transaction>Outgoing
Payment>Automatic Outgoing Payment>Payment Method / Bank Selection for
payment program> Set up payment method per country for payment transactions

Select New Entries Country IN

Payment Method 5 ( for cheque payment ) (or any single character: 0 to 9
or A to Z like. C is predefined).

(This payment method, you can define any single character for payment method
identification. For example you have defined Y as payment method, once all the
configuration of APP is over, You have to assign this payment method Y in all
Vendor Masters, (for those Vendors you want to make payment) for payment
program execution.)

Select Outgoing payment area button

Select Check
Posting Details
Document type for payment KZ
Clearing Document type KZ
Payment Medium Program RFFOUS_C
Name of Print data NLIST1 Save

2) Set up payment method in Company Code for payment

transactions
Path : Same as above
Select New Entries Country IN
Paying Company Code 2500
Payment Method 5 ( for cheque payment )
Minimum Amount 100
Maximum Amount 9999999999
Select Payment due date check box

63
 Select Form Data button
Form for payment transfer medium F110_PRENUM_CHCK(system defined)
Drawer on the form HAL International ltd.
Save

3) Set up paying company code for payment transactions

Path : Same as above

Select New Entries button

Paying Company Code 2500
Minimum Amount for Incoming payment 100
Minimum Amount for Outgoing payment 100
Select No Exchange Rate differences Check Box
Select Payment for each reference Check Box
Select Forms button
Form for the payment advice F110_D_AVIS
Select Sender Details button
Tax ID ST ( standard text ) (or ADRS)
Text Elements
Letter Header F-0001-Header
Letter Footer F-0001-Footer
Signature Text F-0001-Signature
Sender F-0001-Sender Save

4) Set up all Company Codes for payment transactions

Path : same as above
Select New Entries button
Paying Company Code 2500
Select Separate Payment for business area Check Box
In “Outgoing payment with Cash Discount from” type 1 Save
(This will allow automatic discount deduction and posting)

8) Set up Bank determination for payment transactions

Path : IMG>FI>A/c Receivables & Payables>Business Transaction>Outgoing
Payment>Automatic Outgoing Payment>Payment Method / Bank Selection for
payment program> Set up Bank determination for payment transactions

64
Select Position button Company Code 2500 Enter
Select 2500 Double click on Ranking Order
Select New Entries Payment Method 5
Currency INR Rank Order 1
House Bank ICICI Save

Double click on Bank A/c

House Bank ICICI Payment Method 5
Currency INR Account ID IC25
Bank A/c No. 200101 Save

Double click on Available Amount

Select New Entries
House Bank ICICI Account ID IC25
Available for Outgoing Payment 2000000
( Note: Amount 2000000 is amount available for making payments to Vendors.)

9) Assign payment method in Vendor A/c TC:/NXK02

Vendor A/c No.

Company Code 2500
Select Payment Transaction – Under Company Code Data group Enter
Under Payment Methods 5 Save

10) Purchase Invoice posting TC F-43

Document Date ( Current Date ) Document Type KR
Posting Date ( as above ) Company Code 2500
Currency INR

Posting Key 31 A/c No. ( Vendor A/c for whom you have assigned
payment method 5) Enter
Amount 100000

Business Area ( as your selection it should be the same for the

transaction )

Text ( narration ) Purchase Invoice Posting Payal Solutions.

Posting Key 40

65
Account No. 200120 ( Inventory Raw Material ) Enter
Amount *
Business Area ( as your selection it should be the same for the
transaction )
Text + Enter
From Menu Select Document-Simulate-Save

11) Automatic Payment Program Run TC:/NF110

(Check /NSM12)
Run Date -----/-----/-------(enter current date)
Identification ABC ( any name )
Select Parameter tab
Company Code 2500
Payment Method 5
Next posting date ( there should be gap between the run date and next
posting date, i.e. type next day date )
Vendor A/c No. Press F4 select method 5 assigned vendor)

(Now check /NSM12 and any locked data, delete.)

Select Additional Log tab

Select Due Date check box
Select Payment Method selection in all cases check box
Vendor A/c No. (same vendor)
Save.

Select Back Arrow

Select Schedule Proposal button
Select Start Immediately check box
Enter
(Hit Enter key till you get “payment proposal has been created”)
(If you are getting here “Proposal running”, then in command field, type /N and
/NF110, enter.)

Select Payment Run button

Select Start immediately check box
Enter
& click on “Status” Button
(you will get payment run has been carried out & created orders and generated).

66
Select Printout / Data Medium tab
RFFOUS_C (Type Identification) “ABC”

Select Maintain Variant button

Select Check box below “Created” , select Continue button
Program Run date -----------------(CURRENT DATE)
Identification ABC
Paying Company Code 2500
House Bank ICICI (Press F4)
Account ID IC25 (Press F4)

Cheque lot no. (Press F4)

Currency INR
Select Print Check
Printer LP01
Select Print Immediately
Select Print Payment Advice Notes
Printer LP01
Select Print Immediately
Select Print Payment Summary
Printer LP01
Select Print Immediately sample

Select Do not void any check box

Select Attribute button (Top left)
Description Cheque Printing Save

Select back arrow Save

Select back arrow

Select Printout button
job name F110-20171012-ABC-ABC
( in place of ? you have to type Identification ( ABC. You have to note down this Job
Name or copy)
Enter
Here F110-stands for APP T-code
2017-stands for fiscal year
10-stands for month

67
 12-stands for day
ABC-Identification
ABC-identification for current run

Now, in Tool Bar Select System-Service-Jobs-Job overview or /NSM37

Job name F110-20171012-ABC-ABC Execute

System will display status of payment. (Finished)

Go to FBL1N and check the status.
Select Vendor No.
Select Cleared Items radio Button
Execute.
Now, to check the Check Register TC:/NFCHN
Enter Co. Code, House Bank and Account ID and Execute.
Go to /NFS10N, check House Bank Ledger.

EXTENDED WITHHOLDING TAX (TDS)

Withholding tax is applicable in few countries. Some of the countries having

withholding tax are United Kingdom, Slovakia, Turkey, Argentina, Brazil,
Chile, Colombia, Mexico, India, Philippines, Thailand and South Korea. SAP has
given an excellent solution to map the withholding tax scenario.

What is Withholding Tax?

Withholding tax is an Income tax which is deducted at the source of the

revenue. The party is subject to tax does not remit the withholding tax to the tax
authorities himself.

In any business transaction there are 2 parties involved. One is Customer

and another is Vendor. A Customer is authorized to deduct withholding tax for
service rendered by the Vendor. When the Vendor raises the invoice on
the Customer, the Customer deducts the withholding tax as per the rates
specified by the tax authorities and pays the balance money to the Vendor.

68
Tax deducted by the Customer is remitted to the tax authorities on specified
due dates. The Customer gives a Withholding tax certificate to the Vendor for
the withholding tax deducted.

The Vendor can claim this withholding tax (as advance income tax paid) in
his annual returns to Income tax authorities.

When the Vendor submits an Invoice, the Customer is now required to deduct
tax on the Invoice amount
If we are making down payment, deduct TDS at this level and once you receive
Invoice, calculate TDS for amount at invoice level only.
To calculate pay and report the withholding tax, the SAP system provides two
functions:-

Classic Withholding tax

Extended Withholding tax

Extended Withholding tax includes all the functions of classic withholding

tax; SAP therefore recommends the use of extended withholding tax.

Here we are configuring Payment to Professional and Technical Services U/s

194J. of Income Tax Act. This Tax Structure will change from year to year.

Tax Structure: Upto Rs. 30000 no TDS. (Base Amount)

Above Rs. 30000/- TDS at the rate of 10.3% on gross amount
Surcharge is 1% on TDS

1) Check Withholding tax countries.

Path : SPRO>IMG>Financial Accounting> Financial Accounting Global
Settings> Withholding Tax> Extended Withholding Tax >Basic Settings> Check
Withholding Tax Countries

Click on New Entries

(In this withholding country column, you can define any name, but you should
remember as you have to assign to Vendor Masters)

Country Withholding country Description

IN IBM Withholding tax for India

69
 Save

2) Define Withholding tax for Invoice Posting

Path : IMG>Financial Accounting> Financial Accounting Global Settings>
Withholding Tax > Extended Withholding Tax> Calculation> Withholding Tax
Type> Define Withholding tax for Invoice Posting

(Here we have defined tax types for ex: IT,IS, and AT,AS,. Here second letters
T stands for TDS, S stands for Surcharge While practicing you can change 1st
letters, instead of I & A, you can define any alphabetic (D & E, M and N, or any
letters, but second letters should be T and S only, for identification purpose to
define Tax Rate.)

Country IN Enter
Click on New Entries button

a) withholding tax type IT

Description 10.3% TDS on P&T Services invoice posting

Select Gross Amount check box

Deselect manual withholding tax check box and SAVE.

Select Next Entry Button

b) withholding tax type IS
Description 1% Surcharge- invoice posting
Select Tax Amount check box, Deselect Manual w/holding Tax.
SAVE.

3) Define Withholding tax for Payment Posting

Path : IMG>Financial Accounting> Financial Accounting Global Settings>
Withholding Tax > Extended Withholding Tax> Calculation >Withholding Tax
Type > Define Withholding tax for Payment Posting
Country IN Enter
Click on New Entries button

70
a) withholding tax type AT
Description 10.3% TDS on P&T Services- payment posting

Select Gross Amount check box, Deselect manual withholding tax.

SAVE.

Select Next Entry Button

b) withholding tax type AS
Description 1% Surcharge on TDS - payment posting
And the same above procedure select Tax Amount and deselect manual
withholding tax. SAVE.

4) Define withholding tax codes

Path : IMG>Financial Accounting> Financial Accounting Global Settings>
Withholding Tax> Extended Withholding Tax> Calculation> Withholding Tax
Codes> Define Withholding tax codes

(This Tax Codes is to identify Tax Types, you just reverse the Tax Types.
While defining Tax Rates, instead of point (.), you have to define Comma (,)
only) for ex: Rate is 2.2, define 2,2) (Tax Rate T=10.3 and S=0.103)

Country IN Enter

Click on New Entries button

a) withholding tax type IT
Code TI
Description 10.3% TDS on invoice posting
Percentage subject to tax 100
Posting Indicator 1
Withholding tax rate 10.3

Select Next Entries button

b) withholding tax type IS

Code SI
Description 1%Surcharge on TDS - invoice posting
Percentage subject to tax 100
Posting Indicator 1
Withholding tax rate 0.103 SAVE.

71
Select Next Entry button
d) withholding tax type AT
Code TA
Description 10.3% TDS on - payment posting
Percentage subject to tax 100
Posting Indicator 1
Withholding tax rate 10.3

Select Next Entry button

e) withholding tax type AS
Code SA
Description 1%Surcharge on TDS on payment posting
Percentage subject to tax 100
Posting Indicator 1
Withholding tax rate 0.103 SAVE.

6) Assign withholding tax type to the company codes

Path : IMG>Financial Accounting >Financial Accounting Global Settings>
Withholding Tax> Extended Withholding Tax > Company Code > Assign
withholding tax type to the company codes
Select New Entries button Company code 2500
Withholding tax type IT
Select withholding tax Agent Check box

withholding tax obligation from 01.04.2017

Obligated to withholding tax 31.03.2018
Select Next screen button
Enter Company code 2500
withholding tax type IS
Select withholding tax Agent Check box
withholding tax obligation from 01.04.2017
Obligated to withholding tax 31.03.2018
SAVE.

Select Next screen button

72
Enter Company code 2500
withholding tax type AT
Select withholding tax Agent Check box
withholding tax obligation from 01.04.2017
Obligated to withholding tax 31.03.2018

Select Next screen button

Enter Company code 2500
withholding tax type AS
Select withholding tax Agent Check box
withholding tax obligation from 01.04.2017
Obligated to withholding tax 31.03.2018

Save

7) Activate Extended Withholding tax

Click on Position Type Company Code 2500

Select Extended Withholding tax check box and Save
Ignore the message and Enter to save the data

8) Creation of General Ledger A/cs TC FS00

TDS Payable under current liabilities A/c No.100505
Surcharges payable under current liabilities A/c No.100506

( At the beginning stage there is a chart of G/L A/c list in that you can find the
procedure of creation General Ledgers with a/c nos. )

9. Assignment of A/c for Automatic Postings

Path : IMG>Financial Accounting> Financial Accounting Global Settings >

Withholding Tax> Extended Withholding Tax> Accounts for withholding tax>
Define Accounts for withholding tax to be paid over
TC:/NOBWW

Enter Chart of Accounts 2500 Enter

73
Select Withholding tax type check box

Select Withholding tax codes check box Save

Withholding tax type Withholding tax code Account No.

IT TI 100505
IS SI 100506
AT TA 100505
AS SA 100506
Save

10) Assign withholding tax types & codes to Vendor Masters (TDS
Activation) TC:/NXK02

Vendor A/c No. (Auditor Company)

Select withholding check box Enter
Withholding tax country IBM

Withholding tax type Withholding tax code Liable

IT TI Select
IS SI Select
AT TA Select
AS SA Select
Save
( Ignore the messages and hit Enter till you get message “saved” )

Now, go for Invoice posting F-43. After Debit entry, you will get 4 rows or 2 rows
as the case may be:

1. If you want to calculate TDS at payment level, then delete Invoice Tax Code
and type taxable amount next to Pmt tax code. Or if you want to calculate

74
 TDS at Invoice level, type taxable amount in next to Invoice tax codes and
delete Payment level tax codes.
2. Go to F-53 for passing payment entry with TDS deduction.

Now pass one Journal entry in /NF-02: (Check credit balance of TDS and SC A/c
through /NFS10N and note down to pass journal entry..
TDS Payable A/c Dr. (100505)
SC Payable A/c Dr. (100506)
To Bank A/c (200101)

75
 ACCOUNTS RECEIVABLE

All postings in FI-AR are also recorded simultaneously in FI-GL.

• The components of FI-AR are closely integrated with components of SD and MM
which, when properly configured, support an automated Sales Cycle.
• The FI-AR sub-module contains the following features:
– A component to control customer credit exposure (Credit Management)
– A reporting function to monitor customer activity
– Incoming Payment processing (electronic or manual)
– A component to monitor past due customer invoices (Dunning)

1) Creation of Customer A/c group

Path : IMG>Financial A/cing > Account Receivable & Payable> Customer Account>
Master Data > Preparation for Creating Customer Master Data > Define A/c Group
TC:/NOBD2

76
Select New Entries
Account Group B1
Description FI Customers for 2500
Double click on Company Code Data
Double click on Account Management
Reconciliation A/c Make a required entry Save

Select next screen button

Account Group B2
Description SD Customers for 2500
Double click on Company Code Data
Double click on Account Management
Reconciliation A/c Make as Required entry Save

2) Define Screen Layout for Company Code ( customer )

Path : IMG>Financial A/cing > Account Receivable & Payable > Customer Account
> Master Data > Preparation for Creating Customer Master Data >Define screen lay
out for company code ( customer )
Select New Entries button
Company Code 2500 Save

3) Creation of number ranges for customer A/c

Path : IMG>Financial A/cing > Account Receivable & Payable > Customer Account
> Master Data > Preparation for Creating Customer Master Data >
Creation of number range for customer A/c TC:/NXDN1

(To create No. Ranges for Customers and assign, refer Page No. 19.)
Select Change(Second) Interval button
Select Interval button
Give the number 10 (or any Number)
Press F4 From No. To No. Enter
Again select Interval button
Give the number 02
Press F4 From No To No. Enter
[ Any number can be assigned ]

77
4) Assign No. ranges to Customer A/c Groups
Path : IMG>Financial A/c>A/c Receivable & Payable>Customer A/c >Master Data>
Assign No. range to Customer A/c Groups T C : /NOBAR
Select Position
Give the A/c Group No. B1 Enter
FI Customer for 2500 10
MM Customer for 2500 02 Save

5) Creation of two G/L A/cs TC FS00

a) Sundry Debtors (No. 200111) under Current Assets
b) Sales A/c (No. 300000) under Sales

6) Creation of Customer Master

Path : SAP > Accounting > Financial Accounting > Account Receivable > Master
Records > Creation of customer master TC:/NXD01

Account Group FI customer for 2500

Company Code 2500 Enter
Give the title Company
Name Sriram ram chit funds
Type the necessary information
Country IN

Select Company Code Data button

Give Reconciliation A/c 200111
Sort Key 031 Save

78
(Whenever you are configuring at OBA7-Document Types, the Numbers defined 14
to 19, (for KR, KA, KZ, DR, DA and DZ) are system defined and the same numbers
you should define while creating number ranges.)
7) Define Document Type T C:/NOBA7
Select Position
Enter Document Type DR Enter
Select DR Select details button from icon
Select No. Range Information button
Type Company Code 2500
Select change Interval button
Select Interval button
Type No. 18 ( it is system define )
Year 2012 From No.--------------- To No.--------- Enter & Save
Select Back arrow three times
Deselect DR & Select DZ Select details button
Select No. Range Information button
Type Company Code 2500
Select change Interval button
Select Interval button
Type No. 14( it is system define )
Year 2012 From No.--------------- To No.--------- Enter & Save
Select Back arrow three times
Deselect DZ & Select DA Select details button
Select No. Range Information button
Type Company Code 2500
Select change Interval button
Select Interval button
Type No. 16 ( it is system define )
Year 2012 From No.--------------- To No.--------- Enter & Save

8) Sales invoice posting TC-F-22

Document Date ( Current Date ) Document Type DR
Posting Date ( as above ) Company Code 2500
Currency IN
Posting Key 01 ( Customer Debit )

Account No.-------------- ( Sriram chit fund A/c )

Enter

79
Amount 100000
Business Area ( as your selection it should be the same for the
transaction )
Text ( narration ) Sales invoice posting .

Posting Key 50 ( G/L Sales Credit A/c)

Account No. 300000 ( Sales A/c ) Enter
Amount *
Business Area ( as your selection it should be the same for the
transaction )
Text + Enter
From Menu Select Document-Simulate-Save

9) Check the customer line item display TC-FBL5N

Give the customer A/c no.---------
Select open item radio button Execute

10) Posting of incoming payment TC-F-28

Document Date ( Current Date ) Document Type DZ
Posting Date ( as above ) Company Code 2500
Currency IN
Account No 200101 ( Bank A/c )
Enter
Amount 100000
Business Area ( as your selection it should be the same for the
transaction )
Text ( narration ) Incoming payment from sriram chit funds
Under Open Item Selection
Account No. Customer A/c No.
Select Process Open Item
From the menu Select Document – Simulate - Save
11) Check the customer open item TC-FBL5N
Customer Account No.
Select Cleared items radio button
Enter clearing date Execute

80
ADVANCE PAYMENT FROM CUSTOMER OR DOWN PAYMENT

1) Creation of General Ledger: Advance from customer (G L A/c No.

100502) TC:/NFS00
( Note: you can have the information of this ledger creation in the G/L chart in Part-
One.)

2) Define Reconciliation A/c for customer Down Payment TC-OBXR

Double click on “A” under Spl GL Indicators
Type the chart of A/c no. 2500 Enter
Type the Reconciliation A/c no.
Reconciliation Account 200111 (Sundry Debtors)
Special G/L A/c no. 100502 Save

3) Down Payment or Advance Receipt Posting TC:/NF-29

Date --------------------- Posting date --------------
Customer A/c no. ------------- Spl G/L indicator A
Bank A/c No. 200101 Business Area ----------------
Amount 40000 Value date----------------------
Text Advance payment receipt Enter
Amount * Business area--------------
Text +
Document – Simulate Save
4) Check part account customer line item display TC:/NFBL5N
Customer No.----------
Company code 2500
Select Open item radio button
Select Special general ledger transaction Execute

5) Sales invoice posting TC:/NF-22

Document Date ( Current Date ) Document Type DR
Posting Date ( as above ) Company Code 2500
Currency IN
Posting Key 01 ( Customer Debit )
Account No.-------------- ( Sriram chit fund A/c )
Enter

81
Amount 100000
Business Area ( as your selection should be the same for the
transaction )
Text ( narration ) Sales invoice posting .
Posting Key 50 ( G/L Sales Credit A/c)
Account No. 300000 ( Sales A/c )
Amount * Business area--------------
Text + (Enter) Save

6) Check part account customer open item display TC_FBL5N

Customer No.----------
Company code 2500
Select Open item radio button
Open item key date ----------
Select Normal item check box
( if you want to view the down payment also select both Normal item and Special
general ledger transaction check box at bottom.)
Execute

7) Transfer of special general ledger A/c to normal general ledger by

clearing special general ledger A/c TC-F39
Document Date ---------------
Posting Date` ---------------
Customer A/c No. ---------------
Text Advance Transfer Posting
Select Process Down Payment button
Double click on Transfer Posting (highlighter box)
Save
10) Check part account customer open item display TC_FBL5N
Customer No.----------
Company code 2500
Select Open item radio button
Open item key date ----------
Select Normal item check box
Execute
Now pass Normal Incoming Payment for balance amount TC:/NF-28.

11) To check Customer Balance TC-FD10N

Customer No.----------
Company code 2500

82
 DUNNING
(Dunning means Sending reminders to the Debtors for recovery of Overdue
Payments.)

Dunning - The process of notifying customers that an unpaid obligation has become
past due.
• Dunning Area - An optional unit in the Organizational Structure used to group
Customers / Vendors for dunning and each could represent different dunning policies
or Organizational Units responsible for dunning.
• Dunning Procedure - A four-character alphanumeric code that contains the
configuration of a Dunning Program and can be tied to Dunning Areas or to a
Customer / Vendor master record.
• Grace period - The number of days that a line item is in arrears (is past due),
which, if not exceeded, will prevent it from being taken into consideration as due for
dunning.
• Dunning Level - Defines what type of dunning will be carried out by a certain
Dunning Procedure and which conditions will result in using that Dunning Procedure.
• Minimum Amount - A user-defined overdue threshold of the total Account
Balance which must be exceeded to reach a Dunning Level.

83
• Dunning Charge - The amount to be charged a customer for the expense incurred
in dunning. They are not posted to the General ledger.
Dunning Letters - The document sent to a customer / vendor that results from a
Dunning Run. It contains a header, footer, main body (which contains text), line
items, totals, and basic information.
• Dunning Program - Examines the open items of a Customer / Vendor Account
and, if overdue items exist, produces the appropriate notice.
• Dunning Block Reasons - Used to block a Customer / Vendor or an item from
being dunned.
• Dunning Keys - Used to mark items that should not trigger a higher Dunning
Level.

Dunning Configuration:

1. Define Dunning Area:

(One Company Code should have one dunning area. If reporting is at
company code level this area is not required).
TC: /NOB61
Select ’New Entries’
Enter Co Code “2500”, in Area define any 2 characters “dn”, in Text
“Dunning Area for 2500” and SAVE.

2. Define Dunning Procedure TC: /NFBMP

Select ‘New Procedure’
Dun Procedure: 2500
Description: Dunning Procedure for 2500
Dunning Intervals in Days : 10 (Indicates gap between Reminders.)
No. of levels: 4 (No. of reminders to send. Maximum 9 we can define.)

Interest Indicator : 01 (system defined.)

Select std. Transaction dun check box.
Ref dun procedure for texts : 2500
Enter, ignore message and enter.
Select ‘DunningText’ push button.
System displays ‘Co. Code’: type Co. Code 2500, Enter.

84
 (In case, now system displays ‘New Company Code’ at this stage, click
on ‘New Co.Code’, by default system displays ‘Co.Code’, just Enter. Now
select ‘Dun levels’ check box and SAVE and Enter. Again Now click on
‘Dunning Text” button, displays Co. Code, just hit Enter to define SAP
predefined letter format).)

No. FORM
1. F150_DUNN_01
2. F150_DUNN_01
3. F150_DUNN_01
4. F150_DUNN_01

Select ‘Dunning Level’ Button.

Now, under ‘Always Dun?’ Select all 4 check boxes.
Select ‘Charges’
Enter ‘INR’, Enter.
Now, select Back Arrow.

-SAVE- Ignore messages, hit Enter until Procedure is saved.

3. Assign Dunning Procedure in Customer Master Data. TC:/NXD02

Select ‘Customer’
Select ‘Company Code Data’ Button.
Select ‘Correspondence’ Tag.
In Dun Procedure: 2500 –SAVE-

4. Make one Sales Entry (F-22) with 1 month back date.

5. Dunning Run TC:/NF150
Run Date: Current Date
Identification: abc
Select ‘Parameter’ Tag
Dun Date: Current Date
Posted : Current Date
Co. Code : 2500
Customer : select Customer
Click on ‘Individual Dunning Notice’ Button.

85
Co. Code : 2500
Output Device : LP01
Select ‘Sample Printout’ Button.
Select Continue Button.
Select ‘Print Preview’ check box.
Click on ‘Sample Printout’ Button.
Now, in Toolbar, Select Goto-List Display- Click
Now, in Toolbar, Select System-List-Save-Local File
Select Unconverted Radio Buton and Continue.
Give File Name: 5Dunn.doc
Select ‘Generate’ Button.
Close SAP System and search in My Documents ‘5Dunn.doc’.

86
 TAX ON PURCHASE AND SALES (INPUT VAT & OUTPUT VAT)

The tax on sales and purchases is the balance of the output tax and the input
tax.

The output tax is levied on the net value of the goods and is billed to the Customer.
It is a liability of the company to the tax authorities.

Input tax is levied on the net invoice amount and is billed by the vendor. The input
tax is a receivable which the company claims from the tax authority.

Under certain circumstances, a company can deduct input tax that it has paid from
its tax liability to the tax authorities: Only taxes that have been levied on the added
value of goods have to be paid over to the tax authorities. The tax liability minus
deductible input tax is the tax payable.

87
Input Vat and Output Vat:

Tax authorities can define that part of the input tax is not deductible.
This tax amount can be posted to a separate expense account, or it can be
distributed to the G/L account and assets line items.

A = Stands for Out put vat

V = Stands for input vat
Input Vat is charged on Purchase
Out put Vat is charged on Sales
Output vat-Input vat = output Vat Payable (to Govt.)

88
1) Define Check Calculation Procedure TC:/NOBQ3

Tax Procedure - A country-specific template containing all of the processing logic

and algorithms that support the tax amount computations. It contains the following
fields:
• Steps - Determine the sequence of lines within the procedure (note it is
recommended that at least a 10 digit space between the numbers exist)
• Condition Types
• Reference Steps - Where the system obtains the amount/value it uses in its
calculation.
• Account Keys - Provide the link between the tax procedure and the GL accounts
to which tax data is posted.

89
Path: IMG> Financial Accounting > Financial Accounting Global Settings > Tax on
Purchase and Sales > Basic Settings > Check Calculation Procedure. TC: /NOBQ3

Select New Entries

Give the Procedure 123TAX (here u can define any name)
Description Tax Procedure for 2500 Save
Select Procedure : 123TAX
Double click on Control data
Select New Entries

Steps Condition Type Description From To A/c Key

10 BASB Base Amount
20 MWVS Input Tax 10 10 VST
30 MWAS Out put Tax 10 10 MWS
Save

2) Assign Country to Calculation Procedure TC:/NOBBG

Path – IMG>Financial Accounting > Financial Accounting Global Settings > Tax on
Purchase and Sales > Basic Settings > Assign Country to Calculation Procedure.

Select Position

Country IN Enter

Procedure 123TAX Save

90
3) Define Tax Codes for Sales and Purchase TC:/NFTXP

Tax Codes can be created in any alphanumeric character. But while configuring,
define whether the respective Tax Code is Input Vat or Output Vat and define Tax
rate which is most important for calculation purpose. These Tax Codes will be used
by End-users for respective tax calculation.

The tax code is the main link to the tax calculation. It is assigned to a tax procedure
and is entered in the G/L master record and accessed when the G/L account is used
in a document (e.g., Sales Order, Invoice). Like the tax procedure, tax codes are
country specific.
• Each country has a Tax Code template (procedure) already set up in the system
that is used to define various specific codes. In addition, a number of Tax Codes are
predefined in the system.

91
 • Within the system, Tax Codes are used for the following reasons:
– verify the amount of tax.
– calculate the amount of tax.
– calculate additional tax portion
– verify the tax type
– determine the G/L account
– show tax correctly on tax forms

Configuration: TC: /NFTXP

Path: IMG> Financial Accounting > Financial Accounting Global Settings > Tax on
Purchase and Sales > Calculation > Define Tax Codes for Sales and Purchase.

Tax Code V5
Type the tax code V5 ( 5 % input tax )
Tax Type V Enter
Type the Input tax 5
Keep the cursor on Output tax % rate
Select D-Active button Save

Tax Code A5
Type the tax code A5( 5 % output tax ) Enter
Tax Type A Enter
Type the Output tax 5
Keep the cursor on Input tax % rate column
Select D-Active button Save

5) Creation of Output Vat A/c no.100520

Input Vat Paid A/c No.200125

6) Define Tax Accounts TC:/NOB40

Path: IMG> Financial Accounting > Financial Accounting Global Settings > Tax on
Purchase and Sales >Posting> Define Tax Accounts

92
Double Click on MWS ( output tax )
Type the chart of A/c 2500 Enter
Select Tax Codes check box Save
Type Tax Code A5
G/L A/c No. 100520 ( Output Vat ) Save

Go Back
Double click on VST ( input tax )
Select the tax code check box Save

Type the tax code V5

G/L A/c No. 200125 ( Input Vat ) Save

7) Assign tax category to the Sales & Purchase a/c no.300000 and 200120
TC:/NFS00
( Select Edit (Pencil Mark), in tax category (under Control Data) define * (Star) for
both Sales A/c and Inventory Raw Material (Purchase A/c), for all types of tax
allowed )

8) Sales invoice posting TC-F-22

Document Date ( Current Date ) Document Type DR
Posting Date ( as above ) Company Code 2500
Currency IN
Posting Key 01 ( Customer Debit )
Account No.-------------- ( Sriram chit fund A/c )
Enter

Amount 210000

Select Calculate tax check box

Business Area ( as your selection it should be the same for the
transaction )
Text ( narration ) Sales invoice posting .
Posting Key 50 ( G/L Sales Credit A/c)
Account No. 300000 ( Sales A/c )
Amount *
Tax Code Press F4 ( Select A5 )
Business area--------------
Text +

93
Go to Menu – Document – Simulate
Double click on blue font line item
type Output Vat Save

9) Purchase Invoice Posting T C F-43

Document Date ( Current Date ) Document Type KR
Posting Date ( as above ) Company Code 2500
Currency INR
Posting Key 31 A/c No. ( Vendor A/c ) Enter
Amount 105000

Select Calculate Tax check box

Business Area ( as your selection it should be the same for the
transaction )
Text ( narration ) Purchase Invoice Posting Payal Solutions.
Posting Key 40 ( G/L debit Purchase A/c)
Account No. 200120 ( Inventory Raw Material ) Enter
Amount *
Tax Codes Press F4 ( Select V5 )
Business Area ( as your selection it should be the same for the
transaction )
Text + Enter
From Menu Select Document-Simulate-
Double click on blue font line item
Type the Text Input vat paid Save

VAT Returns TC: /NF.12

Enter Co. Code

Enter Accounting Year

Under posting period type current month

Execute.

94
 EXERCISE:
(Configuration and Testing the Configuration of Petty Cash Journal )

CASH JOURNAL

Cash Journals are defined by company code

• Multiple cash journals may be assigned to one company code.
• A separate cash journal is required for each currency

The new Cash Journal is a Banking-Related Accounting sub-ledger for the

management of petty cash in a business. You can use it independently of other
posting transactions and it does not have to update the G/L.

95
Configuration:

1. Create General Ledgers: /NFS00

G L No. 200130 Petty Cash Journal G005 & relevant to cash flow check
box. Select Post automatically Check box.
G L No. 200131 Cash From Bank (UTI Bank Curr A/c)
G L No. 200100 Cash to Bank (Cash A/c)
G L No. 200135 Cash Purchase
G L No. 300001 Cash Sales FSG G029.

2. Create No. Range. /NFBCJC1

No. 01
3. Setup Cash Journal: /NFBCJC0
Select ‘Position’
Type ‘1000’, Enter
Select ‘1000’ and press F6
Change ‘Co. Code’, Ignore ‘CJ’
Change G L A/c ‘200130’ (Petty Cash Journal)
Currency ‘INR’, Enter,
Save and Enter
(If ‘1000’ is not available, select ‘KZ,KZ,DZ,DZ’ copy (press F6), Change to
your co. code, Enter and Save.)
4. Create, Change, Business Transactions. /NFBCJC2
(C= Receipt from Bank, B= Payment to Bank, R= Revenue, E= Expense, D=
Customer posting, K=Vendor posting).
(If you want to make any entry in Petty Cash, convert here respective
Ledgers).
Select ‘Position’
Type ‘1000’, Enter.
Select 6 lines of 1000 and press F6. And Change ‘Co. Code’
If ‘1000’ is not there, select ‘C, B, D, K, E and R’ copy individually.
Change Co. Code, G L A/c No.: for C=200131, B=200100, D, K, = leave
blank, E=200135, R=300001.
Delete Tax Codes. (Next to G L A/c column.) Enter, Save and Enter.

96
5. Print Parameters for CJ: /NFBCJC3.
Select ‘Position’
Type ‘1000’ Enter.
Select ‘1000’ (or select RFCASH20) and press F6.
Change ‘Co. Code’. (delete CASHDE) Enter,
Save and Enter.

6. Posting : /NFBCJ
Select in Top ‘Change Cash Journal’ Push Button.
Enter your ‘Co. Code’
C J ‘0001’, Enter

7. Select type of transaction by clicking on respective Tags:

First, make Cash Receipts. Click on ‘Cash Receipts’ Tag.
In Bus. Transaction column, select ‘Cash Transfer from Bank’, Enter Amount
’Rs. 10,00,000’, in text column, type ‘cash from bank’. Now, select ‘Business
Transaction’ (Click on 1st Row, 1st Column). In bottom, select ‘Post Sel’ push
button.

8. For Payment: Select ‘Cash Payment’ Tag. In Bus. Transaction, select ‘Cash
Purchase’, Enter Amount ’25,000’, in Text, type ‘Cash Purchase’. Now, select
Business Transaction, in bottom, click on ‘Post Sel’ push button.

9. To View Petty Cash Journal Register, in top, click on ‘Print Cash Journal’

97
The cash journal supports the following accounting transactions:
– Cash Receipts - Cash sales revenue, cash transfers from the bank to the cash
account, vendor invoice payments, and customer invoice repayments.
Note: A cash journal must always have a balance of at least zero.
– Cash Payments - Cash expenses, cash transfers from the cash account to the
bank, customer invoice payments, and vendor invoice repayments
• Cash journal entries may post to customer, vendor and general ledger accounts
• Within the cash journal, business transactions control journal postings. These
transactions may be pre-configured in the IMG or created when making a journal
entry.

1. Convert all Expenditure GLs to make payment in Petty Cash Journal.

98
DEFINING FINANCIAL STATEMENT VERSION

___________________________________________________________________

Balance Sheet: a statement that shows the company’s financial condition for a
specific period of time, usually at the end of a reporting period.

• Profit & Loss (Income) Statement: a statement that compares revenues and
expenses within a certain period of time with the purpose of establishing the profit
made by the organization.

• Period Accounting - An accounting method that reports on transactions that occur

during a specified period of time

• Cost-of-Sales Accounting - An accounting method that matches revenues with

associated expenses.

99
• Financial Statement Version - the structure of the organization’s financial
Statements and planning layouts.

• The following components must be entered to create a financial statement version

– Financial statement version
– Name (text to explain what the version is)
– Maintenance language
• Optional components:
– Chart of Accounts - If specified, the financial statement version is available only for
that chart of accounts. If left blank, a financial statement version may reference
multiple charts of accounts at the line item level
– Item Key auto - Identifies whether the system should automatically create the item
keys (i.e., unique numeric identifiers) for each node within the financial statement, or
whether they will be manually assigned during the creation of each node.
– Group Account Number - Tells the system that group accounts should be defined
in the financial statement version, instead of the standard G/L account number. This
setting is used for producing a consolidated financial statement.
– Functional Area Permitted - Allows for functional areas to be assigned to nodes
within the financial statement version.
• This setting is used for Cost of Sales Accounting statements. If Functional Areas
are used then each G/L account must be assigned to a Functional Area, which is
then assigned to the Financial Statement Version.
• Nodes are mutually exclusive with respect to accounts and functional area
assignments.
.
Configuration of Financial Statement Version:

Transaction Code: /NOB58

Select ‘New Entries”

Fin St Version 2500
Name: Fin St Version for 2500
Maint Language EN
Item Key Auto Select check box
Chart of Accounts 2500
SAVE

100
In top select ‘Fin St Items’
Cursor on ‘2500’
Select in top ‘ Create’
Income, Enter
Expenditure, Enter
Double click on ‘No texts exists Assets’
Item ‘Assets’, Enter
Double click on ‘No texts exists Liab+Equity’
Item ‘Liabilities’

Cursor on ‘Liabilities’
Select top right ‘-/select-f9 ’ Icon
Select ‘Income’
Select ‘Reassign’ Icon – select ‘same level ‘ Radio Button, Enter
Select ‘Assets’
Select top right ‘-/select-f9 ’ Icon
Select ‘Expenditure’
Select ‘Reassign’ Icon – select ‘same level ‘ Radio Button, Enter
SAVE
Cursor on ‘Liabilities’
In Top select ‘Create Items’
Liabilities –
- Share Capital
- Reserves and Surplus
-
- Secured Loan
- Unsecured Loan
- Current Liabilities and Provision

Enter.
Cursor on ‘Assets’
In Top select ‘Create Items’
Assets –
- Fixed Assets
- Current Assets and Provisions
- Accumulated Depreciation

101
 Enter.
Cursor on ‘Income’
In Top select ‘Create Items’

Income –
- Sales
- Other Income
- Increase or Decrease in Stock

Enter.
Cursor on ‘Expenditure’
In Top select ‘Create Items’
Expenditure –
- Raw Material Consumption
- Personnel Staff Cost
- Manufacturing Expenses
- Administrative Expenses
- Interest
- Depreciation

Enter.
SAVE

ASSIGNING ACCOUNTS:

Cursor on ‘ Share Capital ‘

Select ‘Assign Accounts’ Buton
(Assign Accounts for all types of Accounts Group)
From To D C
100000 100099 (Select) (Select)
Enter and Save.

102
Share Capital A/c 100000 100099
Reserves & Surplus 100100 100199
Accumulated Depreciation 200200 200299
Secured Loans 100300 100399
Unsecured Loans 100400 100499
Liabilities & Provision 100500 100599
Fixed Assets 200000 200099
Assets Loans & Advance 200100 200199
Sales 300000 300099
Other Income 300100 300199
Incr/Decr in Stock 300200 300299
Raw material consumption 400000 400099
Personnel staff cost 400100 400199
Manufacturing Expenses 400200 400299
Administrative Expenses 400300 400399
Interest 400400 400499
Depreciation 400500 400599
Duties and Taxes 400600 400699

103
TO CHECK ACCOUNT ASSIGNMENTS:

In Top Select ‘ Check ‘ Button

Select ‘ Incorrectly Assigned Accounts’
Enter.

TO VIEW BALANCE SHEET:

TC: /NS_ALR_87012284. Or /NF.01

In Fin St Version 2500

In Bottom, select ‘ ALV Tree Control’ Radio Button.
Select ‘Execute’ Icon in top left.

104
 ASSET ACCOUNTING

• All postings such as asset acquisitions, transfers and retirements are also recorded
simultaneously in FI-GL. Depreciation expense, interest and replacement values are
posted using a batch.
• FI-AA supports accounting of traditional assets, assets under construction (AuC),
leased assets and real estate assets.
• As a result of the integration in the R/3 System, FI-AA transfers data directly to and
from other systems.
– The Materials Management (MM) or Production Planning (PP) components can
post directly to FI-AA. When an asset is purchased or produced in-house, you can
directly post the invoice receipt, goods receipt, and/or the withdrawal from the
warehouse to FI-AA.
– FI-AA or FI-AR can post directly to an asset and a customer account if an asset is
sold.

105
 – FI-AA or FI-AP can post directly to an asset and a vendor account if the vendor
invoice is not posted using Material Management (MM).
– You can pass on depreciation and interest to Cost Accounting (CO) in order to
track expenses by cost center and profit center. Internal orders, within CO, can also
be used to collect and control capital expenditures.
– The Plant Maintenance (PM) component can settle maintenance activities that
require capitalization to Assets.

1) Copy reference Chart of Depreciation / Depreciation Area

Path : IMG>Financial Accounting > Asset Accounting > Organizational Structures >
Copy reference Chart of Depreciation / Depreciation Area
Double click on Copy reference Chart of Depreciation
Select Copy Organizational Objects icon, (2nd Icon)

From Chart of Depreciation 1IN

To Chart of Depreciation 2500 Enter
Click on back arrow
Double Click on Specify Depreciation of chart of depreciation.
Select Position
Chart of Depreciation 2500
Description Chart of Depreciation for 2500 Save
Click on back arrow
Double Click on Copy / Depreciation Area
Chart of Depreciation Enter
Select Depreciation Area Retain 01,20,30
( delete rest of the numbers )
From the Menu select Edit – Delete Save
Press enter until you get Data Saved
Define 0 in GL Column of depreciation area 20 and save.

3) Assign Zero % tax code for non taxable transactions TC:/NOBCL

Path: IMG> Financial Accounting > Financial Accounting Global Settings > Tax on
Purchase and Sales > Postings > Assign Zero % tax code for non taxable
transactions.
Select Position
Company Code 2500
Input Tax Code V0
Output Tax Code A0 (Ignore messages, hit Enter) Save

106
4) Assign Chart of Depreciation to Company Code TC:/NOAOB
Path : IMG>Financial Accounting > Asset Accounting > Organizational Structures>
Assign Chart of Depreciation to Company Code

Select Position
Company Code 2500
Chart of Depreciation 2500 Save

5) Specify Account Determination

Path : IMG>Financial Accounting > Asset Accounting > Organizational Structures>
Asset Class > Specify Account Determination
(The purpose of Account Determination is to identify the types of Assets and the
Account Determination numbers mentioned is not the standard numbers. You can
define any numbers.)
Select New Entries
Account Determination Name of Asset Class
10000 Land
11000 Building
20000 Plant and Machinery
30000 Furniture and Fixtures
31000 Vehicle
40000 Capital Work in Progress

(If you want to create new Account Determination for Computers category: Go to
New Entries, type any number which is not already defined in the system, for ex:
12000, and type in Name of Asset Classes Computers, and Save.)

6) Create Screen lay out rules

Path : IMG>Financial Accounting > Asset Accounting > Organizational Structures>
- Asset Class > Create Screen lay out rules

Screen layout Name of Asset Class

1000 Land
1100 Building
2000 Plant and Machinery
3000 Furniture and Fixtures
3100 Vehicle
4000 Capital Work in Progress

107
(To create new screen layout for Computers, Select any existing screen layout, and
press F6, then delete existing screen layout no. and type 1200, and in name column
type Computers and hit Enter and then Save. These Account Determination and
Screen Layouts are above company code level.)

7) Define Number Range Intervals TC-AS08

Number From Number To Number
10 1 100
11 101 200
20 201 300
30 301 400
31 401 500
40 501 600

Save
8) Define Asset Class TC-OAOA
Path : IMG>Financial Accounting > Asset Accounting > Organizational Structures>
Asset Class > Define Asset Class

Select New Entries

Asset Class FA 10002
Description Free hold land
Short Text Free hold land
A/c Determination No. 10000
Screen lay out No. 1000
Number Range 10
Select No AUC or summary management of AUC Save

(Select Include Assets check box for Assets having Depreciation. If no depreciation,
don’t select Include Assets check box. In this case, Land and Work-in-progress.)

Select New Entries

Asset Class FA 11002
Description Building
Short Text Building
A/c Determination No. 11000
Screen lay out No. 1100
Number Range 11

108
Select Include Asset under inventory data
Select No AUC or summary management of AUC Save

Select New Entries

Asset Class FA 20002
Description Plant & Machinery
Short Text Plant & Machinery
A/c Determination No. 20000
Screen lay out No. 2000
Number Range 20
Select Include Asset under inventory data
Select No AUC or summary management of AUC Save

Select New Entries

Asset Class FA 30002
Description Furniture & Fixture
Short Text Furniture & Fixture
A/c Determination No. 30000
Screen lay out No. 3000
Number Range 30
Select Include Asset under inventory data
Select No AUC or summary management of AUC Save

Select New Entries

Asset Class FA 31002
Description Vehicle
Short Text Vehicle
A/c Determination No. 31000
Screen lay out No. 3100
Number Range 31

Select Include Asset under inventory data

Select No AUC or summary management of AUC Save
Select New Entries
Asset Class FA 40002
Description Capital work in progress
Short Text Capital work in progress
A/c Determination No. 40000
Screen lay out No. 4000

109
Number Range 40
Select No AUC or summary management of AUC Save
Select Next Screen button
Asset Class FA 40001 Expansion
Short Text Expansion
A/c Determination 40000
Screen lay out rule 4000
Number Range 40
Select line item settlement

9. Determine Depreciation Areas in Asset Classes: TC:/NOAYZ

Path: IMG> Fin A/cing> Asset a/cing> Valuation> Determine Depreciation Areas
in Asset Classes.
Select Position
In Asset Class type FA 11002 (Building)
Select 11000
Double Click on Depreciation Areas

Depreciation Areas Deactivate Dep Key Screen Layout

Book Depreciation Deselect 2000
(Deselect all “Deactivate” check boxes selection and assign 2000 as screen layout
for all three rows.)

(The same procedure you have to follow for other types of assets, say Building, Plant
and Machinery, Furn and Fixture, Vehicles and Work-in-progress, also)

10. Specify Document Type TC:/NOBA7

Select Position
In document Type enter AF
Select AF
Now click on Details Button icon in top
Select Number Range Information. Button
Enter company Code 2500
Click 2nd (change) interval button
Select Interval icon
No Year From No To No
04 2017 Press F4 Increasing no.
Enter & Save.

110
11. Specify Intervals and Posting Rules TC:/NOAYR (Optional)
Path: IMG> Fin A/cing> Asset A/cing> Integration with Genral Ledger> Post Depn to
Gen ledger> Specify Intervals and Posting Rules
Select Position
Enter Co. code 2500
Select 2500
Double Click on Posting Rules
Double click on 01 Book Depn
Select Monthly Posting Radio Button
Save.

12. Define Screen Layout for Asset Master Data

Path:IMG> Fin A/cing> Asset A/cing>Master Data>Screen Layout> Define Screen
Layout for Asset Master Data
Double Click on Screen Layout for Asset Master Data
Select Position
Screen layout 1100
Enter
Select 1100
Double click on Logical field Groups
Select 2 Posting Information
Double click on Field group Rules
Capitalization Date Select as Optional Entry
Select Main No., Sub No., Copy check Boxes
Save.

Select back Arrow

Select 3 Time Dependent Data
Double click on Field group Rules
Select Bus area and Cost Centre as Required entry
Select Main No., Sub No., copy Check Boxes
Save.

Do the same operation for all other Assets screen layout.

111
13. Specify Rounding up Net Book Value and/or Depn TC:/NOAYO

Path: IMG> Fin A/cing> Asset A/cing> Valuation.> Amt Specification.> Specify
Rounding up Net Book Value and/or Depn

Select Co. code 2500

Double click on Rounding specifications
Double click on Book depn
Select Automatically Calculated Depn Radio Button
Select Round up Radio button
Save.

(Below mentioned Define Base Method & Declining Balance Method are system
defined and not compulsory. You can skip these two steps. But these two will be
assigned to depreciation key later.)

14. Define Base Methods:

Same path: after Asset A/cing> Depn.> valuation methods.> Depn key.> Calcn
Methods.>. Define base Methods.
0014 After end of Life

15. Define Declining Balance Method TC:/NAFAMD

Same path;
Description
001 No decimal factor
in deprn rate

16. Define multi level methods TC:/NAFAMS

Same path:
Select New Entries
Multilevel Method V1
Description: 5% Straight line method
Validity: Start from ord Depn start Date
Save.

112
Double click on Levels
Acqn Year Periods Bas Value %
9999 999 12 01 5
Here 01 stands for (system defined) Acquisition Value
Save.
Select Back Arrow
Select Next Entry Button
Multilevel method V2
Descrpn: 10% Written down value Method
Validity: Start date from ord depn start date
Save.
Double click on Levels
Select New Entries

Acqn Year Periods Base Value %

9999 999 12 24 10

Here 24 (system defined) stands for Net Book Value.

17. Maintain period control Methods: TC:/NAFAMP

Same path:
Select New Entries
Period Con meth Descpn Acqn Add Retmnt Trans
006 01 06 06 06
Save.
(01= Acquisition Date, 06=Start of the accounting year, 07=Mid of the year for
calculation of depreciation)

18. Maintain Depn key: TC: /NAFAMA

Same path:
Select New Entries
Depn Key FA1 (Here you can define any name just for identifying types of depn
keys.)
Descpn: 5% Straight line method
Select Period control according to fiscal years check box
Save.
Ignore the message and Enter.

113
Double click on Assignment of calculation Methods
Select New Entries
Depn type: ord Depn
Phase: From start date of depn

Base method: 0014

Declining Balance method: 001
Period control method: 006
Multilevel Method: V1
Class: St. Line Depn
Save.

Select back arrow 4 times

(To activate Depn key)
Select FA1
Select activate Button in top.
Save.
Do the same operation for to create another Depn Key FA2 for W.D.V Method.
Select Multi Level method: V2, Class: Declining Balance method. Save.
For Assets having no depreciation create Depreciation key with 0% Rate.

19. Creation of Asset Master Data

TC: /NAS01
First type Co. Code
Enter the Asset Class FA 11001 (or Press F4 & select Asset Class)
Click on Master Data
Descpn: Building
Capitalzation Date: 01.04.2017
Select Time dependant Tag
Enter Bus Area
Enter Cost Centre Dept E (Optional)
Select Depn Areas tag
Depn key FA1 Useful Life 15 Period 6 Ord Depn Date 01.04.2017 for all 3 rows.
Save.

114
 ASSET RETIREMENT

Create G L Acounts for Fixed Assets.

Ledger. Ledger Name Recocln a/c Sort key FSG
No. type
200011 Building A/c Assets 018 G067
200211 Acc Depn-Building Assets 018 G067
Below Mentioned G Ls are Common forall Types Of Asset classes
300100 Asset Sale A/c 018 G052
300111 Profit on Asset Sale A/c 018 G052
300110 Clearing Account 018 G052
Revenue
400310 Loss-Asset Sale A/c 018 G001
400311 Loss-Scrapping 018 G001
400500 Depreciation A/c 018 G004

CONFIGURATION:
Path: IMG, Fin A/cing, Asset Acounting, Integration with GL, Assign GL Accounts.
TC:/NAO90
Chart of Accounts : 2500
Select Chart of Accounts : 2500
Doubleclick on ‘Account Determination’
Select ‘11000’ (Building)
Doubleclick on ‘Balance Sheet Accounts’
Acquisition & Product Costs 200011
Los made on Asset Retirement 400311
Clearing Account Revenue 300110
Gain from Asset Sale 300111
Los from Asset Sale 400310 SAVE
( Do the following Configuration for Assets having Depreciation.)
Doubleclick on ‘Depreciation’
Select 01 Book Depn – Doubleclick.
Acc. Depn. A/c for Ord Depn 200211
Exp. A/c for Ord Depn. 400500
-SAVE-
Same procedure for all types of Asset classes.

115
Asset Purchase Posting:
TC: /NF-90
Enter doc date 01.04.2017 , posting Date 01.04.2017
Post key 31 Select Vendor
Amount 1000000
Bus Area
Text: Asset purchase posting
Post Key 70 (Debit Asset) select Asset No. by pressing F4
Trans. Type 100 (external acquisition)
Enter

(delete if any tax codes)

Amount *
Bus Area
Text : +
Select Document-Simulate
Save.
To view planned depreciation, go to TC: /NAW01N

20. Depn Run:

TC: NAFAB
Co. Code 2500
Fiscal Year 2017
Period 1
Select Planned Posting run
Select Test Run
Execute.
Select ‘Yes” for the message
(If any error log rectify)
Select back Arrow
Deselect Test Run
From the menu top Select program>executing Background
Output Device: LP01
Enter
Select immediate button
Select Save (Floppy) button

116
Note down the job Name RAPOST2000
From the menu Select System>Services>Jobs>Job overview ot TC: /NSM37
Type job name RAPOST2000
Execute.
Select the Job (check box)
Select the Spool Button
Select the spool No. (check box)
Select Display Content button (Spects Icon)
Now check with TC:/NAW01 and verify depreciation posted.

Every time, do Test Run for each month before actually posting.

117
 C O N T R O L L I N G
INTRODUCTION

Organizational unit in an organization that represents a closed system used for cost
accounting purposes. A controlling area may contain one or more company codes,
which can operate in different currencies, if required. The company codes within a
controlling area must all use the same operational chart of accounts. All internal
allocation transactions refer only to objects from the same controlling area.

Use
Internal business transactions are portrayed in the controlling area. Primary costs
are transferred from external accounting and classified according to managerial
accounting perspectives. If the primary costs are direct costs, then they are assigned
to cost objects. If they are overhead costs, then they are assigned to cost centers or
overhead cost orders. The system then allocates them using internal allocation
techniques, according to their source. When you create master data, the system
always assigns the Controlling objects to a controlling area and a company code.
The level of detail provided by the Controlling component enables you to track
specific information for cost monitoring, business decisions and sales control. For
example, the Controlling component contains subdivisions such as cost centers and
internal orders in addition to accounts.

The SAP CO (Controlling) Module provides supporting information to Management

for the purpose of planning, reporting, as well as monitoring the operations of
their business. Management decision-making can be achieved with the level of
information provided by this module.

The Controlling (CO) component of SAP R/3 system contains all accounting
functions necessary for effective controlling for businesses.

Every organization normally have an external and internal accounting viewpoints.

The external viewpoints is represented by Financial Accounting (FI) component
and Controlling (CO) represents the internal accounting viewpoint. CO component of
SAP system offers a broad selection of functional tools that can be used to
provide management accounting information that are useful for management
decision making. Do remember that Financial Accounting and Controlling are
independent components of the SAP system. The data flow from the CO component
to FI component takes on a regular basis.

118
DIFFERENCE BETWEEN COMPANY CODE AND CONTROLLING AREA

Company Code
It is the smallest organizational unit in FINANCIAL ACCOUNTING (FI) for which a
complete set of accounts can be created. It is the central organizational unit of
external accounting within the SAP system. Normally, a company code is created for
each company (legal entity). It is a mandatory and pre-requisite that at least one
company code must be defined before implementing the Financial Accounting
component. All business transactions relevant for Financial Accounting are entered,
saved and evaluated at company code level. Therefore, it is at company code level
wherein a complete set of financial statements (Balance Sheet, Income Statement,
and Statement of Cash Flows) can be created.

Controlling Area

Controlling Area in SAP is an organization that represents a closed system used for
cost accounting purposes. It is an organizational unit in the Controlling (Management
Accounting) separate and has different functions with that of the Company Code.
One ore more Company Codes can be assigned to a Controlling Area.

PRIMARY COST AND SECONDARY COST

There are two types of cost elements in Controlling, namely; primary and secondary
cost element. Primary cost elements are use to transfer P&L account postings in

119
Financial (FI) to Controlling (CO). It is a requirement that all P&L accounts should
have a primary cost elements; otherwise, transactions can not be posted involving
P&L accounts in FI. On the other hand, secondary cost elements are use only for
allocation and assessment purposes as period-end process.

Example:
Primary Cost & Secondary Cost: SAP FI End User will pass one entry: Rent A/c Dr to
Cash A/c Rs. 1,00,000 with Cost Centre Dept A.

In CO, Rs. 1,00,000 will reflected in Dept A as expenditure. This is Primary Cost.

In CO, Management wants Department-wise reports for controlling expenditures with

Budget. Rs. 1,00,000 will be allocated to other Departments on some basis of
allocation from Dept A. Dept D may get 50,000 and Dept E may get 50,000. This
allocation is Secondary cost.

Allocation can be done a) Manually b) Automatic.

(One Company Code should have only one controlling Area but one controlling Area
can have number of company codes.)

Maintain Controlling Area:

Path: IMG> Controlling> General controlling> organization> maintaining controlling
area
Double click on Maintain control Area
Select New Entries
Controlling Area 2500 (controlling area=co. code)
Name Controlling area for 2500
Co. code to controlling Area : Controlling area same as co. code (select this option
if there is only one Co. Code. If different Co. Codes to be assigned for the same
Controlling Area, select second option.))
Currency type: 10
Currency : INR
Chart of Accounts :2500
Fiscal year Variant : V3
Cost Centre Standard Hierarchy: 2500hier
Save.
Select ‘yes’ for the message.
Enter.

120
Double click on assignment of Co. Code
Select New Entries
Co.Code: 2500
Save.
Double click on Activate components/control indicators
Select New Entries
Enter Fiscal year 2017
Cost Centers: Component Active (select)
Select AA: Activity type Check box
Order Management: Component Active (Select)
Select Profit Centre Check Box

Save.

Activity Type:

Three types of Activities:

1. Man Hours
2. Machine Hours
3. Units

For example, there is a shortage of manpower in Dept C, one employee from Dept A
will go to Dept C and work in the Dept C for 8 hours. This 8 hours wages will charged
to Dept C. This is man hours. As the same case, one Dept may use other
Department Machine. Machine hours will be charged to the respective department.
Like-wise use of Power.

121
Maintain No. Ranges for Controlling Documents:

You need to define number intervals for all business transactions that generate CO
documents. It is possible to copy document number intervals from one controlling
area to another.
There are two steps to issuing number intervals for documents :

- You group more than one transaction together. If you want to assign a different
number interval to each transaction, you can create a group for each transaction.

122
- You assign the group to an internal or external number interval. This enables you to
use one group of number intervals for similar transactions.

-You define number intervals for CO documents independently of fiscal year. The
document numbers can be assigned in ascending order.

- SAP recommends that you create different number interval groups for actual and
plan transactions. This ensures that reorganization programs that run separately for
actual and planning data also reset the number intervals separately.

Configuration:
Path: IMG>Controlling> General Controlling> Organization> Maintain No. ranges for
controlling documents.
Enter in controlling area : 2500
Select in Top- Maintain groups Button
From menu, select Groups>Insert
Enter Text: Controlling Area for 2500
From No. (press F4) To No. (define Increasing No.)
Enter
Now double click on
COIN (controlling through postings from FI
RKU3 :Repost controlling line items
RKU1 Reposts costs
RKP1 Planning primary cost
RKIU actual overhead Assessment
Now, go top and select Controlling area for 2500 Check box.
Then, click on Assign Element Group button
Save.

Maintain Versions:
Same path:
Select 0 plan/actual Version
Double click on settings for each fiscal year
Controlling Area:2500
Enter.
Select Fiscal year 2017
Select Details Button
Enter Exchange Rate type “M”

Save.

123
 COST CENTRE ACCOUNTING

Cost Center Accounting (CCA)

The cost center accounting (CCA) module within CO provides the means for
assigning planned costs and actual costs incurred to areas of cost responsibility
within an organization. If a manager wants to know how much it costs to run his
department for the month of April, this module can be used to provide the answer.
The CCA module contains a variety of methods for allocating costs among cost
centers and from cost centers to other cost objects (e.g., internal orders, production
orders, profitability segments, etc.).

Initially, we have to assign cost element in all FI Expenditure Ledgers.

124
Creation of cost element in FI area:
Enter TC:/NFS00 in command field.
Enter G L Account No.400100
Co. Code:2500
Select 3rd icon (create icon )
Select Accounts Group: Personal staff cost
Short Text:Salary Account
In control Data tag, select Line item Display check box
In Sort key:001
In create/bank Tag, enter in Field Status Group:G004
Save.
Now select in top right, Edit Cost Element Button
A/c No. 400100
Valid from:01.04.2017 to 31.03.2018
Enter
Under Basic Data:
Enter Cost Element Category:01(indicates Primary cost)
Save.

In the same manner, define for G L Account No. 400300, Accounts Group: Admn
Exp, short text: Rent A/c, in control data tag, enter sort key:001, In create/bank tag,
in field status group:G004.
Save.
Now in top select Edit Cost Element Button
G L A/c No.400300
Valid from:01.04.2017 to 31.03.2018

Enter.
Under Basic Data:
Cost Element Category:01
Save.

(If you want to convert any FI (Expenditure) ledgers into CO for reporting, go to
Edit option in Ledger creation (NFS00), change field status group as G004, Save
and select Edit cost element button, Assign 01 in cost element category and save.)

Edit Field Status Variant:

TC:OBC4
Select the field Status Variant 2500
Double click on Field status group

125
Select G004 and double click on Cost accounts
Double click on General Data

Text field as Required Entry

Select Next group icon in top left
Cost Centre as Required Entry
Business Area as Required entry
Save.

Creation of Cost Centres:

Path:SAP>Accounting>Controlling>Cost centre A/cing> Master Data> Cost

Centre>Individual processing> Create.
TC:/NKS01

(Here we are going to define three Service Depts (A B C) and three Production
Depts (D E F) to allocate Service Depts Expenses to Production Depts.)

Enter Cost Centre:Dept A

Valid from:01.04.2017 to 31.03.2018
Enter
Cost Centre name:Dept A
Descpn:Cost centre Dept A
Person Responsible: A
Cost centre category:H(service cost centre-system defined)
Hierarchy Area:2500hier
Bus Area:
Currency:INR

Profit Centre: (leave blank)

Save.
Ignore the message, Enter.
Same way you have to define Dept B, Dept C.

To define prodn depts.:

Enter cost centre:Dept D
Valid from:01.04.2017 to 31.03.2018
Enter.
Name:Dept D
Descpn:cost centre for Dept D

126
Person Responsible:D
Cost centre category:F(production cost centre(system defined))
Hierarchy area:2500hier
Currency:INR
Profit centre:(leave blank)
Save.
Ignore the message and Enter.
Same way you have to define Dept E, Dept F.

Creation of Cost Centre Group:

TC:/NKSH1
2500hierp (p Indicates prodn depts.), Enter.
2500hierp Prodn cost centre for 2500
Select Insert cost centre Button
Below 2500hierp, type:

Dept D
Dept E
Dept F Save
\
Creation of Cost Element Groups:
(To verify GL converted to CO reporting)
TC:/NKAH1
Type in Cost Element Group: TOTALEXPN
Enter
Descpn:Total Exp for 2500
Select Insert Cost Element Group Button
Below TOTALEXPN type:
400000 400599
Save.
You will find list GLs which are all converted to CO reporting.
Creation of Secondary Costing for Automatic Allocation:
TC:/NKA06
Type in Cost element : 2500cycle (anything you can define)
Valid from:01.04.2017 to 31.03.2014
Enter.

Name:Servicetoprodn
Descpn: service to prodn
In Cost element Category: 42(Assessment). Save

127
Define Assessment:
TC:/NS_ALR_87005742
Type Cycle: 2500
Start Date:(01.04.2017)
Enter.
Enter Text : Servicetoprodn
Select Attach Segment Button in top.
Segment Name : Servicetoprodn
Assessment Cost Element 2500cycle
Sender Rules Posted Amount

Sharing % : 100
Receiver Rule : Fixed Percentages
Now select Senders/Receivers Tag
Enter Cost centre Dept A (in From Column)
Under Receivers Option
In Cost centre , in group column, enter 2500hierp. (Press F4 & select)
Now, Select Receiver Tracing Factor Button.
You will find allocation of prodn depts..
In percent column, enter 20, 30 and 50 (this indicates basis of allocation of expenses
of service Depts to Prodn Depts. The percentage total should come to 100. This is
Absorption of Costing from Service Departments to production Departments)
Save.

128
Planning Primary Costs: TC:/NKP06

Version=0
From Period=1

To Period=12
Fiscal Year=2017

Cost Centre=Dept D

Cost Element=400300
Under Entry:

Select “Form Based”

Select “Overview” Icon

Cost Element Plan Fixed Costs Distribution Key

400300 120000 1

Distribution Key 1=Equal Distribution. Save.

Now, in tool Bar, select Go To>Period Screen.

129
FI Expenses posting: (F-02)

Pass journal entry for Salary A/c Dr. to Cash A/c with Cost Centre “ Dept A” and
Save. Note down Document No. to allocate expenditure manually to production
depts..

Display Cost Centre-wise Details: (TC:/NKSB1)

Cost Centre=Dept A

Delete 2500hier, Totalexp, etc

Execute or Press F8.

Repost of CO Line Items: (TC:/NKB61) (Manual allocation)

Document No.
Co. Code :2500
Fiscal Year : 2017
Execute.

130
In Value Transaction Currency, delete existing amount and type,

Value Tr Currency Trans Currency Oty Account

Assignment-1

100000 Inr Ctr * Dept A

Delete 100000 & Inr Ctr Delete Dept A &

type 50000 & Enter type Dept D &
Enter

Save.

Automatic Allocation by cycle

TC: /NKSU5
Enter period 1 to 12
In cycle column, press F4. (You will get cycle already defined for allocation)
Now Execute.

Variance Report Analysis: TC: /NS_ALR_87013611

Controlling Area=2500
Fiscal Year=2017
From Period=1

To=12
Cost Centre Dept D
Cost Element 400300

Execute.

131
INTERNAL ORDERS

Various events like Trade Fairs, Seminars, Exhibitions, which occur every year in
any Organization.. These trade fairs are organized by the Marketing cost centre of
the Organization. Therefore in this case, Marketing cost centre is responsible for all
the trade fair costs. Hence, these trade fair costs are posted to the marketing cost
centre. Now if management wants an analysis report of the cost incurred for each of
the trade fair organized by the marketing cost centre how would the marketing
manager get these piece of information across to them ? Now this is where Internal
Order steps in. If you go through all cost centre reports, this information is not readily
available since all the costs are posted to cost centre.

(An internal order is used to accumulate costs for a specific project or task in a
specific time-duration. Therefore, an internal order is use for a short period with a
specific deadline.)

132
Purpose:

It can be used to group all the costs/expenses that could be incurred to plan and
hold a marketing event, say over a 2 month period. And then the order can be settled
periodically to a cost center.

Two types of Internal Orders: namely; Real and Statistical Order.

The difference between Real and Statistical Order is that, Real Order is required to
be settled to a cost center. When an order is a Real Order, it is where you post a
cost during posting in FI and in other modules. Example; when you prepare a
purchase order for a marketing event and charge it to an order, the cost is post to an
order not to a cost center. And the cost accumulated in the order are required to be
settled to a receiver cost center.

Whereas, a Statistical order can not be settled to a receiver cost center. Being a
statistical is specified during set-up of an order. When you post costs in FI, you post
simultaneously to a cost center and to a Statistical Order. No settlement of costs
accumulated in the Statistical Order at month-end.

Configuration:
Path: IMG> Controlling>Internal Orders>Order Master Data> Define Order Types.
Select New Entries

Enter the order Category:01(Internal order)

Enter.
Enter the order type:123V(Vehicle order type for 2500)
Enter Planning profile:000001
Enter object class: Overhead cost
Select Release immediately check box.
Save.
You will get message ’No. range not processed’
Enter.

In the same screen, Select pencil mark in No. range.(Assign/change interval button)
Now go to bottom of the screen, in ‘Not assigned list’ category, Double click on
2500V.
Now go to top of the screen, identify heading ‘Motor pool External No. Assignment-
ZZZZZZZ’. / Model Order, Select this check box.

133
Now, Select ‘Assign Element Group’ Button in top.
Save and Enter.

Creation of Field Status Group for Cost Centre and Internal Order :

TC:/NOBC4
Select the Field Status Group 2500
Double click on Field Status Groups
Select G004
Press F6.
Change the Field Status Group as G002.
In Text, change ‘cost accounts (CCIO)’
Enter and Save.
Now, select G002
Double click on cost accounts
Double click on Addnl Accnt Assgnmnt
Cost Centre Requires Entry
CO/PP Order Requires Entry
Bus Area Required Entry
Save.

Now create one ledger (TC: /NFS00) G L A/c No. 400305 A/c Group:Admn Exp,
Ledger :Petrol Expenses, only change in Field Status Group :G002 and Save. Then
Select Edit Cost element Button, type Cost Element Category:01
Save.

Creation of Internal Orders:

TC:/NKO01
Type the Order Type:123V
Enter.
Enter the Order:KA05 2256
Short text:Staff car for 2500
Enter Co.Code
Enter Bus Area
Select Control Data button
Select Statistical order check box.
Save.
(Like this, you can create any number of vehicles of the Company)

134
Planning Internal Orders: TC:/NKPF6

Variables:

Version=0
From Period=1

To Period=12

Fiscal Year=2017

Order=Vehicle No.

Cost Element=400305
Entry:
Select Form Based

Select “Overview” Icon

Cost Element Account Total plan costs Distribution key

400305 Petrol exp a/c 120000 2

Distribution Key 2=Distribution as before.

Save.

Pass an entry in F-02 (Petrol Exp A/c Dr. to Cash A/c, with Cost Centre=Dept D and
Order=Vehicle No. and Save.

135
Variance Analysis Report TC/NS_ALR_87012993

Controlling Area=2500

Fiscal Year=2017
From Period=1

To=12

Plan version=0
(Order Value(s)=Vehicle No.)

Cost Element
Value G L Number (400305)
Execute.

136
PROFIT CENTRE ACCOUNTING

PROFIT CENTRE

A profit center is a management-oriented organizational unit used for internal

controlling purposes. Dividing your company up into profit centers allows you to
analyze areas of responsibility and to delegate responsibility to decentralized units,
thus treating them as “companies within the company”. Profitability of each profit
center can be monitored closely. Furthermore, a financial statement can be
generated for each profit center.

Revenue and costs postings in Financial Accounting (FI) require an assignment to a

cost object (e.g. overhead controlling, profitability). What transfer the FI posting data
to Controlling are the primary revenue and cost elements. Revenue items generally
require a profit center assignment. Cost items generally require cost center, work
breakdown structure element, network and internal order assginments.

Dummy Profit Center: Remember, that an accurate financial statement can be

generated for each profit center. It’s therefore safe to assume that all transaction
postings should have a profit center assignment; all balance sheet and income

137
statement accounts. During posting of transaction there might be instances a user
may forget to indicate the profit center assignment. In this case, the transaction data
will be automatically assigned to a Dummy profit center. A Dummy profit
center serves as a dumping account/temporary receiver of transactions with no profit
center assignment. Data accumulated in the Dummy profit center can be reposted to
the correct profit center.

(Whenever you are practicing Controlling, First you have to check whether you are in
your controlling area or not. To check Controlling Area TC:/NOKKS
Type your Controlling Area and then practice.)

Maintain Control Area Settings:

TC:/N0KE5

Std Hierarchy:2500hier
Select Elimination of Internal business check box.
Profit Centre Currency:90

Select Store Transaction Currency check box.

Save.

Create Dummy Profit Centre:

TC:/NKE59
Enter Dummy Profit Centre:2500dummy
Select Basic Data on top.
Name:2500dummy
Descpn:Dummy Profit Centre for 2500
Person Responsible: Dummy
Profit Centre Group:2500hier
Save.

Set Control Parameters for Actual Data:

TC:/N1KEF
Select New Entries
From year 2017
Select line item check box
Select online Transfer check box.
Save.

138
Maintain Plan Versions:

Path:IMG>Controlling>Profit Centre A/cing>Basic Settings>Controlling area

setting>Activate direct posting>Plan versions>Maintain plan versions.

Select Version ‘0’(plan/actual version)

Double click on Settings for Profit Centre A/cing
Select New Entries
Year 2017
Select ‘online transfer’
Select line item check box
Type Exchange Rate type:M
Save.

Define No. range for Local Documents:

TC:/NGB02
Select ‘maintain Group ‘ Button in top
Select ‘AO(Actual postings) check box.
From the menu, Select Interval-Maintain
Enter Co.Code. 2500
Enter.
Select Interval Button (Here if you are not finding Interval Button, delete the existing
Intervals by selecting already defined intervals and in menu select Edit-Delete and
Save.)
Year 2017
From: Press F4
To: any increasing No.
Enter
Save.
Now select back Arrow
Select GI (PO), (Planned Doc)
From Menu select Interval-Maintain
Co.Code:2500
Select ‘Interval’ Button
Year 2017

139
From: Press F4
To: any increasing No.
Enter
Save.

Creation of Profit Centers:

TC:/NKE51
Profit Centre: Product 1
Enter.
Examn Period: 01.04.2017 to 31.03.2017
Name: Product 1
Long Text:Profit Centre Product 1
Person Responsible: P1
Profit centre Group: 2500hier
Now, in top, Select ‘Activate’ Button
In the same way, you can create for Product 2, Product 3.

Assignment of Profit Centre in Cost Centres:

TC:/NKS02
Cost Centre: Dept D
Enter
Profit Centre: Product 1
Save.
Select ‘yes’ for the message.
Same way define for Dept E – Product 2 and Dept F – Product 3.

140
Edit Profit centre as “required entry” in Field status variant:

In TC:/NOBC4, select 2500 and Doubloe click on Field status group.

Now, select G001 and press F6 to copy.

Rename G001 as G010 and in text “Profit centre ” and Enter and Save.
Now double click on G010 and double click on Additional Account Assignments.

Select Radio Button of Profit centre as Required Entry.

Save.

Assign FSG G010 to Sales Account

In FS00, edit G L A/c No. 300000 and change FSG as G010 and save.
Select Edit Cost Element Icon
Cost Element=300000

From=01.04.2017 to 31.03.2018
Select Master Data Icon.

Cost Element Category=11 (Revenue). Save.

141
Maintain automatic account assignment: TC:/NOKB9

Select “New Entries”

Co. Code Cost B Arln Cost Order Profit Profit

Element Centre Segment Centre

2500 300000 Product 1

Save.

Revenue Document Posting: TC:/NF-02

Pass entry Cash a/c Dr to Cash Sales A/c, Profit Centre=Product 1 and Save.
(Ignore the messages).

Display Profit Centre-wise details: TC/NKE5Z

Record Type=0

Version=0
Controlling Area=2500

Co. Code=2500
Posting Period=1

Fiscal Year=2017

Profit Centre=Product 1

Execute.

142
INTEGRATION WITH OTHER MODULES: MM & SD

• Customer and Vendor master records also contain segments that are created and
maintained in the Sales and Distribution (SD) and Materials Management (MM)
modules, respectively.
• The organization implementing the system determines whether to restrict access to
Customer and Vendor master records by department (Sales / Purchasing,
Accounting) or to allow all departments to have access centrally via a single
transaction.

INTEGRATION WITH MM:

Any transaction in MM with the respect to material movements happens with a

movement type. Each Material movement such as goods receipt against purchase

143
order, goods issue to production order, scrapping of goods, transfer of goods, goods
issue for sale, initial stock upload, has a Movement type defined in the system.
Thus the various account assignments (transaction keys) are linked to an MM
movement type.

In the Material Master we have various views such as the Basic view, purchasing
view, Sales view, MRP view, Quality view, the Accounting and the Costing view

In the Accounting view of the Material master we update the Valuation Class.

Each material type will have a certain valuation classes. The valuation class will
determines the GL codes for the stock postings.

1. Movement Types:

Used to enable the system to find the predefined posting rules determining how the
accounts of financial accounting system are to be posted & to update the stock fields
in the material master data.(Goods Receipt, Goods Issue, etc)

2. Valuation Class:

Assignment of material to group of GL account, used to determine the GL accounts

that are updated as a result of goods movement.

3. Material Type:

Each material should assign material type in material master record used to update
whether changes made in quantity are updated in material master record & change
in value also updated in stock account.

4. Transaction/Event key:

Used to control the storage or filing of documents & assignment of documents. Used
to differentiate between various transactions such as goods movement that occur in
inventory.

144
AUA: for order settlement

AUF: for goods receipts for orders (without account

assignment) and for order settlement if AUA is not maintained

AUI: Subsequent adjustment of actual price from cost center directly to material
(with account assignment)

BSA: for initial entry of stock balances

INV: for expenditure/income from inventory differences

VAX: for goods issues for sales orders without account assignment object (the
account is not a cost element)

VAY: for goods issues for sales orders with account assignment object (account is a
cost element)

VBO: for consumption from stock of material provided to vendor

VBR: for internal goods issues (for example, for cost center)

VKA: for sales order account assignment (for example, for individual purchase order)

VKP: for project account assignment (for example, for individual PO)

VNG: for scrapping/destruction

VQP: for sample withdrawals without account assignment

VQY: for sample withdrawals with account assignment

ZOB: for goods receipts without purchase orders (movement type 501)

ZOF: for goods receipts without production orders (movement types 521 and 531)

145
Configuration:

Path:IMG>Materials Management>Valuation & Account Assignment>Account

Determination>Account Determination w/o wizard>Define Valuation Class

Click on “Valuation Class”

Material type Description Valuation Class

ROH Raw Material 3000
VERP Packaging 3050
HALB Semifinished Goods 7900
FERT Finished Goods 7920
HAWA Trading Goods 3100

Process Flow in MM:

1. Generating Purchase Requisition (PP & MM involved)

2. Making enquiries (MM)
3. Raising PO (MM)
4. Release of PO (MM)
5. Goods received from Vendor (MM & FI)
6. Invoice verification & quality assurance (FI & MM)
7. Goods issued for consumption (MM, FI & PP)
8. Production Receipt (FI, MM & PP)
9. Finished goods delivered to Customer (MM, SD & FI)

Create General Ledgers in FS00 with Post Automatically Only check box.

For Valuation Class: (with FSG G006)

Valn Ledger Name Ledger No.

Class
3000 Inv Raw Material A/c 200125
3050 Packing Material 200121
7900 Semifinished Goods 200122
7920 Finished Goods 200123
3100 Trading Goods 200124

GR/IR Account G L No. 100520 FSG G045

146
Raw material Consumption (with FSG G003)

3000-RMC 400000
3050-RMC 400005
7900-RMC 400007
7920-RMC 400008

Stock Data:

3000-stock data 200160

3050-stock data 200161
3100-stock data 200162
7900-stock data 200163
7920-stock data 200164

Cost of Goods Sold G L No. 300005

Goods-Scrapped G L No. 400315 FSG G018

Transactions:

Goods receipt of Raw Material against PO (Movement Type 101)

Inv Raw Material A/c Dr

To GR/IR A/c (GR/IR A/c is a provisional Account in SAP)

TC: /NOBYC

For BSX transaction key assign Inv Raw material A/c G L No.

Double click on BSX

Select Valuation Class

SAVE

147
Valn Account
3000 200125
3050 200121
3100 200124
7900 200122
7920 200123

SAVE.

For GR/IR Account, double click on WRX

( GR/IR Accounts are not maintained as per Valuation Class).

Select Valn Modification SAVE

Account 100520 SAVE.

Raw Material issued to Production Order (Movement type 261)

Raw material Consumption A/c Dr.

To Inv raw Material A/c

Double click on GBB

Select Dr, Valn Mod, Valn Class SAVE.

Valn Mod Valn Class Dr Cr

VBR 3000 400000 400000
VBR 3050 400005 400005
VBR 7900 400007 400007
VBR 7920 400008 400008

Initial stock upload (Movement type 561)

Inv raw material A/c Dr

To Stock data Takeover

148
Double click on GBB

Select Valn Mod, Valn Class, Dr. SAVE.

Valn Mod Valn Dr Cr

BSA 3000 200160 200160
BSA 3050 200161 200161
BSA 3100 200162 200162
BSA 7900 200163 200163
BSA 7920 200164 200164

SAVE.

Goods receipt for Finished Goods against Production Order (Movement

Type 101)

Fin Goods A/c Dr

To Change in Fin Goods

Double click on GBB

Select Valn Mod, Valn class, Dr. SAVE.

Valn Mod Valn Dr Cr

AUF 7900 400007 400007
AUF 7920 400008 400008

SAVE.

For Sales (Movement type 601)

Cost of Goods sold A/c Dr

To Fin Goods A/c

149
Double click on GBB

Select Valn Mod, Valn class, Dr. SAVE.

Valn Mod Valn Dr Cr

VAX 7920 300005 300005
VAX 3100 300005 300005

SAVE.

Goods scrapped (Movement type 551)

Raw Mat-Scrapping a/c Dr

To Inv Raw Mat A/c

Double click on GBB

Select Valn Mod, Valn class, Dr. SAVE.

Valn Mod Valn Dr Cr

VNG 3000 400315 400315

SAVE.

Goods for Sampling (Movement Type 331)

Raw Mat Consumption A/c Dr.

To Inv Raw mat A/c

Double click on GBB

Select Valn Mod, Valn class, Dr. SAVE.

Valn Mod Valn Dr Cr

VQP 3000 400000 400000

150
 SAVE.

Integration with Sales and Distribution

All Billing transactions happening in the Sales and Distribution module will trigger FI
postings.

In this step, you allocate the G/L accounts for the revenue account determination.

You make the allocation for each of the access sequences.

In this case, you specify a G/L account depending on the following terms:

· * Application (key for the Sales and Distribution application)

*Account Determination Type

*Chart of accounts (from the FI System)

· *Customer account assignment group

· *Materials account assignment group

· *Account key

The allocated accounts are used to post revenues, surcharges and discounts
automatically.

Create SD Organization:

Path:IMG>Enterprise structure> Definition> SD> Define Copy SD.

Double click on Define Sales Organization
Select New Entries
Sales Orgn: ABC
Stat Currency:INR
Factory calendar:IN

151
Save.
In next screen, Enter same SD Name and Country:IN
Enter.

2. Create G L Accounts:
TC:/NFS00
G L A/c No. Ledger Name FSG Accounts Group
300115 ERF-Freight Revenue G029 Other Income
300116 ERL-Revenue G029 Other Income
300210 ERS-Sales Deduction G001 Incr/Decr in Stock
100520 MWS-Output Vat G001 Current Liabilities

3. TC:/NVKOA
V=S&D, KOFI=Account Determination, 01=Domestic Revenue, 03=Finished Goods.
Double click on 001=cust gr/mat gr/acc key
Select New Entries

APP C TY CH A/C S ORG A AAG A/C KEY G L A/CS

V KOFI 2500 ABC 01 03 ERF 300115
V KOFI 2500 ABC 01 03 ERL 300116
V KOFI 2500 ABC 01 03 ERS 300210
V KOFI 2500 ABC 01 03 MWS 100520
Save.

152