introduction to financial accounting management egn 5622 enterprise systems integration professional...

Introduction to Financial Introduction to Financial Accounting ManagementAccounting Management

EGN 5622 Enterprise Systems Integration EGN 5622 Enterprise Systems IntegrationProfessional MSEMProfessional MSEM

Fall, 2012 Fall, 2012

Introduction to Financial Introduction to Financial Accounting Management Accounting Management

Theories & ConceptsTheories & Concepts

EGN 5622 Enterprise Systems Integration EGN 5622 Enterprise Systems Integration Professional MSEM Professional MSEM

Fall, 2012 Fall, 2012

January 2007 (v1.0)January 2007 (v1.0)

© 2007 by SAP AG. All rights © 2007 by SAP AG. All rights reserved. SAP University Alliance. reserved. SAP University Alliance. The Rushmore Group, LLCThe Rushmore Group, LLC 33

Financial Accounting (FI)Financial Accounting (FI)

Financial accounting is designed to collect transactional data that provides the foundation for preparing a standard portfolio of reports

In general, these reports are, primarily but not exclusively, directed at external parties

Standard reports include:◦Balance Sheet◦Income Statement◦Cash Flows (Statement)

January 2008January 2008

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Target AudienceTarget Audience

InternalExecutivesSenior ManagementAccount managersAdministration StaffEmployees

ExternalLegal AuthoritiesBanksAuditorsShareholdersInsuranceTaxing AuthoritiesMediaFinancial Analysts



FI Organizational ObjectsFI Organizational ObjectsRepresent legal and organizational

views of an enterpriseForm a framework to support business

activities in a manner desired by the management

Accurately collect and organize business information

Enable and support business planning and decisions



FI Organizational ObjectsFI Organizational ObjectsChart of AccountsGeneral Ledgers (G/L)

◦Customer Accounts and Accounts Receivable (A/R)

◦Vendor Accounts and Accounts Payable (A/P)



Chart of AccountsChart of AccountsIt is a classification scheme consisting

of a group of general ledger (G/L) accounts.

It provides a framework for the recording of values to ensure an orderly rendering of accounting data.

It contains the G/L accounts used by one or more company codes.



General Ledger (G/L) AccountsGeneral Ledger (G/L) Accounts

General Ledger is a data storage area created with a unique combination of Company Code and Chart of Accounts

General Ledger contains a listing of transactions effecting each account in the Chart of Accounts and the respective account balance

It is used for preparing financial accounting statements



General Ledger (G/L) AccountsGeneral Ledger (G/L) Accounts

Each G/L account with a unique account number is designated into a ◦balance sheet account group and ◦profit and loss account group.

The balance in balance sheet accounts is carried forward into the same account.

The balances in profit and loss accounts is carried forward into a different (specified) account: ◦E.G.: a retaining earning account.



Subsidiary Ledgers (Sub-ledgers) Subsidiary Ledgers (Sub-ledgers) and Reconciliation Accountsand Reconciliation Accounts

Sub-Ledgers: Some financial data are not directly maintained in the general ledger. For example, customers accounts, which track the amounts customers owe and payments they paid, are maintained separately for each customer. Similarly, data about each vendor are maintained in separate accounts. Such accounts are called sub-ledgers, and don’t show up in the general ledger.



Subsidiary Ledgers (Sub-ledgers) Subsidiary Ledgers (Sub-ledgers) and Reconciliation Accountsand Reconciliation Accounts Reconciliation accounts: part of general ledger

accounts that consolidate data from a group of related sub-ledger accounts, such as customers and vendors.

The reconciliation account for customers is accounts receivable.

The reconciliation account for vendors is accounts payable.

Transaction data must first be posted to a sub-ledger account, and automatically posted to its corresponding reconciliation account.



Subsidiary Ledgers (Sub-ledgers) Subsidiary Ledgers (Sub-ledgers) and Reconciliation Accountsand Reconciliation AccountsThe balance in the reconciliation account

(e.g., accounts receivable or accounts payable) is the sum of the postings in the related sub-ledger accounts (for example, customers and vendors, respectively).



Customer and Vendor AccountsCustomer and Vendor AccountsCustomer and Vendor Account

balances are usually maintained in FI through integrated accounts receivable and accounts payable (sub-modules)

Financial postings for Customers and Vendors are made directly to their respective individual accounts and concurrently to the General Ledger



Customer AccountsCustomer AccountsAccounts Receivable Sub-Module

◦Information with respect to customers who purchase the enterprise’s goods and services such as sales and payments made

◦The integration between Sales and Distribution (SD) and FI is important, so that the billings in the SD will generate FI journal entries for sales activity



Customer AccountsCustomer Accounts

Accounts Receivable(General Ledger)

950

300

Customer 142

150

Customer 123

400

Customer 135

100

Customer 189



Accounts Receivable IntegrationAccounts Receivable Integration

FIFinancial

Accounting

FIFinancial

Accounting

FIFinancial

Accounting

FIFinancial

Accounting

MMMaterials

Mgmt.

MMMaterials

Mgmt.

RevenueIncrease to A/R

GoodsIssue

SalesOrderInvoce

Income StatementBalance Sheet

FIFinancial

Accounting

FIFinancial

Accounting

COGSDecrease to Inventory

SDSales and Distribution



Vendor AccountsVendor AccountsAccounts Payable Sub-Module

◦Information with respect to Vendors from whom the enterprise purchases goods and services such as purchases and payments made

◦The Materials Management (MM) and FI are integrated in SAP, such that the activity of purchase and goods receipt in MM will generate an FI journal entry.



Vendor AccountsVendor Accounts

Accounts Payable(General Ledger)

850

250

Vendor 100435

200

Vendor 100234

100

Vendor 100621

300

Vendor 100846



Accounts Payable IntegrationAccounts Payable Integration

MMMaterials

Mgmt.

MMMaterials

Mgmt.

FIFinancial

Accounting

FIFinancial

Accounting

FIFinancial

Accounting

FIFinancial

Accounting

Increase to A/PDecrease to GR/IR

GoodsReceipt

Balance Sheet

FIFinancial

Accounting

FIFinancial

Accounting

Increase to InventoryIncrease to GR/IR

InvoiceReceipt

MMMaterials

Mgmt.

MMMaterials

Mgmt.



Accountants and Audit TrailsAccountants and Audit TrailsAudit trails allow an auditor to begin with

an account balance on a financial statement and trace through the accounting records to the transactions that support the account balance

Audit trails enable an auditor to trace individual transactions to the effected account balance(s) on a financial statement

Introduction to Financial Introduction to Financial Accounts ManagementAccounts Management

SAP Implementation SAP Implementation

EGN 5622 Enterprise Systems Integration EGN 5622 Enterprise Systems Integration Professional MSEM Professional MSEM

Fall, 2012Fall, 2012

R/3

SAP Module ViewSAP Module View

Integrated SolutionClient / Server

Open Systems

FinancialAccounting

Controlling

Fixed AssetsMgmt.

ProjectSystem

Workflow

IndustrySolutions

ProductionPlanning

Sales &Distribution

MaterialsMgmt.

PlantManagement

QualityMaintenance

Human Resources



Components of Financial Components of Financial AccountingAccounting

Financial Accounting

(FI)

AccountsReceivable

AccountsPayable

SpecialPurposeLedger

FixedAssets

Banks

GeneralLedger

Business Processes IntegrationBusiness Processes Integration



MM

PP

SD

Org

Dat

a

Rules

MM

PP

SD

Master D

ata

MM

PP

SD

FI SDMM

FI

FI

FI

PP



Business Processes IntegrationBusiness Processes Integration

◦Financial Accounting (FI)◦Materials Management (MM)◦Sales and Distribution (SD)◦Production Planning (PP)



Financial Accounting ModuleFinancial Accounting Module

Organization DataMaster dataRulesTransaction Data




Org

Dat

a

Rules

Master D

ataFI

FI FI

FI




Org

Dat

a

FI

FI



Organizational Data (review)Organizational Data (review)

A hierarchy in which the organizational units in an enterprise are arranged according to functions and tasks

Are static data and are rarely changed Once the organizational structure is decided, it is not easy to

change it

The definition of organization units is a fundamental step; it is a critical factor in how the company will be structured



Organization Structures (Review)Organization Structures (Review)

◦Client◦Company ◦Company code◦Chart of accounts◦Fiscal year variant◦Credit control area



Client

CompanyChart ofAccounts

CompanyCode

Fiscal YearVariant

Credit ControlArea

Organizational Structure forFinancial Accounting



Business AreasBusiness Areas

Business AreasA unit in an enterprise that groups product and

market combinations as homogeneously as possible for the purpose of developing unified business policy.



Client

GeneralMotors

GM Corp. Chart of Accts

GMC CadillacChevrolet

CorporateFiscal Year Var.

GM–CorporateCredit CA

Cars Cars

Trucks Trucks Trucks

Business Areas

Consolidation of Company Codes

Optional Organizational Structures




Master D

ataFI

FI


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Master Data

Financial Accounting• General Ledger

Accounts• Material Master• Vendor Master• Customer Master

Material Management• Vendor Master• Material Master• Customer /

Purchasing Info Records

Sales & Distribution• Customer Master• Material Master• Pricing• Credit Limits • Customer Material

Info Records• Item Proposal



FI Master DataFI Master Data

General Ledger Master Data◦Chart of Accounts Data◦Company Code Data◦Reconciliation Accounts

Accounts Receivable Accounts Payable Goods Receipt/Invoice Receipt

General Ledger Account Balances



General Ledger – Master DataGeneral Ledger – Master Data

General Ledger accounts are created at the client level

A unique master record is created for each General Ledger account

Business transactions are posted to the portfolio of General Ledger accounts made available to a company through the assignment of a specific Chart of Accounts



General Ledger – Master Data General Ledger – Master Data (continued)(continued)

Contains control information for:◦ Data entry◦ Data processing

Specifies what is in:◦ The balance sheet, and ◦ The income statement



General LedgerGeneral LedgerOrganization of the DataOrganization of the Data

G/L master account contains◦one or more Chart of Accounts specific

information areas◦one or more Company Code specific information

areasSo that it can be shared by several

combinations of Charts of Accounts and Company Codes



100101

CPEN

X

BS

Account numberChart of accounts

Account groupP&L statement acct type Balance sheet account

General LedgerGeneral LedgerChart of Accounts DataChart of Accounts Data

Account numberName of the Chart of

AccountsAccount group which

provides information to control the creation of the master record for a company code



General LedgerGeneral LedgerCompany Code DataCompany Code Data

Local currencyForeign currencyTax categoryOpen item managementLine item displaySort key



General LedgerGeneral LedgerCompany Code Data (continued)Company Code Data (continued)

Local currency◦Specify the currency in which the account is to

be posted◦Transaction figures are always updated and

displayed in local currency




Foreign currency◦Specify the alternative currency in which the

account is to be posted◦It is possible to select up to two alternative

currencies◦Transaction figures will be updated in both the

local and alternative currencies




Tax category◦Specify the type of tax on purchase and sales

(input or output taxes) that can be posted to the account

◦If the account is not tax relevant, do not make a specification in this field




• Open item management• It implies that the account is subjected to an

affirmative clearing process involving the matching of debits to credits with the purpose of closing each individual line item

• Used in A/P and A/R • We can clear (archive) an accounting document

only when all of its individual line items have been cleared.




Sort Key◦Determines the data field that will be used to

sort the line items Posting date Document date Cost center

◦Necessary when line item display is selected




Reconciliation accounts◦While posting to a sub-ledger, the system

automates concurrently the posting to the corresponding reconciliation account in the general ledger

◦Such that the general ledger is automatically updated and always remains in balance with the individual account totals



Subsidiary Ledger Accounts

A/R, A/P, GR/IR

General Ledger Reconciliation AccountsA/R, A/P, GR/IR


Debit Credit

Debit Credit

A/P

Debit Credit

A/R

Debit Credit

GR/IR

$$ $$

$$ $$$$ $$$$ $$

GeneralLedger



Line Item DisplayLine Item Display

Account number 100999 Bank AccountCompany code C999

Period Debit Credit DC bal. Balance C/f bal. 750,000.00 Period 1 5,250.00 3,540.00 1,710.00 751,710.00 Period 2 25,000.00 15,000.00 10,000.00 761,710.00

Period 1Doc. no. DT Doc.date Currency Amount 1500000013 KZ 01/05/04 USD 1,800.00 -1500000014 KZ 01/06/04 USD 990.00 -100000012 SA 01/08/04 USD 750.00 –1400000342 DZ 01/14/04 USD 5,250.00




Rules

FI

FI



RulesRules

Defines the parameters for Master Data and Transactions

Determines functionality for Master Data and Transactions

Relatively fixedChanges as policy changes



RulesRulesAccount Groups

BS – Balance Sheet Account Group PL – Income Statement Account Group RA – Reconciliation Account Group

Field status variant◦Field status groups

Automatic Account AssignmentsPosting PeriodsTolerance Groups for Account PostingsAccounts Payable Settlement



RulesRules

Financial Accounting• Account Groups • Field Status Variant• Fiscal / Posting

Periods• Tolerance Groups• Document Types• Number Ranges• Automatic Account

Assignment• Valuation Area

Grouping• Parameter IDs

Material Management• Fiscal Periods• Account Groups• Material Types• Plant Parameters• Purc./Rec./Inv.

Tolerances • Automatic

Account Assignment

• Reservations• Material Group• Loading Group

Sales & Distribution• Account Groups• Pricing Procedure

Determination• Shipping Point

Determination• Revenue Account

Determination• Define Availability

Check• Define Credit

Check• Document Types

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Account Groups

Chrt/accts Acct group Description From To CHRT BS Balance Sheet 100000 399999 CHRT PL Income Sheet 400000 999999 CHRT RA Reconciliation 110000 310000



Account GroupsAccount GroupsControl which fields must be entered when

an account is createdDetermine a valid number interval for each

of the groups (types) of General Ledger accounts that have common attributes

Must be created before General Ledger Chart of Accounts master records can be created

You must assign each account to an appropriate account group



Account control Suppress Req. entry Opt. entry Display

CurrencyTax categoryReconciliation account…

Account Group BS

Account controlAccount managementDocument entryBank/financial detailsInterest calculationJoint venture

Account Groups



Field StatusField StatusField status controls how the data will be

entered for a field when an accounting master record is being used in a transaction

Determining whether a field is required, optional, suppressed, or display only

Field status controls are also relevant to a specific activity — create, change, or display



Field Status VariantField Status Variant

Fld status group TextZALL All Accounts

ZBSA Balance Sheet Accounts ZEXP Expense Accounts ZGRI Material Management (GR/IR) Accounts ZRCN Reconciliation Accounts ZREV Revenue Accounts



Automatically posted to Automatically posted to Reconciliation AccountReconciliation Account

Postings to sub-ledgers (such as accounts receivable or accounts payable) are automatically concurrently posted to the corresponding reconciliation account in the General Ledger

In this way, the General Ledger is automatically updated and remains in balance with the customer and vendor individual account totals



Posting PeriodsPosting PeriodsBefore it is possible to post documents, it is

necessary to define posting periodsEach fiscal year is divided into one or more

posting periodsEach posting period is delimited by both a

start and finish dateA common division of a fiscal year involves

defining 16 posting periods◦12 months and 4 quarter ending posting periods



Tolerances Groups forTolerances Groups forAccount PostingsAccount PostingsInternal control – amount limits that define

the maximum authorization levels for your employees◦Must be at least one entry for every company

code◦Can be defined for an employee group with

employees being assigned to a given group to effect the control

◦Can be undefined at the group level meaning that the control is effective for everyone who is not a member of a group



Tolerances Groups forTolerances Groups forAccount Postings (continued)Account Postings (continued)Internal control – amount limits that

define the maximum authorization levels for your employees with respect to: ◦A single transaction ◦A customer or vendor account line item ◦Discount percentage granted to a line item ◦Payment differences that can be accepted in

settlement of an account (e.g., accounts payable)



Accounts Payable SettlementAccounts Payable Settlement

PurchaseOrder

GoodsReceipt

InvoiceReceipt

Debit Credit

PaymentProgram

Verification



Accounts Payable Settlement Accounts Payable Settlement (continued)(continued)

Select payment method and bankSelect items for paymentCalculate the payment amount, taking

account of cash discount periodsPost the payment documentPrint payment medium



Accounts Payable Settlement Accounts Payable Settlement ProcessProcess

Determines:◦Open items to be paid◦When they will be paid◦Bank from which payment will be made◦Payment medium◦Who will get paid

Payment process creates a financial accounting document to record the transaction



Document NumbersDocument NumbersAll posted transactions must have a

unique number assigned to itUsually these numbers are system

generatedThe numbers specifically identify the

business content of a transaction so that it may be recalled at a later time

The actual document number stored in the system includes information respecting the year, date, and company codes



Document Numbers – (continued)Document Numbers – (continued)

Before a document can be posted to a company or company code, a number range must be assigned to each document type

New transaction document number ranges must be created at the start of each new fiscal year




FI

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Integration

Procurement Process (Procure-to-Pay)

Purchase Requisition

Paymentto Vendor

Notify Vendor

VendorShipment

InvoiceReceipt

GoodsReceipt

Purchase Order



Sales Order Process(Order-to-Cash)

Integration

Sales OrderEntry

Post Goods Issue

Invoice Customer

Pick Materials

Receipt ofCustomer Payment

Pack Materials

Check Availability



Scheduleand Release

Shop FloorDocuments

Goods Receipt

Order Settlement

GoodsIssue

ProductionProposal

(Planning/Other)

CompletionConfirmation

Capacity Planning

Production Process (Make-to-Stock)



Transaction DataTransaction DataEach transaction is unique Transactions use organizational structure,

master data, and rules It includes the business activity of the

transaction



Transaction OverviewTransaction Overview

Account Payable ProcessAccount Receivable Process



Accounts Payable Settlement Accounts Payable Settlement ProcessProcess

Determines:◦Open items to be paid◦When they will be paid◦Bank from which payment will be made◦Payment medium◦Who will get paid

Payment process creates a financial accounting document to record the transaction



Goods ReceiptGoods Receipt / Invoice Receipt / Invoice ReceiptReconciliation AccountReconciliation Account

Purchase requisition

Purchase orderMaterials Management (MM) and Financial Accounting (FI)via automatic account assignment

Goods receipt

No impact onFinancial Accounting (FI)

Dr Cr

Inventory

$100

Dr Cr

GR / IR

$100



Goods Receipt / Goods Receipt / Invoice ReceiptInvoice ReceiptReconciliation AccountReconciliation Account

Amount owed isassigned and transferred tovendor account payable

Invoice receipt

Dr Cr

Vendor (sub-ledger)

$100

Dr Cr

GR / IR

$100

Dr Cr

A/P

$100



Vendor PaymentVendor Payment

Amount owed is paid tovendor and account payable is reduced

Bank

Dr CrA/P

$100

Dr Cr

Bank

$100

Vendor (sub-ledger) Dr Cr

$100



(FI – MM) Integration Points(FI – MM) Integration Points

Invoice Receipt

Payment Program

Goods Receipt

(Vendor)

Dr Cr

GR / IR

$100

BankDr Cr

Inventory

$100 $100 $100

Dr CrDr Cr

$100 $100

APDr Cr

$100 $100



Accounts Receivable Settlement Accounts Receivable Settlement ProcessProcess

Determines:◦Open items to be collected◦When they will be collected◦Bank to which payment will be received◦Payment medium◦Who is the customer

Collection of payment process creates a financial accounting document to record the transaction

Goods IssuingGoods IssuingReconciliation AccountReconciliation Account

Sales quotation

Sales order

Materials Management (MM) and Financial Accounting (FI)

Delivery/Goods Issuing

No impact onFinancial Accounting (FI)

Dr Cr

Inventory (Trading, F/G)

$1,000

Dr Cr

COGS

$1,000

Dr Cr

Sales Revenues

$1,250

Billing Billing Reconciliation AccountReconciliation Account

Billing amount isassigned and transferred to

customer account receivableBilling

Dr Cr

Account Receivable (AR)

$1,250

Dr Cr

Customer (sub-ledger)

$1,250

Customer PaymentCustomer PaymentAmount is paid by

Customer and account receivable is reduced

Bank

Dr Cr

Account Receivable (A/R)

$1,250

Dr Cr

Bank

$1,250

Customer (sub-ledger)

Dr Cr

$1,250



(FI – SD) Integration Points(FI – SD) Integration Points

Billing Payment Program

Goods Issue

(Customer)

Dr Cr

COGS

$1,000

BankDr Cr

Inventory (F/G)

$1,000

$1,250

$1,250

Dr CrDr Cr

$1,250 $1,250

ARDr Cr

$1,250 $1,250

Dr Cr

Revenue

Exercises:Exercises:FI 4A: Post Transfer of funds to Bank AccountMM6: Create a new vendorMM7: Create material master for trading goodsMM8: Display Stock/Requirements listMM9: Create a purchase requisitionMM10: Display stock/requirements listMM11: Create request for quotation for your requisitionMM12: Maintain quotation from vendorsMM13: Evaluation quotations on priceMM14: Rejecting quotationsMM15: Create a purchase order referencing an RFQMM16: Create a goods receipt for the purchase orderMM17: Verify the purchase receipt of goods MM18: Create an invoice receipt from vendorMM19: Display purchase order history

Exercises:Exercises:MM20: Create a goods receipt for purchase orderMM21: Create an invoice receipt from vendorMM22: Post payment to vendorMM23: Display vendor line itemsMM24: Display and review general ledger account balances and

individual line items

introduction to financial accounting management egn 5622 enterprise systems integration professional...

Documents

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