REFERENCE GUIDE

INTRODUCTION

What is SAP?
SAP stands for Systems Applications and Products in Data Processing. The original
name for SAP, Systeme, Anwendungen und Produkte in der Dataverarbeitung,
translates from German to "Systems, Applications and Products in Data Processing."
The original idea for SAP was to provide customers with the ability to interact with
a common corporate database for a comprehensive range of applications in real
time.

SAP, by definition, is also name of the ERP (Enterprise Resource Planning)

software as well the name of the company.

SAP Software was Founded in 1972 by Wellenreuther, Hopp, Hector, Plattner, and
Tschira. SAP system consists of a number of fully integrated modules, which covers
virtually every aspect of business management.

SAP is #1 in the ERP market. As of 2010, SAP has more than 140,000 installations
worldwide, over 25 industry-specific business solutions and more than 75,000
customers in 120 countries. Other Competitive products of SAP Softwarein the
market are Oracle, Microsoft Dynamics, etc.

History of SAP
In 1973, SAP released R/1, a financial accounting system. R/1 ran on IBM servers
and DOS, and it had a single-tier architecture in which presentation, applications and
data were on one platform.

In 1979, SAP released R/2, a mainframe system that provided real-time data
processing across accounting, manufacturing, supply chain and human resources.
R/2 used a two-tier architecture, where presentation was on one platform and
applications and data were on another. R/2 helped power SAP's growth, and the
vendor expanded its customer base to about 200 companies.

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In 1992, SAP released R/3, which represented a switch from mainframe computing
to the client-server model, and from a two-tier to a three-tier architecture, in which
presentation, applications and data were housed separately. R/3 was a critical
product for SAP that launched the company onto the world stage.

In 1999, SAP launched mySAP, which marked a new strategy for the company of
focusing on combining e-commerce software with the applications in R/3. One year
after R/3's release, SAP partnered with Microsoft to port the new versionto
Windows NT. By 1997, SAP employed 13,000 people.

In 2004, the company launched SAP NetWeaver, and it reported that more than
1,000 customers acquired the application development platform that year. Also in
2004, the successor to R/3, the SAP ERP system (or SAP ECC, for SAP ERP Central
Component) was released. Customers already using R/2 or R/3 were still supported,
but new customers were required to implement SAP ERP. By 2005, SAP was
generating $8.5 billion, with upwards of 35,800 employees around the globe.

In 2006, the company claimed hefty revenue from SAP Business All-in-One and
SAP Business One, its SAP ERP systems for SMBs.

In 2009, SAP Business Suite 7 became available to customers worldwide. At the

time, SAP called it "the company's next-generation software suite enabledby
service-oriented architecture.

SAP Modules can be categorized into

 Functional Modules
 Technical Modules

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These functional and technical modules are tightly coupled. Below is a list of key

SAP Modules

 SAP FI Module - FI stands for Financial Accounting

 SAP CO Module - CO stands for Controlling
 SAP MM Module - MM is Materials Management
 SAP PP Module - PP is Production Planning
 SAP SD Module - SD is Sales and Distribution
 SAP CRM - where CRM stands for Customer Relationship Management
 SAP HCM Module - HR stands for Human Resources

1. SAP FI Module - FI stands for Financial Accounting

SAP FI is a module used for reporting both externally and internally. The objective
is to record all financial transactions that are posted by an entity and produce
financial statements which are accurate at the end of the trading period.

SAP FI is made up of sub modules. The sub-modules that are often used are accounts
receivables, accounts payables, asset accounting, general ledger Accounting and
bank accounting.

All the sub modules are interlinked and integrate in real time.

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GENERAL LEDGER ACCOUNTING

All general ledger accounts that are used for reporting are managed through
general ledger accounting. In SAP a set of all general ledger accounts used by a
company or a group of companies is called a chart of accounts. These are the
accounts that will be used for the preparation of financial statements. Most of the
transactions are recorded in sub modules and they are reconciled with the general
ledgers in real time

ACCOUNTS RECEIVABLES
Accounts receivables are a sub module that captures all transactions with
customers and manages customer accounts. Separate customer accounts will be
maintained and when transactions are posted in customer accounts, reconciliation
accounts in general ledger are updated with the figures in real time. Transactions in
accounts receivables include invoice posting, credit memo posting, down

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payments, invoice payment, dunning and executing customer reports.

ACCOUNTS PAYABLES

Accounts payables are a sub module that captures all transactions withvendors
and manages vendor accounts. Separate vendor accounts are maintained and when
transactions are posted in customer accounts, reconciliation accounts in general
ledger are updated with the figures in real time. Transactions in accounts payables
include invoice posting, credit memo posting, down payments, invoice payment,
automatic payment program and executing vendor reports.

ASSET ACCOUNTING
Asset accounting manages all transactions related to assets for an entity.
When transactions are posted in asset accounts, reconciliation accounts in general
ledger are updated in real time. Transactions in asset accounting include asset
acquisition, asset retirement, asset sale, asset transfer, asset revaluation and asset
depreciation.

BANK ACCOUNTING
Bank accounting captures all transactions with the banks. Bank
reconciliation is done to reconcile all transactions recorded on bank statements
comparing them to transactions in the system.

2. SAP CO Module - CO stands for Controlling

SAP Controlling (CO) is another important SAP module offered to anorganization.

It supports coordination, monitoring, and optimization of all the processes in an
organization. SAP CO involves recording both the consumption of production
factors and the services provided by an organization.
SAP CO includes managing and configuring master data that covers cost and profit
centers, internal orders, and other cost elements and functional areas.
The main purpose of SAP controlling module is planning. It enables you to

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determine variances by comparing actual data with plan data and thus enables you
to control business flows in your organization.

The key submodules of SAP controlling system are listed below −

 Cost Element Accounting − Cost and Revenue Element Accountingprovides
you with an overview of the costs and revenues that occur in an organization.
Most of the values are moved automatically from Financial Accounting to
Controlling. Cost and Revenue Element Accounting only calculates costs
which either do not have another expense or only one expense in Financial
Accounting.
 Cost Center Accounting − Cost Center Accounting is used for controlling
purposes within your organization.
 Internal Orders − Internal orders in SAP CO are used to collect and control
according to the job that incurred them. You can assign budgets for these jobs
that is system monitored to ensure that they are not exceeded from the set
budgets.
 Product Cost Controlling − It calculates the cost for manufacture a product,
or to provide a service. It allows you to calculate the price at which you can

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 profitably marketed it.
 Profit Center Accounting − It is used to evaluate profit or loss of individual,
independent areas within an organization. These areas are responsible for their
costs and revenues.

PRIMARY CONFIGURATION CONSIDERATIONS

Once a business has decided to use the SAP FI (Financial Accounting) Module, there
are several Configurations prerequisite steps that must be completed. Determining
the organizational structure is one of the first steps in setting up the business
functions in SAP as well as your reporting requirements. The Organizational
structure is created by defining the organizational units consistingof the following:

 Client
 Company
 Company Code
 Business Area

A Client is the highest unit within an SAP system and contains Master records and
Tables. Data entered at this level are valid for all company code data and
organizational structures allowing for data consistency. User access and
authorizations are assigned to each client created. Users must specify which client
they are working in at the point of logon to the SAP system.

A Company is a unit to which your financial statements are created and can have
one to many company codes assigned to it. A company is equivalent to your legal
business organization. Consolidated financial statements are based on thecompany’s
financial statements. Companies are defined in configuration and assigned to
company codes. Each company code must use the same COA ( Chart of Accounts)
and Fiscal Year. Also note that local currency for the company can bedifferent.

Company Codes are the smallest unit within your organizational structure and isused for
internal and external reporting purposes. Company Codes are not optional within SAP and
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are required to be defined. Financial transactions are viewed at the company code level.
Company Codes can be created for any business organization whether national or
international. It is recommended that once a Company Code has been defined in Configuration
with all the required settings then other company codes later created should be copied from
the existing company code. You can then make changes as needed. This reduces the repetitive
input of information that does not change from company code to company code as well as
eliminate the possibility of missed data input.

When defining company codes, the following key areas must be updated

Company Code Key- identifies the company code and consists of four alpha-
numeric characters. Master data and business transactions are created by this key.

Company Code Name- identifies the name of the business organization within your
organizational structure.

Address- identifies the street address, city, state, zip code for the company code
created. This information is also used on correspondence and reports.

Country- identifies the country to which your business is based. Country codes
within SAP are based on ISO Standards.

MORE FI CONFIGURATION CONSIDERATIONS:

Business Area is optional and is equivalent to a specific area of responsibility within
your company or business segment. BA (Business Area) also allows for internal and
external reporting.

Another configuration requirement for set-up in SAP are the Basic settings
consisting of the following:

 Chart of Accounts (COA)

 Fiscal Year Variants

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  Currencies
The COA (Chart of Accounts) lists all General Ledger accounts that are used by
the organization. It is assigned in configuration to each company code and allows
for daily General Ledger postings.

The General Ledger accounts are made up of such data as account number, company
code, a description of the account, classification of whether the accountis a P & L
Statement Account or a Balance Sheet Account.

Control data of the GL Account is where currency is specified, Tax category

(posting without tax allowed), marking the account as a reconciliation account (e.g.
Customer, Asset, Vendors, Accounts Receivable) or not.

Marking the G/L Account as a “reconciliation” account allows for postings to an

Asset Account (for example) as well as automatic update to the G/L Account.

Configuration prevents direct postings to reconciliation accounts thereby assisting

in maintaining integrity of the data.

This allows reconciliation between the sub-ledger and general ledger to always be
guaranteed.

Within the General Ledger control data, you can also designate whether line item
display is possible in the account. The system then stores an entry per line in an
index table which links back to the account. (Display of line item details are then
available for reporting purposes, etc.)

Open Item Indicators can be set on the G/L Account allowing for better management
of open items. Examples include: Bank Clearing Accounts, GR/IR Clearing
Accounts, Payroll, etc.

Fiscal Year configuration is a must and can be defined to meet your company’s
reporting periods whether Fiscal (any period combination that is not calendar) or
Calendar (Jan-Dec).

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  Posting Periods are defined and assigned to the Fiscal Year.
 Within the periods you specify start dates and finished dates.
 SAP allows for 12 posting periods along with specially defined periods that
can be used for year-end financial closing.

Currencies are another basic configuration setting requirement which defines your
company’s legal means of payment by country.

 It is recommended that all Currency set-ups in SAP follow the ISO

Standards.
 The ISO Standards ensure Global conformity across businesses worldwide
utilizing SAP.
 Country currency- identifies the local currency for the company code that
you have defined.

What are some of the integration points of the FI module?

SAP is marketed as a fully integrated system, therefore knowing some of the

integration points enables the Users to better understand the Modules.

Organization units are not only defined in FI (Financial Accounting) but also in
other SAP Modules. The SAP SD (Sales & Distribution) Module requires the set-
up of Sales Organizations, Distribution Channels and Divisions; Purchasing requires
purchasing organizations, plants, and storage locations; and CO (Controlling)
requires a Controlling area to be defined. To transfer data between FI (Financial
Accounting) and CO (Controlling) as well as othermodules, a Company Code must
be assigned to each of the Modules.

Business Areas must be entered when generating business transactions if you would
like the visibility of those transactions impacting a certain BA (Business Area). You
can also update your Master Records to include BA (Business Area) for example
Cost Center.

How to define company code in SAP and creation of company code

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 SAP ERP system, company and company code is somewhat different. The company
is the main company and company code is a sub-company .In another term SAP
company is a parent company and company code is its subsidiary company
.Therefore a one company can have several company codes. It’s mainly useful for
the reporting purposes.

Each of the company code should use the same charts of Accounts and Fiscal
year. It makes easier to consolidation process .Although the each of the company
can use different local currency. The company financial statements are view by
company code.

SAP FI – Create Company

Use T-code SPRO → click on SAP Reference IMG → New window will open.
Expand SAP Customizing implementation guide → Enterprise Structure →
Definition → Finance Accounting → Define Company → click on Execute
or

1. Parent company creation TC= (/N) OX15

 Press New Entries

 In the next Screen Enter the Company Details :

 Enter a unique Company transaction code for the Company within your
corporate group
 Enter the Company Name
 In the Detailed Information Section Enter the Company Address details
such as Street , PO Box, Postal Code, City
 Select Country code for country the company is established

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  Select Default language for the Company for Print forms and Default
Texts
 Select a Local Currency for the Company

 After completing all the required information ,press save Enter your
customizing request number

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2. Subsidiary company creation TC= (/N) OX02
In SAP FICO ERP Company code is the smallest organizational unit. A Company
can have several company codes. Normally the company’s financial statements are
viewing by using company code levels. If a company has several SBU’s/divisions
it can create several company codes. This will help to prepare consolidated financial
statements.

 Enter Transaction code in the command field

 Select New Entries

 In the Next Screen Enter the Following Details

 Enter your Unique Company Code Number

 Enter Company Name
 In the Additional Data section Enter City
 Enter Country for the Company
 Enter Local Currency
 Enter Default Language

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  Click Address Details button on same screen

Enter Address Details for the Company this will appear in print forms

 In the Name Section Enter Title and Company Name

 In the Search Term section Enter Search term 1 and 2
 In the Street Address section enter street, postal code, city, country
 In the P O Box Address section Enter PO Box and Postal Code
 In Communication Section Enter appropriate details

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  After Completing this information Press Save and Enter your Change
Request number.

You have successfully created a new Company code.

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 3. Assign subsidiary company to parent company TC= (/N) OX16

Expand Enterprise Structure as mentioned in the previous topic → Definition

→ Financial Accounting → Edit, Copy, Delete, check company code →
Execute using click on the watch image → New window will open → You can
create a new company code by selecting both the options.
Or
Go to T-Code
 Click on position button  New Entry (f5)
 Enter company code
 Save

4. How to create a new Business Area (/N) OX03

Expand Enterprise Structure as mentioned in the previous topic → Definition
→ Financial Accounting → Define Business Area → Execute → Go to New
Entries.

5. Fiscal year variant TC= (/N) OB29

Go to SPRO → SAP Reference IMG → Financial Accounting → Financial

Accounting Global Setting → Fiscal Years → Maintain Fiscal year variant →
Execute.
In SAP the fiscal year is assigned as a variant .Posting periods can further be defined
in each fiscal year variant. SAP allows a maximum of 16 posting period in each
fiscal year .It consists 12 regular posting period and 4 special periods which can be
used for audit or tax adjustments to already closed periods
.

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  Enter the Transaction code OB29 in the SAP Command Field
 In the next screen, Select "New Entries" from the Application Toolbar

In the next screen, enter the following Data

 Enter two digit unique fiscal year variant key

 Enter a Description for Variant created.
 If Fiscal Year is year dependent, that is if start and end dates for fiscal year
changes between years, then select this option, normally it is used for
shortened fiscal year.
 If Fiscal Year is same as calendar year, that is Jan - Dec, then select this
option.
 Enter the number of posting periods for this fiscal year
 Enter the number of special posting periods for this Fiscal year that is used
for closing activities.

 Then selects the raw

 Click on periods
 New entries

In the next screen, Maintain the periods for the Fiscal year in ascending
order

 Then click on period texts

 New entries

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  Save

5. Assign variant to the parent company TC= (/N OB37)

 Click on position
 Enter company code
 Give description
 Save

6. Posting period variant TC= (/NOBBO)

In SAP posting period variant is used to maintain accounting periods that are open

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for posting and all closed periods are balanced. This is used for opening and
closing period in the fiscal year for posting purpose

 Enter the Transaction code in the SAP Command Field and Press Enter
 In the next screen, Enter the Following
 Click on new entries
 Enter a unique Posting Period Variant Key
 Enter a Description for the Variant

 Save

7. Assign posting period to parent company TC= (/NOBBP)

 Click on position
 Enter company code
 Assign the variant to parent company
 Save

8. Open and close posting periods TC= (/NOB52)

 A separate variant for posting period is defined for every company code.
 You can specify for each variant which posting periods are open for
postings.
 Two intervals are available for doing this.
 For every interval enter a lower period limit, an upper period limit and the
fiscal year.
 You close periods by selecting the period specifications so that the periods
to be closed are no longer contained.

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Go to SPRO → SAP Reference IMG → Financial Accounting → Financial
Accounting Global Setting → Document → Posting Periods → Define Variant for
open Posting Periods → Execute.

 Var. = Enter 4-digit Variant code.

 Select Account Type −

o +=Valid for all account type (masking)

o A = Asset
o D = Customers
o K = Vendors
o M = Materials
o S = General Ledger Account
 From Per.1 = Enter Starting Period

 Year = Enter Year

 To Period = Enter Ending Period

 Year = Enter Year

 From Period2 = Enter First Special Period

 Year = Enter Year

 To Period = Enter Period

 Year = Enter Year

 Authorization Group = It is used to open a period for particular users

OR
 Enter the Transaction Code in the SAP Command Field
 Click on new entries

 Select Posting Period Variant

 Select Account Type
 Enter the Account number range for which you want to change the
periods
 Enter the Period to open as per the Fiscal Year Variant of the

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 Company Code assigned to the Posting Period Variant.
 Enter the Period to which posting to be Open
 Enter Any Special Period you want to Open

 In the next screen , Enter the customizing request number

 You have successfully maintained periods in Posting Period Variant

What is a Chart of Account?

In SAP, the Chart of Accounts (COA) is defined at the client level and assigned to
each company code. It is a list of General Ledger account’s master data that fall
under different account groups of a company code. This grouping mechanism
helps to develop better financial reports.

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TYPES OF CHART OF ACCOUNTS
There are three types of Chart of Accounts,

1) Operating chart of accounts: They are used to post daily expenses. The
accounts in Operating Chart of Accounts could be either expense or revenue
accounts, or the information is shared by Finance as well as Controlling
modules.
2) Group Chart of Accounts: These are accounts used by the entire corporate
group. They help in generating reports at the corporate
3) Country-specific chart of accounts: This Chart Of Accounts help meet
country-specific legal requirements

9. Maintain charts of account TC= (/NOB13)

You can create a SAP FI chart of accounts group as per your requirement. To
effectively manage and control a large number of G/L accounts, you should use COA
groups.

T-code SPRO → SAP Reference IMG → Financial Accounting → General Ledger

Accounting → G/L Accounts → Preparations → Define Account Group → Execute
→ New window will open → New Entries.

How to Create Chart of Accounts

Enter Transaction code OB13 in the command field

In the next screen enter following data:

 Enter a unique Chart of Accounts Code , maximum length is four

 Enter a Description for the Chart of Accounts
 Enter Language in which the Chart of Accounts is created. All accounts have
a description in this language. Master Data can only be displayed or maintained
in this language
 Enter the maximum length for G/L Accounts number, it could be maximum to
ten digits if number is short then it will prefix zero before it to make it to

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 the maximum length
 Enter the type of integration between G/L accounts and cost elements
 Enter Chart of Accounts which is used in the corporate group

After you complete entering this information Press Save .

10. Assign charts of accounts to parent company TC= (/NOB62)

 Click on position
 Save

11. Define account group TC= (/NOBD4)

Account groups are used to maintain intervals and screen layout while defining or
extending GL account master data at the company code level.

SPRO → SAP Reference IMG → Financial Accounting → General Ledger

Accounting → G/L Accounts → Preparations → Define Account Group → Execute
→ New window will open → New Entries.

 Select New Entries

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 In the next screen, Enter following Information

 Enter the Chart of Accounts key in which the Account Group is to be created
 Enter unique Account Group key
 Enter Description for the Account Group
 Enter the number range for the G/L account to be created in the Account
Group

 Save

12. Retained earnings TC= (/NOB53)

Retained Earnings Account is used to carry forward the balance from one fiscal year
to the next fiscal year. You can assign a Retained Earning Account to each P&L
account in the chart of accounts (COA). To automatically carry forward the balance
to the next fiscal year, you can define P&L statements as per COA and assign them
to the retained earning accounts.
 Retained earnings account is used to carry forward the balance from one fiscal
year to next fiscal year.
 Enter Transaction code in the command field

In the next screen, enter the Chart of Accounts to maintain the Retained Earnings
Account

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  Enter the P&L statement account type, to determine the retained earnings
account for each P&L account. If you are creating a P&L account, you must
make an entry here.
 Enter the G/L Account which will be considered as Retained Earnings account

Document Type (/NOBA7)

Document Type Key is used to distinguish between different business
transactions and to classify the accounting documents. It is also used to
determine the number range for documents and account types such as asset,
material, vendor, etc. for posting.

Common Document Type Keys are as follows −

Document Type Document Type Description

AA Asset Posting

AN Net Asset Posting

DR Customer Invoice

DZ Customer Payment

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 KA Vendor Document

KG Vendor Credit Memo

Go to SPRO → SAP Reference IMG → Financial Accounting → Financial

Accounting Global Setting → Document → Document Header → Define
Document Types → Execute.

It will open a new window. Click New Entries and provide the following details −
 Document Type − Unique 2-digit code.
 Number Range − Number Range Code.
 Reverse Document Type − Reverse Document Type Key Code.
 Number Range Information − Number ranges are maintained for document
types.
 Account Types allowed − Asset, Customer, Material, Vendor, and G/L
Account.
 Control Data − Control data for document type.

Once you enter the above data, click the Save icon. Enter the description of
document and save. It will save the configuration of the document type.

13. Number ranges TC = (/NFBN1)

Document Types are Postings to various accounts are made through documents.
Only complete documents can be posted in SAP. Document types are created to
differentiate different types of transactions depending on businessneed
and number range can be assigned each document type.

You can further specify thecharacteristics for the document types based on
business use. Posting keys are used to post transactions to accounts. The combination
of positing key and document type can restrict the type of accounts to

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be posted for the transaction. When customer or vendor account is posted, the system
automatically makes a posting to thecorresponding reconciliation account in the
general ledger. As a result amount totals from sub-ledger accounting no longer needs
to be transferred to the general ledger before preparation of balance sheet. Certain
line items like gain/losses from exchange rate differences, price
variance etc. are generated automatically by the system.

Special G/L transactions can be used to account special transactions in account

receivable or payable and are displayed separately in general ledger andthe sub-
ledger. Transactions like bill of exchange,down payments, bank guarantee etc. can
be accounted through special G/L transaction option

Document number range are defined at the specific interval within which documents
should be created in SAP and document number range depend upon company code
and valid for defined year

 Click on position
 Enter
 Double click the SA,(DR,DZ,KA,KR etc.)
 Click on number range information

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Press 'Number range Information' Button in the properties section

In the next screen,

 Enter the Company Code for which you want to maintain the number range
 Press 'Change Interval ' Button

In the next screen, Press 'Insert Interval' Button

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In the next screen,

 Enter a unique number range key

 Enter the fiscal year for which the range is defined
 Enter the Start Number and End Number of range without overlapping other
Number Ranges
 Mark it as External if you want to insert the Document number manually
during document creation
 Press 'Insert' Button

In the next screen, the new number range is listed

In the next screen, the new number range is listed

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 14. Tolerance group
In the real time business scenario tolerance group allows the sap system to
process and post the transaction beyond the tolerance group limits .Tolerancegroup
are referred as payment difference .It can be an amount tolerance % debitand
credit tolerance.

 For employees

Employees are classified in to tolerance groupsbasing on, the maximum docum

ent amount is authorized to post, the maximum amount the employee can enter as a
line item in a customer or vendor account, the maximum cash discount percentage
the employees can grant in a line item, and the maximum acceptable tolerance for
payment differences for the employee.

 For customer and vendors

Determine Tolerance Groups –

Customers& VendorsTolerance groups are created for postings of differences in
payment and residual item, which can occur during payment settlement. Defined
tolerance groups are assigned to each customer and vendor via the customer and
vendor master record. Once you created tolerance group for customers then you
need not create it for vendors.

Tolerance group for GL TC = (/NOBAO)

 Menu Path: – SPRO –> IMG –> Financial Accounting –> G/L Accounting
(New) –> Business Transactions –> Open Item Clearing –> Clearing
differences –> Define tolerance groups for G/L accounts.

Step 1) Enter T-Code “OBA0” in the SAP command field and enter.

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Step 2) On change view “Tolerance for Groups of G/L accounts in Local currency”
screen click on new entries button to define the tolerance groups as per company
requirements.

Step 3) On new entries screen, update the following details.

Company Code: – Enter the company code “TK01”.

Tolerance group: – Keep it as blank.

Description: – Update the descriptive text of tolerance group for G/L Accounts
(Tolerance group for TK01).

Debit Posting: – Give 0 for debit posting and percentage.

Credit Posting: – Give 0 for credit posting and percentage.

step 4) Click on save button and save the configured tolerance groups details.
Successfully we have defined tolerance groups for G/L accounts in SAP.

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Tolerance group for employees TC= (/NOBA4)

Tolerance groups for employees in SAP determines the upper limits for postings as
per
 Amount per document
 Amount per open item account
 Cash discount
 Payment differences.

Menu Path: – SPRO >> IMG >> Financial Accounting (New) >> Financial
Accounting Global Settings (New) >> Document >> Tolerance groups >> Define
tolerance groups for employees.

Tolerance group for Customer and Vendor = (/NOB52)

Tolerance group enables the users to process transaction with the payment
difference of gain or loss that defined as per tolerance group for customers and
vendors in SAP.

Menu Path: – SPRO > SAP Reference IMG > SAP Customizing Implementation
guide –> Financial Accounting (New) —> Accounts Receivable & Accounts

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Payable —-> Business Transactions —–> Outgoing Payments ——> Manual
Outgoing Payments ——-> Define Tolerances for customers and vendors.

Step 1) Enter T- code “OBA3” in the SAP commend field and enter.
Step 2) On change view Customers/Vendors tolerances overview screen, click on
“New Entries” button to define new tolerance groups for vendors and customers as
per the requirements.
Step 3) On new entries customer and vendor tolerances screen, update the
following details.

 Company Code: – Update the company code for which you would like to
define tolerance groups.
 Tolerance group: – It is not required to update the tolerance group key, just
update the description text of tolerance group.
 Permitted payment difference: – Update the payment differences of gain &
loss with amount and percentage i.e 500 percentage and 1% adjustment by
100.
 This means the user can process the business transaction with the payment
difference of 500 with gain or loss of 1 percentage. The SAP system doesn’t
allow to process the transaction above the payment differences amount.

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  After maintaining all the required details of customer and vendor tolerances,
click on save button and save the implemented tolerance group details.
 Successfully we have defined tolerance group for customers and vendors in
SAP.

15) Field status variant TC= (/NOBC4)

During document entry, field status group controls which fields are required for
entry and which fields are set to optional and suppress. It is used to define the field
which are used for input like cot centre, profit centre etc.

 suppress: – If you choose quantity as suppress, at the time of posting this

quantity field will not visible on the screen.
 Required: – If you choose quantity as required, at the time of posting quantity
field will appear on the screen and you have to give value in the quantity field.
Required means mandatory, so without quantity value you can not go to next
screen.
 Optional: – If you selected quantity as optional, at the time of posting the
quantity field appears on the screen and it is your choice to update value or not.
Without giving value you can go to next screen.

Navigation: – SPRO –> Reference IMG –> Financial Accounting (New) –>
Financial Accounting Global Settings (New) –> Ledgers –> Fields –> Define field
status variants.

Step 1) Enter transaction code “OBC4” in the SAP command field and enter to
continue.

Step 2) On change view “field status variants” overview screen, select the FSTV
0001 and than select the copy as button.

Step 3) Now change the variant name to TKFV and name to Field status for
TKFV. Press enter to continue

Step 4) Now the system asks you to copy all or only copy entry, select copy all
option.

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Step 5) We get a message number of dependent entries copied: 41, press enter to
continue.

Step 6) Click on save button and than select the request number, save the
configured field status variants details.

Successfully we have defined field status variants in SAP.

 In the next screen, you can change the field status for different sections of
the G/L COA Master Data. For example select Account Control

Now you can maintain the status of different fields belonging to Account Control
Tab between Suppressed (Hidden), Required, Optional and Display modes.

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The default status of fields is Optional.
After maintaining the field status, press save Enter your change request
number.

16. Assign field status variant to company code TC= (/NOBC5)

 Click on position
 Save

Company Code Global Parameters

Global parameters control how a company code behaves in the SAP system, these
parameters influence the way system process the business transactions. Global
parameters are divided in to two categories.
 Accounting organization
 Procession parameters.
Transaction Code: – OBY6
Path: – SPRO –> IMG –> Financial Accounting (New) –> Financial Accounting
Global Settings (New) –> Global parameters for company code –> Enter Global
Parameters.
Step 1) Enter T Code “OBY6” in the SAP command field and enter.

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Step 2) On change view “Company Code Global Data”: overview screen, click on
position button and enter your company code “TK01” in the given entry field.
Step 3) Now double click on your company code “TK01” to check company code
global parameters in SAP.
Step 4) Update the following details.

Some of the fields are updated automatically as we already configured and assigned.
For e.g. Chart of accounts, Company, FM area, Credit control area, Fiscal year
variant, etc.

Choose business area financial statements check box.

Select the propose fiscal year check box
Select define default value data check box
Select negative postings permitted check box.
After maintaining all the required details, click on additional data.

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Step 5) On maintenance of additional data for company code TK01, update the
following details.
TDS No – Update the Tax deduction source number for filing TDS returns.
PAN No – Update permanent account number for filing income tax returns.
GIR No – Update general identification number.

17. Creation of general ledger TC= (/N FS00)

A general ledger (GL) is a set of numbered accounts a business uses to keep track of
its financial transactions and to prepare financial reports. Each account is a unique
record summarizing each type of asset, liability, equity, revenue and expense.
Accounts list all of the accounts in the general ledger, which can number in the
thousands for a large business.

When you start this transaction you need to specify general account number and
specify the company code and then click on the Create icon or Create with
Template icon as shown below.

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G/L Account
The G/L account number identifies the G/L account in a chart of accounts. Here we
put the number of the general ledger account that we want to create. The number
should be within the number range for the type of the account that we want to create.
When creating we can do it with reference to an existing account (to copy existing
data and speed up data entry) or we create without referencing any existing account.

Company Code
The company code is the main organizational unit within financial accounting. When
creating an account, we specify the company code so that the system will create the
company code segment for that account. In other words, by specifying the company
code we are making sure that the general ledger account is complete and ready for
use in the specified company code.

After entering the company code and general ledger account number you click on
create icon and the following fields will be ready for input.

Account Group
The account group is a classifying feature that is used within the general ledger

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account master records. This field is a required entry which means we cannot
proceed without populating this field. The account group determines the fields for
the entry screens if the user creates or changes a general ledger master record in the
company code. The account group also determines in which number interval the
account number must be.

P&L statement acct

This field is a called a radio button in SAP. It means if we click on P&L statement
acct, the system will deselect all other alternatives. This radio button means we are
creating a profit or loss account. Profit and loss accounts will reduce to zero when
the balance carry forward program is run at the end of the year and the balance will
be moved to retained earnings account.

Balance Sheet Account

Selecting this radio button means that we are creating a balance sheet account.
When a balance carry-forward program is run at the end of the year the account
balance will be taken to the next year as opening balance.

Short Text
The general ledger account short text is used for online displays and evaluations
which do not have sufficient space for the long text.

G/L Account Long Text

When there is sufficient space, the general ledger long text is used for online
displays and evaluations

Trading Partner
In this field we enter the company ID of the trading partner. The company ID is
standard for the whole group.

Now, to go to the next tab you should click on the tab labelled Control Data and
the following fields will be ready for input.

Account currency
The account currency indicates the currency in which the account is held. If a

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currency other than the company code currency is specified, users can only post
items in that currency to this account. If the company code currency is specified,
users can post items in any currency to this account.

Only balances in local crcy

Indicates that the balances are updated only in local currency when users post
items to this account. Setting this indicator for accounts managed on an open item
basis affects the clearing procedures.

Exchange rate difference key

This is a key for account determination in valuating foreign currency amounts
posted to balance sheet accounts.

Valuation group
A valuation group can include a number of different general ledger accounts. The
exchange rate is determined from the foreign currency total when the valuation is
carried out.

Tax category
This field is used to decide whether you want to use the account for tax relevant
postings, if not leave the field blank.

Recon. Account for acct type

An entry in this field characterizes the general ledger account as a reconciliation
account. The reconciliation account ensures the integration of a sub ledger account
into the general ledger. All postings to sub ledgers are also posted automatically to
the general ledgers marked as reconciliation accounts. The reconciliation account
itself is not designed for direct postings.

Tolerance group
Group term for SAP general ledger accounts that you are free to define. The
tolerance groups are unique within a company code. For each tolerance group, make
sure to define the appropriate specifications for the treatment of differences arising
from open item clearing.

Open Item Management

Determines that open items are managed for this account. Items posted to accounts
managed on an open item basis are marked as open or cleared. The balance of

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these accounts is always equal to the balance of open items. Accounts that are
managed on an open item basis include bank clearing accounts, payroll clearing,
cash discount clearing account and goods receipt/invoice receipt clearing account.
Accounts that are not managed on an open item basis are bank accounts, tax
accounts, raw material accounts, reconciliation accounts, profit and loss accounts
and material management accounts posted with a posting key that has account type
M.

Line Item Display

Enables line item display for the account. For each line item, an entry is saved in
an index table. This entry contains the connection between the line item and the
account. In the new SAP General Ledger, line item display is always possible for the
general ledger view. You have to set this indicator if you also want to see the line
items in the entry view and want open item management. You should not set the
indicator for accounts where line item display in dialog does not make sense due to
the number of postings. These accounts include tax accounts, receivables, payables
and specific revenue and expense accounts.

Sort key
Indicates the layout rule for the allocation field in the document line item. The
system uses a standard sort sequence for displaying line items. Among otherthings,
it sorts the items according to the content of the allocation field.

Next, click on the tab labelled Create/bank/interest and when you do it the
following fields will be ready for input.

Field status group

Determines the screen layout during the document entry for this account. Fields can
have three statuses which are optional entry, mandatory entry and suppressed. For
optional fields one can enter data in the field or leave it blank. Mandatory fields are
fields that needs to be filled with data for the user to be able to proceed. Suppressed
fields are fields that do not appear on the screen.

Post automatically only

Indicates that this account can only be posted by the system using account
determination tables.

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Supplement auto. Postings
Indicates that the line items which are generated automatically by the system for this
account can be supplemented manually. You set this indicator for the general ledger
account for bank charges. If you post an incoming payment which contains bank
charges, the system automatically generates a line item and supplement itwith
an account assignment. You should then assign the bank charge to a cost center, for
example.

Recon. Acct ready for input

Indicator which determines that the reconciliation account is ready for input when
posting a document. The indicator is used in financial assets management.

Planning level
This field is used to control displays in cash management.

Relevant for to cash flow

Indicator that determines that the general ledger account is a cash flow account.
Accounts that are typically defined as cash flow accounts include bank accounts,
accounts for bank charges, check clearing accounts and clearing accounts for
incoming payments. This information is used by the system in order to determine
the payment notices.

Commitment Items
Alphanumeric code of the commitment item you are creating, changing,displaying,
or to which you are assigning a budget.

House bank
All bank data is determined using this key. House banks are the banks that are used
by the company. This field links the general account with the house bank.

After populating all these fields on the tabs of FS00 transaction, you should click on
Save button and then SAP general ledger account will be created. At the bottom of
the screen you will see a confirmation message that the data has been saved.

Journal Entry (SA, ZJ, ZB, AB, & ZZ)

A journal entry is an accounting document containing debit and credit postings to

the general ledger. Journal entries are used to transfer funds from one account to

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another for payment of various services, materials, etc., and used to correct postings
if needed. Journal entries can be posted to one or more departments within one
company code (single company code entries) or across company codes (cross
company code entries).

Journal entries are:

• Manually keyed into R/3 (Document types SA, ZJ, ZB) by anyone with
authorization in any Duke department.
• Processed by Accounting Services (Document Type AB) to reverse accruals /
deferrals entered in the previous month (Document Type ZB).
• Entered from electronic system feeds into R/3 by Accounting Services (such as
Document types ZZ).

1. Document Date = Invoice date. It is a mandatory field.

2. Currency = By default, it is currency of the company code. If the transaction

currency is other than company code currency, then it should be maintained here.

3. Posting date and Posting Period = Date that will be used to update financial
statements at the company code level. It is a mandatory field.

4. Ref. doc. (Doc. Types SA, ZJ, ZB, or ZZ) = an eight digit reference containing
the Assigned JV number (Ex: JV060132)

(Ex: JV060132)
defined as: Journal Voucher (same term / meaning as journal entry or Transfer
Journal Voucher - TJV) (Example: 06) The fiscal period of the entry(Example: 0132)
A 4 digit number assigned to the “owner” of a journal entry. The number identifies
the nature of the entry and a department contact name and phone number for any
questions.

6. Doc. Head. Text = generic text that pertains to all line items of the journal
entry and was entered on the Document Header initial screen to provide a brief
description of the nature of the journal entry.( Text to maintain at the header level.
It is optional.)

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 7. Cross – CC no: If the financial document has two company codes then the
system will update cross-company code number after financial document
posting.

8. Itm (Item) column = the line item number for each line of the entry which
helps in the drill down process from a report (see note below). Note: When
drilling down into a journal entry from an amount on a line item report, the
entire journal entry is displayed. The journal entry may contain numerous
lines posting amounts to many accounts across Duke, i.e., the line item double
clicked on is ONLY one line of the journal entry. The line item number is
available on the reports and should be used to locate your lineitem (use the
Page down button if needed).

9. The PK (posting key) column = the posting key indicating a debit (40) or a
credit (50) to a particular G/L Account and Cost Object.

10.Account and Account short text columns = the six digit G/L account and
corresponding short text description of the G/L Account that is being
charged/posted for this line item.

11.Cost Ctr column = displays the Cost Center posted for this line item if
applicable (blank if a Profit Center or WBS Element was posted).

12.WBS Elem. column = displays the WBS Element (Project) posted for this line
item if applicable (blank if a Cost Center or Profit Center was posted).

13. Profit Ctr column = displays the Profit Center posted for this line item if
applicable (blank if a Cost Center or WBS Element was posted). 11. Fund
column = displays the Fund (for Funds Management which only applies to
Company Code 0010) posted for this line item if applicable.

14. Text column = free-form text entered for each line item posted to provide a
short description that applies specifically to that line item, i.e., debit or credit.
Text does not appear on all journal entry line items. Text from this field also
appears in the Name field on some report screens and is why it is important to
enter text on journal entry line items.

15. Assignment: Any information or text to be maintained at line item level.

16. Value date: This field is required for bank transactions.

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 17. Text: Invoice text can be maintained here.
18. Business area: It can be entered here or automatically fetched from the
master data.
19. . Amount column = the amount posted as a debit or credit for each line item
of the document. Credits are indicated with a minus sign. The sum of all
debits and credits must net to zero before a journal entry can be posted.

 Save

To see the line item in details. It helps the user to see the data entered for a line
item at a glance.

– Used to select the entered data for modifications.

– To add a new line item.

– To add more line items.
– To delete a line item.
– To copy line items.

– To copy fields.

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 – To sort line items in ascending or descending order.

Now, we can post this sample document. But before posting it is a good idea to check
that everything is correct by using Simulate button that we discussed above. By
clicking on it we can see the information before the document is posted as shown on
the screenshot below. If everything is correct and the system didn’t display any
errors or warning, you can post the document by clicking Complete
button.

18. Customer account group creation TC= (/NOBD2)

 Click on new entry

 Double click on company code data
 Double click on account management
 Change the reconciliation account to required entry
 Cash management group to suppress
 Then
 Save

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19. Create number range to the customer account group TC = (/NXDN1)

Press 'Number range Information' Button in the properties section

In the next screen,

 Enter the Company Code for which you want to maintain the number
range
 Press 'Change Interval ' Button

In the next screen, Press 'Insert Interval' Button

In the next screen, the new number range is listed

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  Enter
 Save

20. Assign number range to customer account group TC= (/NOBAR)

 Click on position
 Then give account group
 Save

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20. Take TC = (/N FS00)

 Click on control data

 Select "Customers" in Recon. Account for acct type
 and select 031(Customer number) as short key

Create Tolerance Group for Customer - (T-code-OBA3)

Click on New Entries

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Add details

21. Creation of customer master TC= (/NFD01)

Create Customer Master

Customer Master is created centrally in sales and distribution and financial

accounting with the irrespective views. However, they are created only in financial
accounting as in the case of customers for sale of assets, sale
of scrap etc. When customer master is created centrally, it has sales view & also
accounting views in cases, where it is defined in financial accounting, only the
accounting views are defined. Case of separate creation, sales and distribution
personnel will create the sales organization view of the customer and financial
accounting personnel will create the accounting views for the same.

The accounting view consists of reconciliation account, method of payment,

tolerance groups etc.

To Create a One Time Customer Master,

 Enter Transaction Code FD01 in SAP Command Field
 In the next screen , Select Account Group Overview Button

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 Click enter
 In the next screen in the General data - Address Tab, Enter the
Following
 Enter the name for the One Time Customer Master
 Enter the Search Term
 Enter the Communication Language

 Select the Company Code data in the Application Menu

 Select the Account Management Tab

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  Enter the Reconciliation G/L Account Number

 Then click on payment transaction

 Save
 Check the Status bar for the Creation of the new Customer Master

19. Sales invoice posting TC= (/Nf-22)

 Enter transaction F-22 in SAP Command Field

 In the Next Screen, Enter Company Code

In the next screen, enter the Following details.

 Document date
 Posting date

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  Company code
 Currency/rate

Debit key is 01
Credit key is 50

For example: Goods sold for cash RS.100000 on 1/4/2018

Cash a/c Dr.100000 (Debit key 01)

To sale a/c Cr.100000 (Credit key 50)

20. Account receivable customer balance TC= (/NFBL5N)

21. Clearing sales invoice with incoming payment TC= (/NF-28)

Enter the transaction code F-28 in the Command Field

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In the next screen, enter the following data

 Enter the Document Date

 Enter the Company Code
 Enter the Payment Currency
 Enter the Cash/Bank Account the Payment is to be posted
 Enter the Payment Amount
 Enter the Customer Id of the customer making the Payment

Press the Process Open Items Button to display the list of Pending Invoice

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 Assign the Payment Amount to Appropriate Invoice so as to balance the
Payment with the Invoice Amount

o Press Post from the Standard Toolbar to post the Incoming Payment
o Check for the Status bar for the Document number to be generated

22. Invoice posting of direct and indirect income and payments TC= (/NF-02)

Enter transaction F-02 in SAP Command Field

In the next screen, enter the Following details.
 Document date
 Posting date
 Company code
 Currency/rate

Enter transactions

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 Receipt invoice posting

For example; Rent received from tenant Rs.5000

Rent receivable account Dr.5000

To rent received account Cr.5000

Debit post key -40

Credit post key-50

 Payment invoice posting

ABC ltd paid salary to their employees Rs.25000

Salary account Dr.25000

To Salary payable Cr.25000

Debit post key -40

Credit post key-50

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23. Incoming payments clearing TC=F-06

Press the Process Open Items Button to display the list of Pending Invoice

Assign the Payment Amount to Appropriate Invoice so as to balance the Payment

with the Invoice Amount

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Press Post from the Standard Toolbar to post the Incoming Payment

Check for the Status bar for the Document number to be generated

24. Check incoming balance TC=FBL3N

25. Outgoing payments clearing TC=F-07

Press the Process Open Items Button to display the list of Pending Invoice

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Assign the Payment Amount to Appropriate Invoice so as to balance the Payment
with the Invoice Amount

Press Post from the Standard Toolbar to post the Incoming Payment

Check for the Status bar for the Document number to be generated

26. Check outgoing balance TC=FBL4N

Accounts payable

Accounts Payable is a sub module of SAP FI used to manage and

record Accounting data for all the vendors. It handles vendor invoices, approvals,

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payments and other allied activities.

Any postings made in Accounts Payable are updated in General Ledger as well. The
Accounts Payable sub module has tons of reports and forecasting to features totrack
vendor outstanding and payments.

The chief processes covered in the sub-module are

 Maintain Vendor Master Data

 Invoice Handling
 Payments
 Account Analysis of Reconciliation
 Reports

27. Creation of vendor account group TC=OBD3

Enter Transaction Code SPRO in the SAP Command Field

In the next screen, select the 'New Entries' Button from Application Menu
bar

In the next screen, enter the Following

 Enter a Unique key as Account Group key

 Enter a short description for the Account Group
 Check this for creating Account Group for Onetime Vendors
 Select the Master Data Section for which you want to maintain the Field

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 Status

Press 'Edit Field Status' button to maintain the field status of the selected
Master Data Section

 Click on company code data

 Double click on account management
 Reconciliation account change to require
 Cash management change to suppress

28. Create number ranges for vendor account group TC=XKN1

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In the next screen,

1. Enter a unique number range key

2. Enter the fiscal year for which the range is defined
3. Enter the Start Number and End Number of range without overlapping other
Number Ranges
4. Mark it as External if you want to insert the Document number manually
during document creation
5. Press 'Insert' Button

In the next screen, the new number range is listed

29. Assign number range to vendor account group TC=OBAS

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 30. Create vendor master data TC=FK01
Create Vendor

MasterVendor master is created centrally in materialsmanagement & financi

al accounting with their respective views. However, financial vendors can
becreated only in financial accounting.

For example, employees, auditors, insurance companies etc. When it is

created centrally, it has purchasing view and also accounting
views. In cases, where it is defined in financial accounting, theaccounting
views only are defined.

In case of central creation, materials management personnel will create the

purchasing view of the vendor and financial accounting personnel willcreate
the accounting views for the same.

The accounting view consists of reconciliation account, method of payment,

tolerance groups etc. It is necessary that the reconciliation account for the
Vendor is correctly identified and defined in the master data.

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 Enter Transaction code FK01 in SAP Command Field

In the Initial Screen,

Enter the Company code in which you want to create the vendor

In the next screen, In Address Tab Enter the Following

1. Enter the name of the Vendor

2. Enter Search Term ,for searching the Vendor Id
3. Enter Street/House Number
4. Enter Postal code/City
5. Enter Country/Region

Next in the Account Management Section

1. Enter the Reconciliation Account
2. Enter the Cash Management Group

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Choose Save from the Standard Toolbar
Check the Status bar for Confirmation of successful creation of Vendor Master.

Eg;

31. Purchase invoice TC=F-43

Enter transaction F-43 in SAP Command Field

Enter transaction details

For example: ABCD tld purchased goods for Rs.70000

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ABCD tld Dr 70000

To cash Cr.70000

Debit post key =31

Credit post key=40

32. Clearing purchase invoice with outgoing payment TC=53

Enter Transaction Code F-53 in the Command Field

In the next screen, enter the following data

1. Enter the Document Date

2. Enter the Company Code
3. Enter the Payment Currency
4. Enter the Cash/Bank Account in which Payment is to be credited
5. Enter the Payment Amount
6. Enter the Vendor Id of the vendor receiving the Payment

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Press the Process Open Items Button to display the list of Pending Invoice

Assign the Payment Amount to Appropriate Invoice so as to balance the Payment

with the Invoice Amount

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Press Post from the Standard Toolbar to post the Outgoing Payment

Check for the Status bar for the Document number to be generated

You have successfully post the Outgoing Payment for Vendor

PARTIAL METHOD: INCOMING & OUTGOING PARTIAL

PAYMENTS POSTING IN SAP

Incoming Partial Payments Posting

In SAP we can post Incoming Payments as Partial Payments. The partial payments
which will be posted as a separate open (Outstanding) item. For example a customer
has an outstanding of 1000 and he makes a payment of 400 as partial payment then
there will two separate open(Outstanding) items of 1000 Dr and 400 Cr .No
clearing document is created.

Enter a Transaction Code F-28 in the SAP Command Field

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In the next screen, enter the following data

1. Enter Document Date

2. Enter Company Code in which the payment is to be posted
3. Enter payment currency
4. Enter the Cash/Bank Account in which the payment is to be posted
5. Enter the Payment Amount
6. Enter Customer ID of the Customer making the payment
7. Press 'Process Open Items'

In the next screen ,

1. Choose the Partial Payment Tab

2. Select and Activate the Invoice against which the partial payment has been
made.
3. Enter Partial Amount

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Press 'Save' to post the Payment Document

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Check the Status bar for the Document Number Generated.

Outgoing Partial Payments Posting

Enter a Transaction Code F-53 in the SAP Command Field

In the next screen, enter the following data

1. Enter Document Date

2. Enter Company Code in which the payment is to be posted
3. Enter the Cash/Bank Account in which the payment is to be posted
4. Enter the Payment Amount
5. Enter Vendor ID of the Vendor making the payment
6. Press 'Process Open Items'

In the next screen,

1. Choose the Partial Payment Tab

2. Select and Activate the Invoice against which the partial payment has been
made.

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 3. Enter Partial Amount

Press 'Save' to post the Payment Document

Check the Status bar for the Document Number Generated.

FD32 IN SAP: CREDIT CONTROL AREA

Multiple outstanding receivables or bad debts can have a considerable impact on
company's performance.

Using Credit Control, you can minimize your credit risk by defining a credit limit
for your customers.

In SAP, Credit and risk management takes place in the credit control area. If your
credit management is centralized, you can define one credit control area for all of

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your company codes. On the other hand, if your credit policy requires
decentralized credit management, you can define credit control areas for each
company code or each group of company codes.

A credit control area, is used to define, and control, customer credit limits.

We can Maintain Credit Control Area Master Data for a customer:

Enter Transaction Code FD32 in SAP Command Field

In the next screen, enter the Following

1. Enter Customer Id for the Customer for which you want display the Credit
Limits
2. Enter the Credit Control Area
3. Check Central data section

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In the next screen, maintain the Credit Management Data for the Customer

Press "Save" button from the SAP Standard Toolbar for save the changes made in
the credit limits

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DUNNING
Dunning is a Germany word which means a “remainder to the party”.

Sometimes your business partner may fall behind payments. Then you can send them
a payment remainder or a dunning notice to remind them about their outstanding
debts

You can use the dunning program to dun both the customers and vendors. It may be
necessary to dun the vendors if they has a debit balance as result of credit memo

If a customer is also a vendor we can offset the account balances against one another.
Dunning program selects the overdue open items, determines the dunning level of
the account and creates a dunning notice

The SAP system allows you to use either the automatic dunning program, which
duns all overdue items in accordance with your selection criteria or if received you
can dun individual customers or vendors

There are some attributes to control the dunning program and these attributes
are configured according to the needs of the company

These attributes are:

 Dunning procedure
 Dunning level
 Dunning areas

Dunning Procedure
A predefine procedure specifying how customers or vendors are dunned. For each
procedure, the user defines

 Dunning frequency
 Text for the dunning notice

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  Number of dunning levels

Dunning Level:
SAP has given totally 9 levels. The number of levels we use depends upon the
client requirement

Dunning Areas:
Dunning area represents an organizational entity that is responsible for dunning.

Besides the main configuration, there are five other segments to be configured for
dunning as dunning procedures. In the main configuration screen we will define
- Dunning interval days, days between the dunning levels
- No of dunning levels
- Total due items from dunning level , total of due item from the defined dunning
levels.
- Min days in arrears (acct); these minimum days in arrears have no influence on
calculating the days overdue.
- Line item grace period; Grace periods per line item which are taken into
consideration during determination of the due date for the dunning run.
- Interest Indicator; if dunning interest is to be calculated, interest indicator will be
defined here

Dunning levels segments

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- Whether interest will be calculated at each dunning levels.
- Whether dunning notices will be generated, where no changes are noticed since
last dunning notice.
- Whether all line items are required to be printed out.
- Payment deadline dates

Dunning Charges Segments

- From Dunn Amt. Total of all overdue items which are printed in a dunning
notice
- The fixed dunning charge in dunning currency can be printed on the dunning
notice
- Dunning charge in percent. The percentage is multiplied by the total of all
overdue items in a dunning notice

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Minimum Amount Segments

Minimum amount of the overdue items which is necessary to set a dunning level.

- The minimum percentage is multiplied by the total of all open items on a

particular account. A dunning notice is only created at this level if all the items due
at this dunning level have reached at least the level determined by the
multiplication.

- Minimum amount to be reached by interest in order to be identified at this level

in dunning notices.

Note:
1. Dunning procedures are company code independent. They determine the
dunning interval, the grace periods for the due date determination, and the number
of dunning levels. You can also set the dunning level at which you want to list all
due items from an account in the dunning notice.

2. Dunning Charges: If the dunning notice only contains items in one currency, this
is the dunning currency. If the dunning notice contains items in different
currencies, the dunning currency is the local currency.

vendor master data in SAP FI

You can create a vendor master record by referencing an existing one. In this case,
the system copies certain data from the reference master record, however the

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system does not transfer all the data.
If you have SAP Material Management configured, you can create a vendormaster
record centrally. Here we will discuss how to create vendor master record for a
company code.

Create Vendor Account Group

 SPRO → SAP Reference IMG → Financial Accounting → AR and AP →
Vendor accounts → master data → preparation for creating vendor master
data → Define Account groups with screen layout (Vendors) → Execute.
It will open a new window. Enter the following details −

 Unique key as Account Group key.

 Description for the Account Group.
 Select box for creating Account Group for One Time Vendors.
 Select the Field Status.
 After providing the required details, click the Save icon at the top.

Create Vendor
Spro-Go to Accounting → Finance Accounting → Accounts Payable → Master
Record → Create.
Enter Transaction code FK01 in SAP
Press Enter after entering the Company code, Account group. It will open a new
window will open where you need to enter the following details −

 Name of the Vendor.

 Term for searching the Vendor Id.
 Street/House Number and Postal code 6 digit/City.
 Country/Region and click the Next screen button at the top.

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Once you press Enter or click Next Screen, enter the bank account details as shown
below and click the Next Screen icon. Next, enter the contact person details, name,
telephone, description and go to the next screen.
In the next screen, enter the Recon Account and cash management group
(domestic/Foreign, etc.)
Click the Next Screen icon and enter the payment transactions accounting details.
Enter Payt terms (like pay immediately, pay after 14 days 3% cash, etc.). Once
you are done with all the details, click the Save button at the top. You will get a
message that a vendor has been created in the given company code.

Post Purchase Invoice

Use the T-code FB60 for an incoming invoice or go to Accounting → Financial

Accounting → Accounts Payable → Document Entry → Invoice. Enter the company
code you want to post this invoice to and press Enter. It will open a new window. Enter
the following details −

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  Vendor ID of the vendor
 Invoice Date
 Amount for Invoice
 Tax Code for the Tax Applicable
 Tax Indicator "Calculate Tax"

Go to the Payment tab and enter the Payt terms like pay immediately, after 14
days, etc.
In Item details, enter the following details −

 Purchase Account
 Select Debit
 Amount for the Invoice
 Check Tax code
After entering these details, click Check the Status of the Document and
thereafter, click the Save button at the top.

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Purchases Returns
Use the T-code FB65 or go to Accounting → Financial Accounting →
Accounts Payable → Document Entry → Credit memo.
Enter the company code as shown below –
In the next screen, enter the following details −

 Enter the vendor ID

 Enter the Document date
 Enter the amount to be credited
 Enter the tax code used in the original invoice
 Check the Calculate Tax check box

Go to Item details section and enter the following data −

 Enter the Purchase Account for the Original Invoice posted

 Enter the Amount to be debited and select credit
 Check the tax code
Once the details are entered, click the Save button at the top. You will get a
confirmation that a vendor credit memo is posted in the company code 0001.

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Post Outgoing Vendor Payment
Use the T-code F-53 or go to Accounting → Financial Accounting → Account
Payable → Document Entry → Outgoing Payment → Post.

In the next screen, input the following details −

 Select the Document Date.

 Select the Company Code.
 Select the Payment Currency.
 Select the Cash/Bank Account in which Payment is to be credited and
Payment Amount.
 Select the Vendor Id of the receiving vendor.

Once you provide the above details, click Process Open Items.

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Assign the payment amount to the appropriate invoice so as to balance the payment
with the invoice amount.

Click the Save button at the top to get the document number to be generated.

Automatic Payment Run

Automatic Payment Program (APP) serves the purpose of posting accounts payable
like payment to a vendor based on vendor invoices automatically.
APP is used to find out due/overdue invoices and to process a list of customer and
vendor invoices to make payments in one go. APP cannot be used for all company codes
from different countries.
APP has the following categories −

 Setup all company codes

 Setup paying company codes
 Payment method per country
 Payment method per country code
 Bank Selection
 House Bank

Use the T-code FBZP to see all the following options.

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Setup all Company Codes
Click the option All Company Code in the above screen. A new window will open. Go to
New Entries.Enter the company code in the field Paying Company Code. Select the
checkboxes Pyt. Meth Suppl. and Max. Cash Discount as shown below –

Setup Paying Company Codes

Click Paying Company Codes and go to New Entries.

It will open a new window wherein you need to provide the following details −

 Paying company code

 Min amount for incoming payment
 Min amount for outgoing payment
 Exchange rate differences, separate payment for each Ref.,Bill / Exch pymt.

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Payment Method in Country
Click the option Payment Method in Country on the main window. Go to New Entries
as shown below.

In the next screen, input the following details −

 Enter Country name, Payment method and Description.

 Select payment method: Incoming/outgoing payment.
 Select payment method classification.

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Payment Method in Company Code
Click the option Pmnt. Method in Company Code on the main window. Go to New
Entries as shown below −

In the next screen, enter the following details −

 Enter Paying Co Code and Pymt. Method.

 Enter minimum and maximum amount limits.
 Select Bank selection control option.
 Go to form data as shown below.

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Update Form Data Type. Click the Search button and select the value.

Enter the field-drawer of the form and once all the details are supplied, click the Save
button.

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Bank Determination
Click the option Bank Determination in the main window. Select Paying Company Code
and click the option Select Block as shown below and go to Bank Account.

Click the button Ranking Order and go to New Entries as shown below –

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Enter the new bank account details as shown below to create a bank account.

House Banks
House Banks provide the details of the bank account which is used by a company to
make payments to its vendors and customers.
Click the option House Banks on the main screen and enter the company code as
shown below −

The next window will show a list of all house banks which the company is using to make
payments to its vendors and customers.

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Execution : After Configuration of the Payment Process we will enter parameters to
execute the program. Enter the Transaction code F110 in the SAP Command Field

Every Payment Program run is identified by two fields

1. Run date
2. Identification

In the Parameters Tab , We have to define the following

1. What is to be paid - Docs. Entered Up to

2. What payment methods will be used - Payment Methods
3. When will the payments be made - Posting Date
4. Which company codes will be considered - Company Codes
5. How are they going to be paid - Payment Method Sequence decides the Priority of
the Payment Method

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Save the Parameters Entered

After the Parameters are Entered we execute the Program by pressing the proposal button
in Application Toolbar

In the next dialog box , Check the "Start Immediately" and press Continue

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A payment proposal is generated based on the parameters.

We can edit the proposal to block the some payments if we want, Press the Edit Proposal
Button

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In the next screen , the Proposal List of Vendors is generated who are to receive the
Payments

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After edit the Proposal , and then run the payment run to release the payments. We can
schedule the payment run by coming back to main screen pressing the Payment Run button

In the next Dialog box , Check "Start Immediately" to start the payment run instantly and
Press continue

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We can check the status of the Payment run on the Status Tab

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 SAP FICO EXAM QUESTIONS & ANSWERS
1) Explain the term SAP FICO?

SAP FICO stands for FI (Financial Accounting) and CO (controlling). In SAP FICO, SAP
FI take cares about accounting, preparation of financial statements, tax computations
etc., while SAP CO take cares of inter orders, cost sheet, inventory sheet, cost allocations
etc. It is the software that stores data, and also computes them and retrieves the result
based on the current marketing scenario. SAP FICO prevents data lost and also does the
verification and reporting of data.

2) What are the other modules to which 'Financial Accounting' is

integrated?

The other modules to which 'Financial Accounting' is integrated are

a) Sales and Distribution

b) Material Management

c) Human Resource

d) Production Planning

e) Controlling of financial transaction

3) In SAP FI what are the organizational elements?

The organizational elements in SAP FI are:

a) Company Code

b) Business Area

c) Chart of Account

d) Functional Area

4) Explain what is posting key and what does it control?

In order to determine the transaction type which is entered in the line item, a two digit
numerical is used known as 'Posting Key'

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Posting key determines

a) Account Types

b) Types of posting. Debit or Credit

c) Field status of transaction

5) What is the company code in SAP?

To generate financial statements like Profit and Loss statement, Balance sheets etc.
company code is used.

6) How many Chart of Accounts can company code have?

You can have one Chart of Account for one company code which is assigned.

7) For a Company Code how many currencies can be configured?

There are three currencies that can be configured for a Company code, one is a local
currency and two are the parallel currencies.

8) What are the options in SAP for Fiscal years?

Fiscal year in SAP is the way financial data is stored in the system. In SAP, you have 12
periods and four special periods. These periods are stored in fiscal year variant that is:

a) Calendar Year: From Jan-Dec, April-March

b) Year dependent fiscal year

9) What is a 'year shift' in SAP calendar?

SAP system does not know what broken fiscal year e.g is April 2012 to March 2013 and
only understand the calendar year. If, for any business, the fiscal year is not a calendar
year but the combination of the different months of two different calendar year and then
one of the calendar year has to classified as a fiscal year for SAP and the month falling
in another year has to be adjusted into the fiscal year by shifting the year by using the
sign -1 or +1. This shift in the year is known as 'year shift'.

Example: April 2012 to Dec 2012 is our first calendar year, and Jan 2013 to March 2013
is our second year, now if you are taking April-12 to Dec-12 as your fiscal year, then Jan-
13 to March-13 automatically becomes the second year, and you have to adjust this year
by using -1 shift, and vice versa if the scenario is reversed, here you will use +1

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shift.

10) What is year dependent fiscal year variant?

In a year dependent fiscal year variant, the number of days in a month is not as per the
calendar month. For example, in year 2005, month January end on 29th, month Feb ends
on 26th etc.

11) In SAP how input and output taxes are taken care?

For each country tax procedure is defined, and tax codes are defined within this. There
is a flexibility to either expense out the Tax amounts or capitalize the same to stocks.

12) In SAP what is the use of FSV (Financial Statement Version) ?

FSV (Financial Statement Version) is a reporting tool. It can be used to extract final
accounts from SAP like Profit and Loss Account and Balance Sheet. The multiple FSV's
can be used for generating the output of various external agencies like Banks and other
statutory authorities.

13) What is a field status group?

'Field status groups' control the fields which come up when the user does the
transactions. In FIGL (Financial General Ledger) master, the field status group is stored.

14) What are the methods by which vendor invoice payments can be
made?
a) Manual payment without the use of any output medium like cheques etc.

b) Automatic payments like DME (Data Medium Exchange), cheques, Wire transfer

15) What are the problems when business area is configured?

The problem faced when a business area is configured, is splitting of account balance
which is more pertinent in the case of tax accounts.

16) How are tolerances for invoice verification defined?

Tolerance determines whether the payable places matching or tax hold on the invoice.
The following are the instances of tolerance can be defined for Logistic Invoice
Verification.

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a) Small differences

b) Moving average price variances

c) Quantity variances

d) Price variances

17) What is APP in SAP Fico?

APP stands for 'Automatic Payment Program'; it is a tool provided by SAP to companies
to pay its vendors and customers. APP tools help to avoid any mistakes taken place in
posting manually. Also, when number of employees is more in the company, payment
through APP becomes more feasible.

18) What is "dunning" in SAP?

'Dunning' is the process by which payment chasing letters are issued to customers. SAP
can determine which customers should receive the letters and for which overdue items.
Different letters can be printed in SAP depending on the overdue payment date, with a
simple reminder. With the help of dunning level on the customer master, we can know
which letter has been issued to the customer.

19) Which of the following are the fields of 'General Data' in customer/vendor
accounts?

a. Insurance
b. Account Management

c. Both a and b
d. None of the above

Ans: Both a and b

20) Which of the following are process dimensions of SAP business workflow?

a. Organizational structure
b. Process structure
c. Function
d. Information
e. All of the above

ANSWER: E: All of the above

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21) What is the purpose of account determination?

a. Document type
b. Debit account
c. Credit account
d. Balance sheet account
e. All of the above
f. a, b and c

CORRECT ANSWER: a, b and c

22) Which of the following are the fields of 'General Data' in customer/vendor
accounts?
a. Insurance
b. Account Management
c. Both a and b
d. None of the above

CORRECT ANSWER: Both a and b

23) The posting period can be defined for each:

a. Company code
b. accounting principle
c. posting period variant
d. Accrual type
e. All of the above
f. a, b and d

CORRECT ANSWER : F- a, b and d

24) Which of the following are required settings for foreign currency valuation?

a. Define exchange rates

b. Define valuation methods
c. Define expense and revenue accounts for exchange rate differences
d. Specify balance sheet adjustment accounts for receivables and payables
e. All of the above

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CORRECT ANSWER: E- All of the above

25) In which entity is ROI, EVA and cash flow analyses is possible
a. Profit Center
b. Expense Center
c. Cost Center

Answer: A- Profit Center

26) Which entity is used for short period with a specific deadline

a. Profit Center
b. Internal Order
c. Cost Center
ANSWER: B- Internal Order

27) Which transaction code is used to create a customer master data?

a. FD34
b. FD14
c. FD06
d. FD01
ANSWER: D- FD01

28) Which transaction is used in new general ledger account?

a. FS03
b. FS08
c. FS04
d. FS00

ANSWER: D- FS00

29) Which transaction code used to create vendor master data?

a. FK20
b. FK12
c. FK01
d. FK15

ANSWER: C- FK01

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30) Which transaction code is used to post outgoing vendor payment?

a. F-45
b. F-51
c. F-52
d. F-53

ANSWER: D- F-53

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LAB WORK
Company A was incorporated on January 1, 2023 with an initial capital of 5,00000
shares . During the first month of its operations, the company engaged in following
transactions:

Date Transaction

Jan 2 An amount of Rs.36,000 was paid as advance rent for three months.

Jan 3 Paid Rs.60,000 cash on the purchase of equipment costing Rs 80,000

Jan 4 Purchased office supplies costing Rs 17,600 on account.

Jan 13 Provided services to its customers and received Rs 28,500 in cash.

Jan 13 Paid the accounts payable on the office supplies purchased on January 4.

Jan 14 Paid wages to its employees for first two weeks of January, aggregating Rs 19,100.

Jan 18 Provided Rs 54,100 worth of services to its customers. They paid Rs 32,900 and promised to
pay the remaining amount.

Jan 23 Received Rs 15,300 from customers for the services provided on January 18.

Jan 25 Received Rs 4,000 as an advance payment from customers.

Jan 26 Purchased office supplies costing Rs 5,200 on account.

Jan 28 Paid wages to its employees for the third and fourth week of January: Rs 19,100.

Jan 31 Paid Rs 5,000 as dividends.

Jan 31 Received electricity bill of Rs 2,470.

Jan 31 Received telephone bill of Rs 1,494.

Jan 31 Miscellaneous expenses paid during the month totaled Rs 3,470

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On Feb 01, 2023 Anees started business with Rs. 100,000 and other transactions forthe
month are:
2. Purchase Furniture for Cash Rs. 7,000.
8. Purchase Goods for Cash Rs. 2,000 and for Credit Rs. 1,000 from Khalid Retail Store.
14. Sold Goods to Khan Brothers Rs. 12,000 and Cash Sales Rs. 5,000.
18. Owner withdrew of worth Rs. 2,000 for personal use.
22. Paid Khalid Retail Store Rs. 500.
26. Received Rs. 10,000 from Khan Brothers.
30. Paid Salaries Expense Rs. 2,000

On March 2023, Farhan Rahim, starts wholesaling business. Following transactions as

follows:
1. He started business with capital of Rs. 15,000 and Land worth Rs. 10,000.
8. Bought goods from Bilal and Friends Rs. 1,000 and by cash from XYZ Co. Rs 2,000.
13. Sold goods to Rehman & sons Rs. 1,500 and sale by cash Rs. 5,000.
17. Gave away charity of cash Rs. 50 and merchandising worth Rs. 30.
21. Paid Bilal and Friends cash Rs. 975; discount received Rs. 25.
28. Received cash from Rehman & Sons Rs. 1,450; allowed him discount of Rs. 50.

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