Key words

SAP -> Systems Applications and Products in Data Processing

SAP software is used to control all types of critical business functions. By integrating and automating
key processes. It helps the organizations to run faster and more efficiently by storing the data centrally.
It also provides the multiple business functions with real-time and accurate insight into operations.
ERP -> Enterprise Resource Planning
It's a software system that includes all the tools and processes required to run a successful company,
including HR, manufacturing, supply chain, finance, accounting, and more.
IMG -> Implementation Guide
The IMG structure contains documentation and activity texts for the Implementation, which is used
to customize SAP software according to specific business requirements.
SPRO -> SAP Project Reference Object
It is used to configure the setting as per your client requirement by using the standard setting present
in the system. This is where you can do all the SAP configuration work. Or
This is the place where we can do all the configuration work.it is used to configure the system as per
client requirement by using the standard setting present in the system.
Note - 1 when an object is defined at client level (Group Level/Company level) that object
can be used by all the company codes by the client.
Note - 2 When an object is defined at company code level then that object can be used by
that company code only.
Note - 3 Master data- The data which remain constant and can’t be change over the period of time is
called master data and the data which contain the master data is called master record. For example,
1. GL account number
2. Account group
Note - 4 Transitional data- The data which can be change over the period of time as per business
requirement, whose existence is temporary and this data can be used for various function is called
Transitional data.
Chapter – 1 Company, code, assign & business area
Q1. What is company?
Define company/client or group of company or Enterprise structure in SAP FICO. ( T-Code
/NOX15)

It is an organizational Structure in SAP in Financial accounting under which different types of

company operates having distinct identity from each other as per the legal requirements of the
area/country where they operate. In this we can define the Identification, Name of the Client,
Address, Country, Language and currency which can be different from company code.
For example: Tata group is the Group of company under which different types of company operates
example Tata motors, Tata consultancy services etc. having separate statement of profit/loss a/c,
balance sheet etc.

Enterprise structure - > Definition - > Financial accounting

- > Define company -> New entries (Clicking on new entry
means we can create new entry or we have to create new
entry)

Q2.What is company code?

Define company code (T-Code /NOX02)

Company code is an independent organizational Structure under Group of company which maintain
their own P&L, Balance sheet and pay taxes individually as per the law of the area/country in which
its operating/registered.
For example: Tata motors is operating in India then he should have to prepare his books of accounts as
per the Indian company’s law i: e companies act 2013.

Enterprise structure - > Definition - > Financial accounting

- > Edit, copy, delete, check company code -> New entries
-> define the parameters
Q3. How to Assign company code to company?
Assign company code to company (T-Code /NOX16)

It Provides the links/relation between two objects in the software is called assignment/integration.
Here we will link two objects i: e company code to company. Once you assign the company the role of
group of company is finished.

Enterprise structure - > Assignment - > Financial accounting - > Assign

company code to company

Q4 What is Credit control area and what are its uses?

In SAP, a credit control area is an organizational unit that controls and specifies customer
credit limits. It can include one or more company codes, but a company code cannot be
divided into multiple credit control areas.
Uses of credit control area
As per the company requirement we can implement credit management that is centralized,
decentralized, or somewhere in between
Centralized - We define one credit control area for all of your company codes. (i: e at client
level)
Decentralized - We can define credit control areas for each company code or each group of
company codes. (i: e company codes level)
Q5 What is Business area in SAP FICO?
Business area in SAP FICO (T-Code /NOX03)
It is an organizational unit within accounting which can be classified as area wise. Through this we
can generate financial statements of the particular area i: e profit & loss account and balance sheet
Points to be noted/ benefits of using Business Areas
 1. Definition of business area in SAP is optional.
2. We can maintain ‘N’ number of business areas in SAP as per client needs.
3. While posting a business transaction you need to enter business area.
4. Business area is used to differentiate transactions as per the requirement of the company.
5. We can configure the business area by attaching it to the company code and the other details
in that business area and you will get report attached automatically.
6. We can get the P/L & Balance sheet of the particular area as and when required.
7. It’s mainly used in Controlling as compared to Finance Accounting.
8. We can use the same business area if other company codes require the same area

Example. A company ABC works in different areas like production, wholesale and sales and he wants
to maintain the data on this basis that he will be came to know the details as an when required.
soln One is to create different types of company codes.

Enterprise
Second is to create each of these business lines into the business areas.
structure - > Assignment - > Financial accounting - > Business area -> New
entries
Q6 What is Business Segment in SAP FICO?
It is also Independent organizational unit for which can be utilized for reporting. This can be used for
locations wise, Products wise reporting. Segment is derived from the assigned profit centers during
posting. It is mostly used as category of similar profit centers.

Enterprise Structure - > Definition - > Financial Accounting - > Define

Segments
Chapter – 2 Chart of account
Q.6 What is chart of account? Is it compulsory to define chart of account? Chart of account is for
company code or group?
Define chart of accounts in SAP FICO
It is the grouping of General ledger (GL) accounts that forms the foundation for recording the
accounting transactions in a structured way (day-to day basis). It controls the number of GL accounts,
name of the GL accounts, and some other control information. It contains the list of the General
ledger account used by the company code.
It’s compulsory to define chart of account so that you can create ledger or folio and its mandatory for
every company to assign one operational chart of account.
Chart of account is company code specific.
Minimum length of chart of account will be 2(maximum invoice be 10) and maximum length
will be 10(maximum invoice be 10000000000)
Note: We can assign 1 chart of account to multiple companies
Q6.How many types of chart of account are there?
There are three types of chart of account -:
1)Operating chart of account:
1)The operating chart of accounts in SAP is used for recording the day-to-day transactions in a
company code.
2) It’s also known as standard chart of account.
3) Each company code uses at least one operating chart of account and we can assign same chart of
account to more than one company code.
4) It can be different from the country chart of account. Both FI & CO make use of this element
2)Country specific chart of account:
1)The Country specific chart of accounts in SAP is used to meet the country specific legal
requirements.
2) It’s optional to assign company code to chart of account but we have to assign it when we have to
work in different operating chart of account and we can do it by entering the country chart of GL
account number in the alternate account number field of GL master record.
3) We can establish the link by entering the country chart of G/L account number in the alternate
Account number field of GL Master Record?
4)Example: A subsidiary company code is working in Russia and his parent company code is operating
in India then they have to use the Country specific chart of account so that the parent company code
can see their financial statement in India any time.
Russian Scenario: If any Russian entity is having a business in other country, then they Russian part
has to submit or disclose the financial of foreign counter part. Then they will ask Indian part to
prepare financial statements as per Russian law.
India Scenario: India Counterpart is using chart of account as per Indian Government now they will
prepare tow statements and will use two charts of account e.g. one for local Indian and once country
specific chart of account e.g. Russian chart of account
3)Group chart of account:
The group chart of accounts in SAP is used for consolidating all company codes with a different
operating chart of accounts belonging to a company/group and is used to consolidate the reports for
the entire group although it is not mandatory to assign group chart of account to company. It’s also
known as corporate chart of accounts.
Q7. What is Account groups? Is there any limit on number of account groups? Can we add/delete
account groups in fiscal year? Classify the account groups?
Account groups are used to maintain intervals, segregate G/L accounts groups, and define field status.
it has a four-digit alphanumeric code and serves for organization of G/L account master data based on
specifications on how G/L account master data to be defined. Minimum two GL account groups are
required e.g. one from P&L and other for Balance sheet account group maximum no limit. We can
add/delete the account group between the fiscal year as per the need only if no GL is created under the
concern group. Classification of account groups->

Balance sheet accounts groups

Liabilities Assets
(a) Share capital (a) Fixed assets
(b) Reserve and surplus (b) Current assets
(c) Accumulated depreciation (c) Loans and advances
(d) Secured loans
(e) Unsecured loans
(f) Current liabilities

Profit and loss account group

Expenditure Income
(a) Raw material consumption (a) Sales
(b) Personal cost (b) Other income
(c) Manufacturing cost (c) Increase and decrease of stock
(d) Administration cost
(e) Interest paid
(f) Depreciation
Note: Every account group should have a separate number range.

Q8. What is Retain earning account

While creating the income and expenditure account we have to specify the profit and loss account type.
It is compulsory to create one retain earning account. We can define any number of profit and loss
account types. For example, operating profit and loss account and non-operating profit and loss
account to know the operating and non-operating profit and loss at any point of time. P&L account type
is “X” however we can give any identification, and must be maintained under “Reserve and surpluses”
or “Shared Capital” account group.
Q9. What is Posting period variant? What are Account types in posting period?
As per sap standard only current opening period are open and all the past and future period are closed.
We can open all the period in sap system as per the client needs but it is not recommended . For doing
any transaction(s) in the past month we need to request to the concern person along with the reason
and after the approval we can open the posting period.
Account types in posting period
It describes the nature of accounts in sap
The following are the account types define in the system are
1) GL account (S)
2) Vendor account (K)
3) Customer account (D)
4) Assets account (A)
5) Material account (M)
6) Account type (+) it indicates that the posting period is applicable to all account
Types
Note 1: We cannot define our own account types as they are already defined in the system.
Note 2: User level or end user level maintenance of posting period at the end of every month the
user has to open the period for this path is also available from sap easy access screen this is called
user level maintenance of posting period.

Creation of number ranges for document type.

Q10. What is document in sap? How many types of documents are their?
The business transaction is posted into the system through an accounting system called “Posting”. As
an evidence of posting a record is generated and stored in the database. This record is known as
document or voucher as well. There are two Types of documents.
1.Original document
These is the evidence of entering the transaction into the sap system. for example, vouchers, cheque
book, purchase invoices, copies of sales invoice and receipt.
2. Processing documents
It contains the complete content of a solution or a part of the solution based on the scenario. For
Example, recurring documents, sample document and accounting documents .
Q.11How many segments are their GL account segment?

Every document contains two parts

Document header: These parts contain the data such as document date, posting date, posting period,
currency type, company code and document type.
Line items: These parts contain posting key, GL account number, amount and business area.
Note: A document can contain up to 999-line item for example
(Rent a/c dr. 1000
Freight a/c dr. 1500
Expense a/c dr. 2500
To cash a/c 5000)
These all are line items
Important points
1)The number to be assigned to the document.
2)It differentiates the business transaction and the nature of business of the account type.
3)It’s defined at the client level*
4)The standard system delivered with document type and same are used, copied and changed.

Q11. Why document type concept is configured?

A person from finance background can easily figure out the nature of transaction just by looking at the
transaction but A person from non-finance background cannot figure out the nature of transaction just
by looking at the transaction therefore, sap configure the document type concept so that by simply
looking at the document type anyone can figure out the nature of transaction.
Sr. Number Document Type Description

1 SA GL AC POSTING

19 KR VENDOR INVOICE

15 KZ VENDOR PAYMENT

17 KA VENDOR ANOTHER DOCUMENT

18 DR CUSTOMER INVOICE

14 DZ CUSTOMER PAYMENT

16 DA CUSTOMER ANOTHER DOCUMENT

4 AF DEPRECIATION

Q12. How does functional consultant know that whether object is defined at client (Group) level or
company code level?
At the time of defining the object if the system asks for the company code it means that that the
object is created at client level and can be used by all company code, but if the system does not ask
for the company code it means that that the object is created at company code level.

Q13. What is tolerance group for employees?

The tolerance group for Employees means that the maximum amount an employee or group of
employees are authorized to post in SAP. It can enter as a line item in a Vendor or customer account.
Tolerance group for Employees
LIMIT

Particular Group A Group B Group C Group D

AmtPer Document 1,00,000 1,50,000 2,00,000 2,50,000

AmtPer Open Item 1,50,000 2,00,000 2,50,000 3,00,000

Discount % 0% 1% 2% 3%

Payment Difference 1,000 2,000 3000 4000

Note 1: Once ABAP developer set the limit only then each group or person will be able to make the
entry.
Q14. What is credit control area?
A credit control area is an organizational unit for specifying and controlling customer credit limits. It
can include one or more company codes. It is not possible to divide a company code into several
credit control areas. It is defined at company code level.
Use of credit control area
The credit control area is used for credit management in the application components Accounts
Receivable (FI-AR) and Sales and Distribution (SD).