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FI Financial Accounting

FI Financial Accounting. External Accounting. Cash Flow. Profit & Loss. Bankers, Lenders. Balance Sheet. Stockholders. External Auditors. IRS, Taxing Authority. SEC. Financial Accounting. FI/CO Organizational Structure Elements. Client Company Code Chart of Accounts

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FI Financial Accounting

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  1. FIFinancial Accounting Quarles: Flya Kite

  2. External Accounting Cash Flow Profit & Loss Bankers, Lenders Balance Sheet Stockholders External Auditors IRS, Taxing Authority SEC Financial Accounting Quarles: Flya Kite

  3. FI/CO Organizational Structure Elements • Client • Company Code • Chart of Accounts • Fiscal Year Variant • Credit Control Area Quarles: Flya Kite

  4. Client • Highest hierarchical level in an SAP system • A complete database containing all the tables necessary for creating a fully integrated system • Master records are created per client Quarles: Flya Kite

  5. A COMPANY CODE IS... A BALANCED SET OF BOOKS Quarles: Flya Kite

  6. Company Code • A required structural element • A legally independent entity • The smallest organizational unit for which accounting can be carried out • Where business transactions are processed • Whereaccounts are managed • Where legalindividualfinancial statements, such as the balance sheet and the profit and loss statement, are created Quarles: Flya Kite

  7. Chart of Accounts • A listing of the accounts • A chart of accounts must be assigned to every company code • Several company codes can use the same chart of accounts • A different chart of accounts can be used if a different grouping of the chart of accounts is required • Flya Kite uses FICH Quarles: Flya Kite

  8. Fiscal Year Variant • Used to define the fiscal year for the company • Standard year = 12 periods • Special periods = up to four • Allow additional closings of the books during or at the end of the year Quarles: Flya Kite

  9. Credit Control Area • An organizational unit or area of responsibility created to control customer credit limits • A company code is assigned to one and only one credit control area • Multiple company codes can be assigned to one credit control area Quarles: Flya Kite

  10. CLIENT CHART OF ACCOUNTS - FICH CREDIT CONTROL AREA = FIFL COMPANY CODE FIFL Quarles: Flya Kite

  11. Master Data • Describes items orobjects usedin a business such as accounts, materials, vendors, customers • The informationusually remains unchangedover an extended period of time • Each master data record isuniquein name or number Quarles: Flya Kite

  12. MASTER DATA GL AP AR G/L ACCOUNTS VENDORS CUSTOMERS FI Master Data Quarles: Flya Kite

  13. Account number 10000_ _ _ Bank Account Account number 20000000 Accounts Payable G/L Master Records • A master record must be created for every G/L account • Business transactions are posted to G/L accounts • Line items are displayed by G/L account Quarles: Flya Kite

  14. Account number 10000000 Chart of accounts Balance sheet account P&L statement acct type Account group G/L Master Records • Chart of Accounts information • G/L account number • G/L account name • Account type: Balance sheet or Income Statement • Account group: Info that controls creation of the master record in the company code Quarles: Flya Kite

  15. Account Group • Identifier that controls which fields must be entered when the account is created • Can determine a valid number interval for the G/L account • Must be created before creating G/L master records - configuration data Quarles: Flya Kite

  16. Account groups Chrt/accts Acct group From acct To account Description FLCH BSA 10000000 39999999 Balance sheet FLCH PLA 60000000 79999999 P & L accounts FLCH RAA 11000000 30000000 Reconciliation Quarles: Flya Kite

  17. G/L Master Records • Contains Company Code information • Account Currency • Tax Category • Used for country specific taxes during pricing • Reconciliation Account for Account Type • Open Item Management • Whether each item in an account must be used to clear other line items in the same account –each line must zero out before it can clear • Line Item Display Quarles: Flya Kite

  18. Company Code Information • Sort key • Necessary when Line Item display is selected • Determines the field that will be used to sort the line items • Posting date • Document date • Cost center • Others Quarles: Flya Kite

  19. Company Code Information • Reconciliation account • Accounts receivable, Accounts payable, Fixed Assets, etc. • When you post to an account in the sub-ledger, the system automatically posts to the corresponding reconciliation account • The general ledger is automatically updated Quarles: Flya Kite

  20. 1000 2000 Accounts Receivable 3000 Reconciliation Account Customers Subledger Customer1 Customer2 Reconciliation Account Quarles: Flya Kite

  21. Vendor2 3000 5000 Accounts Payable Reconciliation Account Vendors Subledger Vendor1 8000 Reconciliation Account Quarles: Flya Kite

  22. Company Code Information • Field status group • An identifier which controls which fields appear on a G/L document which uses this account - configuration data • Sets screens for entering data so they are specific to the account or to the transaction Quarles: Flya Kite

  23. Master Data MASTER DATA GL AP AR G/L ACCOUNTS VENDORS CUSTOMERS Quarles: Flya Kite

  24. General data Address Control data Payment transactions Company code data Account management Payment transactions Purchasing org data Purchasing data Partner functions Accounts Payable Master Records - Vendors • A master recordmust be created for every vendor • Centralized datafor both MM & FI Quarles: Flya Kite

  25. Address screen Control Payment transactions Vendor Master General data Address screen Vendor Name Search Term Street address, City, Postal code Country Language Telephone, Fax, Data numbers Quarles: Flya Kite

  26. Master Data MASTER DATA GL AP AR G/L ACCOUNTS VENDORS CUSTOMERS Quarles: Flya Kite

  27. General data Address Control data Payment transactions Company code data Account management Payment transactions Sales area data Sales Shipping Billing ... Account Receivable Master Records - Customers • A master record must be created for every customer • Centralized data for both SD & FI Quarles: Flya Kite

  28. Inventory Expenses GR / IR Dr Cr Dr Cr Dr Cr $150 $150 $150 GR/IR account: a suspense account Purchase Requisition No Impact on Finance Purchase Order Integration MM- FI Via Automatic Account Assignment Goods Receipt Goods Receipt or Quarles: Flya Kite

  29. GR/IR account Invoice Receipt Payment GR/IR Vendor Cash Dr Cr Dr Cr Dr Cr $150 $150 $150 $150 $150 Quarles: Flya Kite

  30. Address screen Control data screen Marketing screen Address screen Unloading points screen Customer Name Search Term Street address, City, Postal code Country Language Telephone, Fax, Data numbers Foreign trade screen Contact persons screen Sales screen Shipping screen Billing screen Taxes screen Output screen Partner functions screen Customer Master Quarles: Flya Kite

  31. FI Transactions Quarles: Flya Kite

  32. Outline Agreement or Scheduling Agreement Procurement Process Purchase Requisition Vendor Demand Accounts Payable Purchase Order Goods Receipt & Inventory Mgt. Invoice Verification Quarles: Flya Kite

  33. Document 1000010 Document Principle • In SAP, transaction postings are always stored in document form • The document remains as a complete unit in the system until it is archived • Only complete documents can be posted • A document consists of a document header and at least two line items Quarles: Flya Kite

  34. Tolerances Groups for Account Postings • Amount limits for your employees which control • the maximum document amount the employee is authorized to post • the maximum amount the employee can enter as a line item in a customer or vendor account • the maximum cash discount percentage the employee can grant on a line item • the maximum acceptable tolerance for paymentdifferences for the employee Quarles: Flya Kite

  35. Tolerance Group for A/R & A/P • Handles differences in payment and residual items which can occur during payment settlement • Allocate a tolerance group to each vendor in the master record • Tolerances up to which differences in payment are posted automatically to expense or revenue accounts when clearing open items Quarles: Flya Kite

  36. ControllingCO Where the company “really” finds out what is going on! Flya Kite Quarles: Flya Kite

  37. Cost Element Accounting Which costs are incurred ? Product related costs (Direct , traceable costs) Material Labor Overhead costs (Indirect costs) Admin wages Depreciation Interest Cost Center Accounting Where are the costs incurred? Product Cost Accounting Purchasing What for? Product Manufacturing Administration Sales Quarles: Flya Kite 37

  38. Cost Elements CO FI General ledger accounts P & L accts Bal. sheet accts Expense accts Primary cost elements Secondary cost elements Revenue accts Quarles: Flya Kite 38

  39. Primary Cost Elements • A way to identify whichtype of cost - Salaries, utilities, selling expenses • Cost that arise from consumption of goods/services from outside of the enterprise • Must be created in the GL chart of accounts in FI • Each posting to a cost element must be assigned either to a cost center or an order Quarles: Flya Kite 39

  40. Secondary Cost Elements • Used exclusively in CO for allocations and settlements • Internal cost allocations • Created and exist ONLY in CO • Cannot exist in FI • The internal value flows such as allocations and overhead calculations • Secondary cost elements are allocated to cost objects within CO • Represent activity values produced in internal cost allocations Quarles: Flya Kite 40

  41. Cost Centers and Cost Elements • Closely linked in SAP • Each posting to a cost element is assigned either to a cost center or an order • Data is subdivided between both cost centers and cost elements for analysis • Cost Centers = where • Cost Elements = which Quarles: Flya Kite 41

  42. Distributions • A method of allocating primary costs • Primary cost element is the same in the sender and receiver • Cost element retains its character: same element in receiver as it was in sender • Sender cost centers and receiver cost centers are documented in the CO document Quarles: Flya Kite 42

  43. Distributions Rent Expense $10,000 Cost center A060 Identity of the cost is the same in the Receiver Cost Centers Identity of the cost in the Sender Cost Center Primary Cost Element Sales & Mktg Rent Exp $2,500 Distributed Rent Expense 780000 Mfg Rent Expense $5,000 Adm Rent Expense $2,500 Nature of cost (i.e., rent expense) comes across to receiver Quarles: Flya Kite 43

  44. Assessments • A method of allocating both primary and secondary costs • Iterative or hierarchical • Primary costs are grouped together and transferred to receiver cost centers as a single secondary cost element • Sender cost centers and receiver cost centers are documented in the CO document Quarles: Flya Kite 44

  45. Assessments Secondary Cost Element Sender Cost Center Receiver Cost Centers Sales & Mktg IS Assessment $25,000 Information Systems Costs = $100,000(wages, paper, depreciation, etc) Cost center A070 Mfg IS Assessment $50,000 Allocated IS costs 800000 Admin IS Assessment $25,000 Nature of costs is unknown to receiver Quarles: Flya Kite 45

  46. FI/CO Transactions • EXERCISE FI/CO01: CREATE GENERAL LEDGER B/S ACCOUNT • We will create a bank account manually. A bank account is an asset account located in the Balance Sheet • EXERCISE FI/CO02: CREATE GENERAL LEDGER GR/IR ACCOUNT • EXERCISE FI/CO03: CREATE P/L ACCOUNTS • Now that the vendor account has been created, the corresponding rent expense account is to be created in your chart of accounts using a reference account. Also, a utilities expense account is to be created. Using a reference account copies much of the detail data from the reference account to the account being created thus saving time making repetitive entries. Quarles: Flya Kite

  47. FI/CO Transactions • EXERCISE FI/CO04: CREATE GENERAL LEDGER P&L ACCOUNTS • To process billing we will need Profit & Loss Statement accounts for Sales Revenue and Sales Discounts • EXERCISE FI/CO05: RUN GL ACCOUNTS REPORT • This report will give you a summary of all accounts assigned to your company code. • EXERCISE FI/CO06: CREATE PRIMARY COST ELEMENTS • Primary cost elements: are costs that arise through the consumption of goods and services that originate from outside the company. They represent the link between FI and CO. This exercise creates the linkage between FI cost elements (GL accounts in FI) and the cost element categories to which they will link in CO. Quarles: Flya Kite

  48. FI/CO Transactions • EXERCISE FI/CO07: CREATE VENDOR MASTER RECORD • Flya Kite has rented new office space. The accountant in charge is requested to create a new vendor account for the real estate company. • EXERCISE FI/CO08: G/L DOCUMENT ENTRY • You receive the utility bill for the month for the plant and it must be paid immediately. The bill is for $1,000. The expense must be recorded in the General Ledger. It will be initially charged to the Administration cost center and charged out to manufacturing cost centers later. • EXERCISE FI/CO09: DISPLAY ACCOUNT BALANCES (OR LINE ITEMS) Quarles: Flya Kite

  49. FI/CO Transactions • EXERCISE FI/CO10: POST VENDOR INVOICE • Ross’ Rockin Rentals has sent the invoice for the first month’s rent of $350. Please post the invoice using the accounts you have created in your Company code. • EXERCISE FI/CO11: DISPLAY ACCOUNT BALANCES (AND/OR LINE ITEMS) • EXERCISE FI/CO12: POST OUTGOING PAYMENT • The invoice of Ross’ Rockin Rentals is due for payment now. You are requested to clear the invoice amount by posting an outgoing payment using the bank account (no. 10000_ _ _) of your chart of accounts. Quarles: Flya Kite

  50. FI/CO Transactions • EXERCISE FI/CO13: POST OUTGOING PAYMENT • The invoice of Widgets & Things (created in the Procurement Logistics exercises) is due for payment now. You are requested to clear the invoice amount by posting an outgoing payment using the bank account (no. 10000_ _ _) of your chart of accounts. • EXERCISE FI/CO14: RECEIVE PAYMENT FROM CUSTOMER • A sale to a Crosby Trinkets was processed and billed in the Sales Logistics system. That customer has now received the invoice and sends you payment. The payment will be posted to his G/L account. Quarles: Flya Kite

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