Introduction to financial accounting processes
Download
1 / 66

Introduction to Financial Accounting Processes - PowerPoint PPT Presentation


  • 119 Views
  • Uploaded on

Introduction to Financial Accounting Processes. Categories of Accounting (1). Financial Accounting (FI) is concerned with recording the financial impacts of business processes (transactions) as they occur Usually external sources are interested in these outcomes

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about ' Introduction to Financial Accounting Processes' - ursa


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript

Categories of accounting 1
Categories of Accounting (1)

  • FinancialAccounting (FI) is concerned with recording the financial impacts of business processes (transactions) as they occur

    • Usually external sources are interested in these outcomes

      • Financial statements for shareholders

      • Tax and regulatory requirements for governmental agencies


Categories of accounting 2
Categories of Accounting (2)

  • ManagerialAccounting (controlling) (CO) is of interest to the business itself

    • Managerial reporting

  • Allocation of costs and revenues

  • Internal financial statements

  • I’ll talk about each in turn but this lecture is about financial accounting


Background
Background

  • For this lecture, I assume that you have taken your core accounting classes. You should be familiar with

    • T accounts

    • GL / AP / AR

    • Account categories

      • Asset / Liability / Capital / Income / Expense

  • Refer to my Web site link at www.middlecity.com for an accounting tutorial


Financial accounting tasks
Financial Accounting Tasks

  • General Ledger

  • Accounts Receivable

  • Accounts Payable

  • Asset accounting

  • Withholding tax


Enterprise global settings
Enterprise Global Settings

  • The following are not completely in the financial accounting domain but occur prior to FI configuration

    • Company Code

    • Business Area

    • Functional Area

    • Credit Controlling Area


Organizational data company code
Organizational Data (Company Code)

  • Financial statements are usually prepared at the company code level

    • (US00) (DE00) for Global Bike so they can prepare financial statements for the US or German company

  • It’s the smallest unit of financial accounting

  • We meet the regulatory and reporting requirements of a particular country


Company tables
Company Tables

  • Table T000 stores the company codes

  • Table T001 stores the company code / GL assignment


Organizational data company code1
Organizational Data (Company Code)

  • Use transaction OX02 (IMG)


Organizational data division
Organizational Data (Division)

  • A division is an OU based on sales of materials and services

    • They are an OU for sales and distribution

    • They are assigned to sales organizations

    • Global Bike has two divisions


Organizational data business area
Organizational Data (Business Area)

  • We often need internal financial accounting across company codes (legal boundaries)

  • A businessarea is an internal division of a company used for internal reporting

  • You can create internal financial statements by business areas

  • Use business areas to

    • Organize (report by) product lines

    • Organize geographically (usually reserved for business segment)


Business area illustration
Business Area (Illustration)

  • Global Bike has one business area (BI00)

  • Business area 0001 is part of the default SAP installation (US 0X03)


Assignment of business areas to transactions
Assignment of Business Areas to Transactions

  • When a transaction is recorded, we post to a FI / GL account

    • We assign the transaction to a business area or segment too

    • This can be done manually

    • Or automatically through automatic assignment of plant, division, sales areas, distribution channels, and cost centers


Business area plant assignment
Business Area Plant Assignment

  • We can connect a plant and division to a business area through configuration


Organizational data segment
Organizational Data (Segment)

  • Segments are responsible for monitoring performance and profitability

    • Similar to a business area

  • Typically used for product line reporting

  • Use with business areas to internally report by geography or product line

  • Global Bike does not use segment accounting


Functional area
Functional Area

  • Used for cost-of-sales accounting

    • Functional areas are used to classify expenses

      • Finance, marketing, production, HR, etc..

  • Global Bike does not define functional areas

  • Functional areas are implemented by means of a special purpose ledger


Organizational data credit control area
Organizational Data(Credit Control Area)

  • Defines the area of responsibility for credit monitoring (of companies)

  • Again, the CCA can be centralized or somewhat decentralized

    • One CCA for multiple company codes (centralized)

    • One CCA for each company code (decentralized)


Organizational data credit control area1
Organizational Data (Credit Control Area)


Credit control area global bike
Credit Control Area (Global Bike)

  • Define credit control area (OB45)


Credit control area global bike1
Credit Control Area (Global Bike)

Assign credit control area – GB has one for both companies



Financial accounting global settings steps
Financial Accounting Global Settings (STEPS)

  • Define fiscal year

  • Define posting periods

  • Define field status variant

  • Define tolerance groups

  • Define document types and number ranges

  • Define posting keys

  • Assign all of the above to company code


Fiscal year
Fiscal Year

  • A period (usually 12 months) for which a company produced financial statements

  • Fiscal year need not correspond to a calendar year


Fiscal year variants
Fiscal Year Variants

Global Bike uses K1


Fiscal year variants1
Fiscal Year Variants

  • Assign fiscal year variant to company code

  • Both Global Bike companies use the same fiscal year variant


Posting periods
Posting Periods

  • A period within a fiscal year to which transactions are posted

    • Every transaction has a posting period

    • A posting period must be “Open” to post transactions

  • A posting period (variant) has a beginning and an end


Posting periods1
Posting Periods

  • IMG posting periods (OBBO)


Posting periods define variant
Posting Periods (Define Variant)

  • Use IMG transaction OBBO

  • Global bike used variant GL00.

    • This is not the operating ledger GL00


Posting periods open and close
Posting Periods (Open and Close)

  • IMG transaction code OB52


Tolerance groups
Tolerance Groups

  • Tolerance groups exist throughout SAP

  • They define an accepted deviation from specified values

    • The chief accountant will likely have higher tolerances than accounting clerks


Tolerance groups for users
Tolerance Groups for Users

  • IMG transaction code OBA4


Document types
Document Types

  • Document types classify accounting documents

  • The document types appears in the header record for accounting documents

    • Document number ranges are based on the document type


Document types example
Document Types (Example)

  • The document type SA is the G/L Account Document

  • WA is for goods issue (goods out)

  • WE is for goods receipt (goods in)

Trans code OBA7



Posting keys
Posting keys

  • A two-character numerical key that controls the entry of a line item in an accounting document

  • Posting keys are defined by SAP but new keys can be added


Posting keys ob41
Posting Keys (OB41)

  • Posting key 40 is a G/L debit



General ledger accounting
General Ledger Accounting

  • Define chart of accounts

  • Define account groups and number ranges

  • Define retained earnings account

  • Create GL master records


Financial accounting processes
Financial Accounting Processes

  • Primary Ledger

    • General Ledger (GL) contains the primary source data used in financial reporting

  • Subsidiary ledgers

    • Accounts payable accounting is concerned with procurement (Chapter 4)

    • Accounts receivable accounting is concerned with fulfillment (Chapter 5)

    • Asset accounting is concerned with keeping track of asset acquisition, depreciation, and disposal


General ledger accounting fi gl
General Ledger Accounting (FI-GL)

  • Provide a comprehensive view of financial accounting

  • The GL is a COMPLETE record of all FI transactions

    • Transactions are available in “real time”

  • Some G/L transactions are posted manually (we’ll do that today)

  • Some G/L transactions are posted automatically




SKB1

  • Company Code Segment

    • (K) Client

    • (K) Company Code

    • (K) Account Number

    • Specific company accounts

    • For Global Bike (US00) and (DE00)


SKA1

  • Client Segment (SKA1)

    • (K) Client

    • (K) Chart of Accounts

    • (K) Account number

    • Balance sheet, PL, OR other account (Account Group)


SKAT

  • It’s the GL account master record


Organizational data company code g l options
Organizational Data (Company Code – G/L) (Options)

  • Centralized

    • Cross company code accounting

    • Multiple operational chart of accounts are assigned to a group chart of accounts

  • Decentralized

    • One chart of accounts for each company code

    • No cross company code accounting is possible


Accounting master data coa
Accounting Master Data (COA)

  • An ordered listing of accounts is called the Chart of Accounts (COA)

    • This is the same COA that you are familiar with

  • Instead of one, SAP supports up to three charts of accounts

    • Operative

    • Country specific

    • Group

  • You should be familiar with the standard numbering scheme for account types


  • Accounting master data operative coa
    Accounting Master Data (Operative COA)

    • Operative (COA) – This is the primary GL

      • Day-to-day postings are recorded here

      • Shared by FI and CO

        • In other words, it’s used by cost accounting

      • Two company codes can use the same operative COA

      • The operative COA is required


    Organizational data company code illustration
    Organizational Data (Company Code) Illustration

    • The general ledger GL00 is shared by both company code US00 and DE00


    Accounting master data optional coas
    Accounting Master Data (Optional COAs)

    • Country-specific operative (COA) – Used to meet country-specific reporting requirements

      • Optional

      • Additional accounts are added to the ledger to support local requirements

      • Must be assigned to a company code!

    • Group (COA) – Used to consolidate financial statements

      • Optional



    Coa creating
    COA (Creating)

    • IMG transaction OB13 (Global Bike)



    Account groups
    Account Groups

    • An account group defines how a GL account behaves and the screens that are available


    Retained earnings account
    Retained Earnings Account

    • Every P&L account is assigned to a retained earnings account

    • At the end of a fiscal year, the P&L accounts are transferred to the corresponding retained earnings account

    • The has to be at least one retained earnings account but there can be many


    Retained earnings account1
    Retained Earnings Account

    • Transaction code OB53

    • Global Bike has one retained earnings account


    Clearing accounts
    Clearing Accounts

    • These are temporary accounts that hold data until moved to another account

      • These are typically AR and AP accounts

      • Subsidiary ledgers and reconciliation accounts


    The recon account process
    The Recon Account Process

    • A/R is a reconciliation account


    The recon account process1
    The Recon Account Process

    • And it’s a recon account for customers (as opposed to vendors)


    Accounts receivable accounting
    Accounts Receivable Accounting

    • Here we are concerned with customer purchases (fulfillment)

    • Each customer typically has a reconciliation account in the sub-ledger

    • See Figure 3-16 on page 65


    Accounts payable accounting
    Accounts Payable Accounting

    • A/P accounts are reconciliation accounts

    • Transactions are automatically posted to the corresponding GL account

    • For Global Bike, the AP reconciliation account is #300000



    Gl accounting processes
    GL Accounting Processes

    • Some postings are made manually

    • Most are made as a result of a business transaction

      • Procurement (goods receipt) / fulfillment (goods issue)

      • SAP has rules that define how these automatic postings are performed (We will not get into those rules here)


    Asset accounting
    Asset Accounting

    • Organizations (hopefully) have assets

      • Tangible (physical) assets

      • Intangible assets (goodwill, patents, trademarks)

      • Financial assets (financial instruments, mortgages due, …)

    • We will do little with asset accounting in this course


    Financial accounting outcomes
    Financial Accounting Outcomes

    • The result of GL accounting is financial statements

      • Balance sheet

      • Income statement (profit and loss)

      • Statement of cash flows


    Cost centers using
    Cost Centers (Using)

    • When posting selected GL transaction, we allocate expenses (costs) to a particular cost center


    ad