Chapter 2

There are 3 steps to create and use chart of accounts

1.       Define COA

2.       Define Properties of COA

3.       Assign it to Co Code

The chart of accounts is a variant that contains the structure and the basic Information about general ledger accounts. It contains list of all accounts.

1.       You define the chart of accounts with a four-character ID.

2.       You can define the individual components of the chart of account, for example, language, length of the G/L account number, group chart of accounts, status

3.       The length of the G/L account numbers can be from 1 to 10 digits.

4.       It must be assigned to every company code.

5.       Maintenance language is the language in which account descriptions are maintained.

·         Definition of chart of account contains

o   Char t of accounts key

o   Description

·         General information

o   Maintenance languages

o   Length of G/L accounts

·         Controlling integration

·         Consolidation

·         Status

Group account number is used for cross company code reporting if company codes use different chart of accounts.

A chart of account not yet completed can be blocked so that no company code will use it until its ready

One chart of account can be assigned to several company codes.

Controlling component uses same chart of account financial accounting component . if company codes intend to use same cross-company code controlling, they must Have same chart of accounts.

chart of accounts segment

 The information for an account is summarized in a chart of accounts segment.

It contains:

1.       Account number

2.       Name of the account (as short and as long text)

3.       Control fields (see the following graphics)

4.       Consolidation fields

The information entered in the chart of account segment for a G/L account applies to all company codes.

Texts entered for the chart of accounts segment are managed by text ID and language.

Texts with different information can be entered for each chart of accounts segments.

chart of accounts segment fields

1.       type/ description

2.       keyword

3.       information

Information entered in chart of accounts segment for G/L account applies to all company codes

We can define and change the layout of the tab pages for the individual processing of the G/L account master data. We can define:

1.       The number of tab pages

2.       The title of the tab pages

3.       The field groups that we require and their position on the tab pages

4.       We can select the layouts for central processing, and processing in the chart of accounts-and company code-specific area.

Company code segment

To use one of the accounts from the assigned chart of accounts in our company code, we must create a company code segment for the account.

The Company code segment contains information refers exclusively to company code concerned.

Company code segment for same G/L accounts can be different depending on the requirements of company code.

STEPS: a company code segment is created and then its assigned a chart of accounts to use the accounts

We define the information that is relevant to each company code in Co Code Segment:

·         Currency

·         Taxes

·         Reconciliation account

·         Line item display

·         Sort key

·         Field status group

·         House bank

·         Interest calculation information

Company code segment fields

1.       Control data

2.       Bank/interest

3.       Information

Balance sheet or a profit and loss statement account

·         In the chart of accounts segment, we have to specify whether the account is a balance sheet or a profit and loss statement account because of their treatment in the closing procedure.

·         For balance sheet accounts, the balance is carried forward to the same account.

·         For profit and loss statement accounts, the balance is carried forward to a retained earnings account and the profit and loss statement account is set to zero.

·         A key “X” is assigned to account to which balance is carried forward. The key is entered in the field  “P&L Statement type” in  chart of accounts segment

·         If there is only one retained earnings account, the system automatically uses the one defined in Customizing. If there is more than one retained earnings account, when we create a master record, we can select the retained earnings account for each profit and loss statement account.

 Account groups control

The Account groups control two main things

·         Number ranges of accounts

·         Field status in the company code segment of master record

By assigning a number range, accounts of same type are within same number range.

Number intervals for G/L accounts can overlap

By entering account group in chart of accounts segment, appearance of company code segment of G/L accounts can be controlled.

Field status

The field status enables to control the display and maintenance of an account's master data.

·         Hide -                fields that we do not use.

·         Display -           Fields whose values must not be changed (even in change mode).

·         Required –        For fields where we must enter a value.

·         Optional -         Fields that can contain an entry, but are not required

The following fields are always have status of REQUIRED and can’t changed

·         Account currency

·         Field status group

Fields displayed in G/L master record are not only controlled by account group also by  transaction that are using to edit master data (transaction specific control) {change, create and display}

Reconciliation accounts

Reconciliation accounts are general ledger accounts assigned to the business partner master records to record all transactions in the sub ledger.

 All postings to the sub ledger accounts are automatically posted to the assigned reconciliation accounts.

Following are main account types in the field Reconciliation Account for Account Type:

·         D for Accounts Receivable 

·         K for Accounts Payable

Typical reconciliation accounts are “Receivables” and “payables”

No transaction can be posted to Reconciliation accounts, but to sub ledger account.

line item display

For accounts without “line item display” only the transaction figures are updated when a document is posted to this account. When a user wants to look at this account online, they can only view the balance.

For accounts with “line item display”, the most important data from the posted line items is stored in a special index table. When a user wants to look at this account online, they can view both the balance and the individual line items.

The field line item display is a control field in company code segment of an account.

We should not activate the line item display for:

·         Reconciliation accounts (line items are managed in the sub ledgers)

·         Revenue accounts (line items are managed by the Sales Order Management application)

·         Material stock accounts (line items are managed by the Purchasing Management application)

·         Tax accounts (Tax items are only useful in connection with the document; the tax amounts were already checked when the document was posted.)

Open item management

Items in accounts with open item management are specified as open or cleared.

Accounts with open item management must have line item display activated.

Open item management is prerequisite if you need to check whether   there is an offsetting posting for a given business transaction.

We should use open item management for the following accounts:

·         Bank clearing accounts

·         Clearing accounts for goods receipt/invoice receipt

·         Salary clearing accounts

We can only activate or deactivate open item management if the account has a zero balance.

Currency

If the account currency is the local currency, the account can be posted to in any currency. The other currencies are converted into the local currency for each line item.

If the indicator “Only Balances in Local Currency” is selected in the master data record, transaction figures are only managed for amounts converted into local currency.

·         The indicator must be set in cash discount and GR/IR clearing accounts.

·         It must not be set in reconciliation accounts for customers or vendors.

·         It’s usually set in balance sheet accounts not managed in

o   Foreign currency

o   Open item basis

If the account currency is the foreign currency, the account can be posted to into foreign currency. The other currencies are converted into the local currency for each line item.

Collective processing

Collective processing for G/L master records

·         Chart of accounts

·         Company codes

·         Description

Chart of accounts

·         Group Chart of accounts :cross company code reporting

·         Country Chart of accounts: country’s specific  legal requirements

·         Operative Chart of accounts: day to day business

Assignment

·         Operative Chart of accounts:                                      company code

·         Group Chart of accounts :                                            chart of accounts

·         Country Chart of accounts:                                          country chart of accounts

Profit Center and Segments

SAP enables to save a segment in the master data of a profit center thus segment is posted to automatically when the profit center is posted to.

There is no dummy segment posting as in the profit center logic

Segment is derived thru Profit Center in following cases:

·         Material Management/Production – Material Master or Controlling Object

·         Sales & Distribution – Sales Order

·         Controlling – Cost objects like Cost Center, Internal Order etc.

·         Other cases (DOCUMENT SPLITTING)

o   Manual entry

o   BAdI implementation (FAGL_DERIVE_SEGMENT)

o   defining substitution rules

o   Standard account assignment.

Profit Center Accounting has its historical origin in Controlling. However, due to its increased significance for external accounting, it is now also a part of Financial Accounting.

Each individual company decides whether Profit Center Accounting is an instrument of internal or external accounting.

Segments  doesn’t have time reference and is not assigned to hierarchy

A complete customer account consists of the following three segments:

·         General data at the client level

·         Company code segment

·         Sales area segment

A complete vendor account consists of the following three segments:

·         General data at the client level

·         Company code segment

·         Purchasing organization segment

Account numbers are assigned to customer and vendor at client level

Sales area segment must be created for sales area assigned to company code. Purchase area segment must be created for purchase area assigned to company code.

 Customer / Master Data records can be maintained centrally for all areas or separately for Financial  Accounting and Sales and Distribution/Material Master.

To post vendor invoice general data segment and purchase area segment is only needed.( same for customer invoice)

We can prevent the creation of duplicate accounts as follows:

·         Use the match code before you create a new account

·         Activate the automatic duplication check

 Account segment

·         General data

o   Address

o   Control data

o   Payment transactions

o   Texts

·         Company data

o   Accounting information

o   Correspondence

o   Insurance

o   Withholding tax

o   Texts

Explanatory texts can be entered at every segment

Line item display and open item management are configured as standard for every customer/vendor account.

The Account group in Customer/Vendor controls the following:

·         Number Ranges of Account

·         Status field in the master record

·         One time Vendor/customer

For each number range you can define whether the number assignment is internal or external.

 Internal numbers are assigned by the system, whereas external numbers are entered by the user who creates the record. External numbers may be alphanumeric.

For all customers or vendors with whom you rarely do business, create a special customer and a special vendor master record. These master records contain receivables and payables for one-time customers / vendors (one-time accounts).

Each number range can be assigned to one or more account groups

The layout of customer/vendor master data screens can be affected by several factors:

·         Account group-specific control: This means that all accounts of one account group have the same screen layout.

·         Transaction-dependent control: The field status can be dependent on the master data transaction

·         Company code-dependent control: We can control the field status for fields in the company code segment of customer and vendor master records  via the company code-specific screen layout..

The account group-specific field status, the transaction-specific field status and the company code specific field status are compared, and the field status with the highest priority is used.

Dual control principle

We now can define that one person makes changes to customer or vendor master data while another person is responsible for confirming the changes, usually for critical customer/vendor changes.

If you can define a field in customer/ vendor master record as “sensitive” , the corresponding customer / vendor is blocked for payment if entry is changed. The block is removed when a second person with authorization checks the change and confirms or rejects it.

Customer/vendor clearing

If a customer is also a vendor, or vice versa, the payment and the dunning program can clear open items against each other. The open items of the assigned account can also be displayed in the line item display and the open item selection screens. To clear open items, we have to carry out the following steps:

·         We have to enter the vendor account number in the customer account, or vice versa.

·         Each company code can decide separately whether it wants to clear open items between customers and vendors. If clearing is to be used, you have to select the “Clearing with Vendor” field in the customer account, or the corresponding field in the vendor account.

Alternative payer/payee

At the client and company code level, you can enter an alternative payer/payee. The entry in the company code segment has higher priority than the entry at client level.

All items posted to a branch account are automatically transferred to the head office account via usage of Head Office/Branch Concept.

1.       The definition of a chart of accounts contains: Chart of Accounts Key Description Maintenance language Lenght of the G/L account number Manual or automatic creation of cost elements group chart of accounts Blocked indicator.

2.       The length of the G/L account numbers can be from 1-6 digits. False

3.       The account group number is used for cross-company code reporting if the company codes use different charts of accounts. True

4.       You use the G/L account plan to display G/L account master data and to print G/L account lists. True

5.       The company code segment contains information that referes exclusively to the company code concerned. This information controls the entry of accounting documents and the management of accounting data. True

6.       The Company code-segmetn consists of several groups of fields : Control data Bank/Interest Information Keyword/Translation Type/Discription.

7.       The company code segment consits of several fields : Account control Account management Joint Venture Document creation Bank/Financial details Interest Calculation Information G/L Account text.

8.       You can set the "Tax Category" indicator for a specific company code to include taxes when income accounts are used.  False.

9.       You define the information that is relevant to each company code : Currency Texes Reconciliation account Line iteam display Sort key Field status group House bank Interest calculation information.

10.   Every company code has to create Company code segment. True

11.   You must enter the account group in the chart of accounts segment: it controls the appearance of the company code segment of a G/L account. True

12.   SAP ERP delivers predefined account groups. True

13.   Certain fields are grouped together and their field status is valid for the entire groups these are : Interest calculation indicator Interest cycle Last interest calculation key date.

14.   The field "Line Iteam Display" is a control field in the Chart of accounts segment of an account.  False.

15.   As standard, the local currency is proposed as the account currency when you create a G/L account. True

16.   Charts of accounts can be created by Manually Copying Data transfer.

17.   The group chart of accounts must be assigned to each operational chart of accounts. If this is done, the filed "Group account number" in the chart of account segments of the operational charts of accounts is a required entry field. True.

18.   The company codes use different operational charts of accounts, no inter-company code controlling can be performed. True

19.   To use a country chart of accounts, you need to first assign a CCOA to your company code; then enter the country chart of accounts number in the company code segment of each G/L accounts. This is knows as the "Alternative a/c Number. True

20.   If all company codes post into the same operational chart of accounts, corss-company code controlling is not possible. False.

21.   Segments are usually used for external reporting. True

22.   Segment is below the company code level. True

23.   A business segment is  a part of a company.  

24.    The segment is posted to automatically when the profit center is posted to. True

25.   If the profit center does not have a segment, there is no segment account assignment either. True False.

26.   The Segment objective is to give a detailed look at the various business activities. True

27.   Profit Center come under company code.  False.

28.   Account number of vendor and customers must have same for all company codes and sales and pruchasing organizations. True

29.   Compare master data is a function which checks for duplication of records maintained in FI vis-a -vis SD or MM views. True

30.   IBAN as ________ alphanumeric characters. 34

31.   Different customers and vendors can NOT have the same IBAN.

32.   Explanatory texts can  entered in every segment.

33.   G/L account groups are at the Chart of A/c Level. True

34.   Account groups for Customer and vendors are at Company code level.  False.

35.   The same number range interval ID can be assigned to any number of A/c group. False.

36.   The customers and Vendors number ranges must not overlap. True .

37.   You enter the customer/vendor specific data for one-time customers/vendors in the document during posting. True False.

38.   The ________ is used to control the fields displayed in the master records. Account group  AND NOT Field status.

39.   Transaction code is necessary for creating Customer or Vendor. True

40.   Charts of accounts can be created byopen iteams against each other. True False.

41.   If clearing is to be used, you have to select the "Clearing with Vendor" field in the customer account, or the corresponding field in the vendor account. True

42.   Setting to pay payee or payer can be done at Client level or Company code level. True

43.   All items posted to a branch account are automatically transferred to the head office account. True

44.   If you sent the "account Control and Status" indicator under "additional Selections" in the report for the customer or vendor list, when you print the report, you can see the possible head offices for each of the branches. True