SAP Module 2

SAP FI – Accounting Basic Settings

Module 2 - SAP FI – Accounting Basic Settings

SAP FI(Financial Accounting) is the basic module and very important

module in SAP. SAP FI module receives postings from various other
modules such as MM(Materials Management) , SD ( Sales and
Distribution) and HR(Human Resource) through various integration points.
All the posting from the aforesaid modules are posted real-time to FI
module. FI module feeds in data to CO modules such as Cost Center
Accounting, profit center accounting and the Profitability Analysis Module.
1) Creation and Assignment of Company and Company Code

Let us discuss the company code configuration in the below steps.

In the SAP scenario, functions involved in consolidation of financial
accounting are based on companies. A company can comprise of one or
more company codes.
Define Company Code
Step 1) Enter Transaction code SPRO in the command field

Step 2) In the next screen Select SAP reference IMG

Step 3) In next screen Display IMG follow the menu path
SAP Customizing Implementation Guide -> Enterprise Structure -
>Definition->Financial Accounting->Edit, Copy, Delete, Check Company
Code
Step 4) In the next screen, select activity - Edit Company Code Data
Step 5) Select New Entries

Step 6) 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
Step 7) Click Address Details button on same screen

Step 8) 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
Step 9) After Completing this information Press Save and Enter your
Change Request number.

You have successfully created a new Company code.

Assign Company Code to Company
Step 1) In the SAP Reference IMG Select the Menu path

SAP Customizing Implementation Guide ->Enterprise Structure-

>Assignment->Financial Accounting->Assign Company Code to Company
Step 2) In the Next Screen Enter the unique Company ID against the
Company Code you

Want to assign to this Company.

Step 3) Press Save and Enter the Customizing request Number

You have assigned the desired Company code to the Company

2) Creation of Business Area
Business area in sap is defined as an organizational area within the
financial accounting module. Business area in SAP is used for internal and
external reporting. An alternative to business area balance sheet and PL
Account is to go for profit center accounting.

Steps to Create Business Area

Expand Enterprise Structure as mentioned in the previous topic →
Definition → Financial Accounting → Define Business Area → Execute →
Go to New Entries.
Enter the 4 digit Business Area code and save the configuration.
3) Defining and Assignment of Fiscal Year Variant

Fiscal year variant contains the number of posting periods in a fiscal year
and the number of special periods. You can define up to 16 posting
periods in a fiscal year in the controlling component CO. You need to
specify the fiscal year variant for each company code.

Steps to Create Fiscal Year Variant.

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

Accounting Global Setting → Fiscal Years → Maintain Fiscal year variant
→ Execute.
It will open the following window.

Click New Entries and it will open a new window as shown below.
Provide the following details −

• FV − Enter 2-digit Fiscal year.

• Description − Enter a description of the Fiscal year variant.
• Year Dependent − If the start and the end date of the fiscal year
changes between year, then check this box.
• Calendar Year − If the fiscal year is same as the calendar year Jan-
Dec, then check this option.
• Number of Postings − Enter the number of posting periods for a Fiscal
year.
• Number of special postings − Enter the number of special posting
periods for a fiscal year.
The next step is to save the details. Enter the customizing request number
that a new fiscal year variant is created.
4) Defining and Assignment of Posting Period Variant

SAP FI Posting period variant is used to maintain accounting periods that

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

Steps to Create Posting Period Variant

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

Accounting Global Setting → Document → Posting Periods → Define
Variant for open Posting Periods → Execute
It will open a new window. Now, click New Entries.
It will open another window, as shown below. Enter the 4-digit Posting
Period Variant and name of the field. Click the Save icon to save this
variant.
5) Define Open and Close Posting Periods

In SAP, Open and close posting periods variant enables to open the
current posting periods and other posting periods remains in closed. It
controls what are the posting periods to open and close for entries.
Through posting period variant, you can determine which company codes
are open for posting period.
Go to SPRO → SAP Reference IMG → Financial Accounting → Financial Accounting
Global Setting → Document → Posting Periods → Open and Close Posting Periods
→ Execute.
Click the button New Entries, as shown in the following screenshot.

Now, you need to provide the following details −

• Var. = Enter 4-digit Variant code.
• Select Account Type −
+=Valid for all account type (masking)
A = Asset
D = Customers
K = Vendors
M = Materials
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
6) Defining Document Type & Number Ranges

The document type is a key that is used to classify

accounting documents and distinguish between business transactions to be
posted. The document type is entered in the document header and applies
to the whole document. The document type determines which
account types that particular document can be posted to.
You can define document number ranges in SAP FI in two way. You can either use
the T-code FBN1 or go to SPRO → SAP Reference IMG → Financial Accounting →
Financial Accounting Global Setting → Document → Define Document Number
Ranges → Execute.
A new window will open. Enter the company code and click Change Intervals
as shown below.
It will open another window. Click Insert Interval.
Enter the following details −
• No − Number range code.
• Year − Enter Year.
• From Number − From number.
• To Number − To Number.
• Current Number − (By default it will be 0).
• Ext − (Internal or External)
7) Maintenance and assignment of Field Status Variants

Field Status Variant is used to define the fields which are used for input like
cost center, profit center, plant, etc., which are entry fields, and
hidden fields. Field status Variant is a tool which is provided
by SAP to assign the same set of properties to more than one object.

Steps to Create Field Status Variant

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

Accounting Global Setting → Document → Line Item → Controls → Define
Field Status Variant → Execute.
It will open a new window. Select field status variants 0001 by clicking the
box before 0001→ click the Copy icon as shown below.
It will open another window. Enter the new Field status variant code and the
name of field name variant for the company. The target key must be
different from the source key. Press the Enter Key and click the Copy All
option.
You will get a confirming message, something like: "Number of dependent
entries copied: 41". Click the Save button.
8) Defining and Assignment of Tolerance Groups of Employees

SAP Tolerance Groups define posting authorizations of users in SAP ERP

system. These posting permissions define the amounts that certain groups of
accounting clerks are allowed to post.

SAP Tolerance Groups determine various amount limits for employees and
predefine the maximum amount an employee is permitted to post, the
maximum amount the employee can post as line items in a customer or a
vendor account, the maximum cash discount percentage the employee can
assign in a line item, and the maximum allowed tolerance for payment
differences for the employee.
Steps to Define Tolerance Group for Employees :-

IMG Menu Path :- SAP Implementation Guide –> Financial A/C –> G/L
Accounting –> Business transactions –> Open Item Clearing –> Clearing
Differences –> Define tolerance group for employees

Step 1 :– Enter T-Code SPRO in the Command Field of the SAP Easy
Access Menu Screen and press enter key on the Keyboard.
Step 2 :- Click on SAP Reference IMG
Step 3 :– Follow the navigation as per below screenshot
Step 4 :- Click on New entries
Step 5 :- In next screen update the following data for configure the tolerance group for
employees
1. Group :- Enter four digits unique code
2. Company code :- Enter appropriate company code that you wants to define
tolerance group and currency will be automatically updated
3. Amount per document :- Enter the maximum document amount the employees is
authorized to post
4. Amount per open item account item :– Enter the maximum amount the
employees is authorized to process the open items
5. Cash discount per line item :- Enter the maximum cash discount percentage the
employee can grant per line item
6. Permitted payment difference :- Enter the amount that is permitted for payment
difference in Revenue and expense field
7. Percentage :- Enter the percentage that is permitted for the payment difference.
Step 5 :- After maintaining all the required information click on save icon
9) Taxes on Sales & Purchases (input & output)

Input taxes are taxes that you would have paid/have to pay when
you purchase materials (input for production). Output taxes are taxes that
you would be charging the customer while selling materials that are sold
(output of your production).

The input tax can be completely or partially non-deductible. This part

cannot be claimed from the tax office. The amount can be posted to a
separate expense account, or it can be distributed to the G/L account and
asset line items.
Example: Posting Output Tax

You post an outgoing invoice to the sum of USD 1150 with 15 percent
output tax. The invoice amount, including tax, is automatically posted to
the customer account ; the tax amount (USD 150) is automatically posted
to the output tax account.
Example: Posting Input Tax

You post an incoming invoice with an invoice amount of USD 1150 with 15
percent input tax. The invoice amount, including tax, is posted to the vendor
account. The tax amount (USD 150) is automatically posted to the input tax
account.
10) Creation of Chart of Accounts

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.
Types of Chart of Accounts

There are three types of Chart of Accounts, which is

• 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, and the information is shared by Finance as well as
Controlling modules.
• Group Chart of Accounts: These are accounts used by the entire
corporate group. They help in generating reports at the corporate.
• Country-specific chart of accounts: This Chart Of Accounts help meet
country-specific legal requirements.
How to Create Chart of Accounts

Step 1) Enter Transaction code SPRO in the command field

Step 2) In the next screen Select SAP reference IMG

Step 3) In next screen-"Display IMG" navigate the following menu path :
SAP Customizing Implementation Guide -> Financial Accounting -> General
Ledger Accounting -> G/L Accounts -> Master Data -> Preparations -> Edit
Chart of Accounts List
Step 4) In the next screen, select New Entries

Step 5) 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
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.
Step 6) After you complete entering this information Press Save. In the next
screen, Enter your Change Request number.

You have successfully created a new Chart of Accounts.

11) Defining Accounts Groups

The account group is a summary of accounts based on criteria that effects

how master records are created. The account group determines: The
number interval from which the account number is selected when a
G/L account is created.
How to Create Chart of Accounts (COA) Account Group

Step 1) Enter Transaction code SPRO in the command field

Step 2) In the next screen Select SAP reference IMG

Step 3) In next screen-"Display IMG" navigate the following menu path

SAP Customizing Implementation Guide -> Financial Accounting -> General

Ledger Accounting -> G/L Accounts -> Master Data -> Preparations ->
Define Account Group
Step 4) In the next screen, select New Entries

Step 5) 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.
Step 6) Select Field Status from the Application menu
Step 7) 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
Step 8) Now you can maintain the status of different fields belonging to
Account Control Tab between Suppressed ( Hidden ) , Required , Optional
and Display modes.

Note :-The default status of fields is Optional.

Step 9) After maintaining the field status , press save Enter your change
request number

You have successfully created a Chart of Accounts Account Group.

12) Defining Retained Earnings Account.

Retained Earnings account defines to be used for posting the expenditure

and income of the year. It is used to carry forward the balance from the
current fiscal year to next fiscal year. The balance of Retained Earnings
account appears as reserves and surplus in the Balance Sheet for the year.
How to define Retained Earnings Account?

There are two ways to define a Retained Earnings Account. You can either
use the T-code OB53 or by T-code SPRO. Go to SAP Reference IMG →
Financial Accounting → General Ledger Accounting → G/L Accounts →
Preparations → Define Retained Earnings Account → Execute
Enter the Chart of Accounts to define the Retained Earning Account for COA
and press Enter.

Provide the P&L Account statement account type and account → Press Enter
and save the configuration.
13) Defining tolerance groups for G/I accounts

General Ledger (G/L) accounts are used to provide a picture of external

accounting and accounts and to record all the business transactions in a
SAP system. This software system is fully integrated with all the other
operational areas of a company and ensures that the accounting data is
always complete and accurate
How to Create a New G / L Account?

You can use the T-code FS00 to centrally define a G/L account. Refer the
following screenshot.
Account Group

Account Group determines the group for which the G/L account must be
created, for example, Administrative Expenses, etc.
P&L Statement Acct

If the G/L account is to be used for P&L Statement Account, then select this
option, otherwise use Balance Sheet Account.
Under description, provide a short text or G/L account long text.
The next step is to click the Control Data and provide data for Account
Currency and other fields such as Balance in local currency, Exchange rate
difference key, Tax category, posting without tax allowed, Recon account for
acct type, alternative account number, Tolerance group, etc. as shown in the
following screenshot.
Click Create / bank interest and provide data in the following fields −
Once the details are entered, click the Save button to create a G/L account.
Posting to General Ledger

After you complete the payroll run, the next step is to post payroll run to G/L
accounts. Posting to G/L account from Payroll run includes the following −
• First is to collect the G/L posting related details from the payroll run.
• Next is to create the documents summary for G/L posting.
• Once you have summarize documents, you have to make posting to
relevant Cost Centers and G/L accounts.
How Posting is performed?
During each Payroll run, payroll contains different posting types for wage
to relevant GL accounts. While posting to GL account following points
should be considered −
• In Payroll, different Wage types- Overtime wage, standard salary and
other expenses should be posted to correct GL account.
• Other wages like contribution to insurance, tax payment and other pay
types should be posted as credit for employee Payroll.
• In payroll run, you have other wage types like contribution to health
insurance should be posted as double posting to accounts- includes
debited as an expense, and credited as a payable in GL account.
Other Wage type in Payroll run like accruals, other insurance types, etc.
should also be posted to two accounts- debited as an expense and
credited as a provision in GL posting.
14) Real time Issues
How they will determine landscape server while in roll out project or
implementation project?
For roll out landscape will be on development server to production server
but where as in implementation in end to end we can have the option to
choose landscape of development to testing and then to production server.
Will all the master data uploaded by LSMW and other ABAP tools?
Yes we have other tool other than LSMW like batch date input etc., for
uploading the master data into the system.
If they upload master data mean, how much time will it take to
complete? Ex: 3000 vendors means?
Not more than 30 minutes
Examples needed for requirements of client on sap Fico?
Separate cash and trade discount accounts or input and output tax
calculations and separate account for service tax amount and cenvat credit
account for month end setoff etc.