Topic Scenario Steps Objective

Activation of RAR Activate RAR in your SAP 1. Go to SPRO > Activate Ensure RAR is activated and
Application S/4HANA system. SAP Business Functions. ready for configuration.
2. Activate the RAR
business function.
3. Verify activation in the
system.
Defining Company Define a new company code 1. Go to SPRO > Define Set up company codes for
Codes for revenue recognition. Company Codes. revenue recognition.
2. Create a new company
code (e.g., CC01).
3. Assign the company
code to the RAR
application.
Setting Up Create business process 1. Go to SPRO > Define Categorize revenue streams
Business Process categorizations for different Business Process for accurate recognition.
Categorizations revenue streams. Categorizations.
2. Create categories (e.g.,
Product Sales, Service
Contracts).
3. Assign the categories
to relevant revenue
streams.
Configuration of Configure accounting 1. Go to SPRO > Define Ensure compliance with
Accounting principles for IFRS and GAAP Accounting Principles. accounting standards.
Principles compliance. 2. Create accounting
principles (e.g., IFRS,
GAAP).
3. Assign the principles to
the company code.
Legal Entity Set up legal entities for 1. Go to SPRO > Define Configure legal entities for
Settings revenue recognition. Legal Entities. revenue reporting.
2. Create a legal entity
(e.g., LE01).
3. Assign the legal entity
to the company code.
Fiscal Year Define fiscal year variants and 1. Go to SPRO > Define Set up fiscal year and posting
Variants and posting periods. Fiscal Year Variants. periods for revenue
Posting Periods recognition.
2. Create a fiscal year
variant (e.g., K4).
3. Assign the variant to
the company code.
4. Define posting periods
and open/close them for
posting.
Chapter 2: Revenue Recognition Types

Topic Scenario Steps Objective

Recognition Type Create recognition types 1. Go to SPRO > Define Recognition Set up recognition
Master Data for different revenue Types. types for revenue
streams. 2. Create recognition types (e.g., streams.
Product Sales, Service Revenue).
3. Assign the recognition types to
relevant business processes.
POB-Based Configure POB 1. Go to SPRO > Define POB-Based Configure revenue
Recognition (Performance Obligation)- Recognition. recognition based
Configuration based recognition. 2. Create POBs for a contract (e.g., on performance
Delivery, Installation). obligations.
3. Assign revenue recognition rules
to each POB
Time-Based Set up time-based 1. Go to SPRO > Define Time-Based Configure revenue
Recognition Setup revenue recognition for a Recognition. recognition over
1-year service contract. 2. Create a time-based recognition time.
rule (e.g., evenly over 12 months).
3. Assign the rule to a service
contract.
 Cost-Based Configure cost-based 1. Go to SPRO > Define Cost-Based Set up revenue
Recognition recognition for a project- Recognition. recognition based
Parameters based contract. 2. Create a cost-based recognition on costs.
rule (e.g., recognize revenue as
costs are incurred).
3. Assign the rule to a project
contract.
Milestone-Based Configure milestone- 1. Go to SPRO > Define Milestone- Configure revenue
Recognition based recognition for a Based Recognition. recognition based
Configuration construction project. 2. Create milestones (e.g., Design on project
Approval, Construction milestones.
Completion).
3. Assign revenue recognition rules
to each milestone.
Combined Set up combined 1. Go to SPRO > Define Combined Configure
Recognition Types recognition for a contract Recognition Types. combined
2. Combine POB-based and time-
based recognition for a contract.
3. Verify the revenue recognition
split in RAR.
Key Notes:
 SPRO: All configuration steps are performed in the SAP Implementation Guide (SPRO).
 Master Data: Ensure all master data (e.g., company codes, legal entities, recognition types) are created and maintained accurately.
 Testing: After configuration, test each scenario to ensure the setup works as expected.Integration: Verify that the configuration
aligns with other SAP modules (e.g., SD, FI).
 These exercises will help you gain hands-on experience with SAP RAR configuration, ensuring you understand the basic settings and
revenue recognition types.

Step No Step Input Process Expected Outcome Result

Step 1 Check Database Type and Execute transaction DB02 Verify database type (SAP Database meets minimum Pass/Fail
Version HANA, IBM Db2, or MS SQL) version requirements:
and version - SAP HANA 1.0 SPS 12+
- IBM Db2 10.5+
- MS SQL Server 2014+
Step 2 Verify Database Size and Execute transaction DB02 Check available free space in At least 50GB of free space is Pass/Fail
Available Space (Space tab) the database available
Step 3 Check Database Execute transaction RZ10 Review database parameters: Required parameter settings Pass/Fail
Parameter Settings - Statement cache size ≥ 1000 are correctly configured
- Sort heap allocation ≥ 4096
- Buffer pool size ≥ 8GB
Step 4 Validate Database Execute transaction DB13 Verify backup schedule and Backup strategy meets RAR Pass/Fail
Backup Strategy retention policy: requirements
- Daily full backups
- Hourly log backups
Step 5 Test Database Execute transaction ST04 Run SQL queries simulating Handles 100+ concurrent RAR Pass/Fail
Performance for RAR RAR transactions and measure transactions with response
Workload response times time < 2 sec
Step 6 Check Database Indexing Execute transaction DB02 Verify support for columnar Database supports efficient Pass/Fail
Capability (Performance tab) indexing and contract table indexing for RAR tables
indexing
Step 7 Verify Database Execute transaction SM59 Check database connection Stable connections with Pass/Fail
Connectivity stability and timeout settings optimal timeout settings
(≥ 300 sec)
Step 8 Document Database Review all findings from Document database readiness Database is compliant for RAR Pass/Fail
Compliance Status previous steps and required changes implementation
Ex Step Sub-
Step Description Sub-Step Description
No No Step No
Verify SAP ERP system meets minimum Check hardware requirements (CPU, RAM, disk
1 1 1.1
requirements for RAR implementation space)
1.2 Verify operating system compatibility
1.3 Confirm SAP kernel version meets RAR requirements
Check SAP S/4HANA version compatibility with Verify SAP S/4HANA release version (e.g., 2020,
2 2 2.1
RAR 2021, etc.)
Check SAP Note for RAR compatibility with the
2.2
specific S/4HANA version
Verify database requirements for RAR
3 3 3.1 Confirm database type (e.g., HANA, Oracle, etc.)
implementation
3.2 Check database version compatibility with RAR
3.3 Ensure sufficient database storage and performance
Download necessary software components from SAP
4 4 Install required software components for RAR 4.1
Support Portal
4.2 Install SAP_APPL component
Install additional RAR-specific components (e.g.,
4.3
FINS_CI_RAR)
Validate SAP_APPL component version for RAR
5 5 5.1 Check SAP_APPL component version in the system
compatibility
Compare the version with the RAR compatibility
5.2
matrix
5.3 Upgrade SAP_APPL if necessary
Check for latest support packages and patches Review SAP Notes for required support packages and
6 6 6.1
for RAR patches
6.2 Download and apply the latest support packages
Verify successful application of patches
6.3
Check SAP RAR license in the system (Transaction
7 7 Verify SAP RAR license availability and validity 7.1
SLICENSE)
Ex Step Sub-
Step Description Sub-Step Description
No No Step No
7.2 Ensure the license is valid and not expired
7.3 Request a new license from SAP if required
Document RAR license details in project Capture license key details (e.g., license type,
8 8 8.1
documentation expiration date)
Store the license documentation in the project
8.2
repository
Execute SFW5 transaction to activate RAR
9 9 9.1 Log in to SAP GUI and open Transaction SFW5
business function
Search for the RAR business function (e.g.,
9.2
FIN_RA_ACC_1)
9.3 Activate the RAR business function
Verify successful activation of Revenue
10 10 10.1 Check the activation status in Transaction SFW5
Accounting business function
10.2 Confirm no errors are displayed during activation
11 11 Check activation logs for any errors or warnings 11.1 Review activation logs in Transaction SM21
11.2 Identify and document any errors or warnings
11.3 Resolve errors or warnings if necessary
Run FINS_RAR_TECH_CHECK program to verify Execute Transaction SE38 and run program
12 12 12.1
technical readiness FINS_RAR_TECH_CHECK
12.2 Review the technical readiness report
12.3 Document any issues identified in the report
Analyze and resolve any technical issues Review the issues listed in the
13 13 13.1
identified in readiness check FINS_RAR_TECH_CHECK report
13.2 Address configuration or system-related issues
13.3 Re-run the readiness check after resolving issues
 Sub-
Step
Step Description Step Sub-Step Description
No
No
Define and set up RAR legal
1 1.1 Go to Transaction SPRO (SAP Reference IMG).
entities
Navigate to Financial Accounting > Revenue Accounting
1.2
and Reporting > Basic Settings > Define Legal Entities.
Create a new legal entity by specifying the Legal Entity
1.3
Name and ID.
1.4 Assign the legal entity to the relevant company codes.
1.5 Save and activate the legal entity configuration.
2 Define revenue accounting areas 2.1 Go to Transaction SPRO.
Navigate to Financial Accounting > Revenue Accounting
2.2 and Reporting > Basic Settings > Define Revenue
Accounting Areas.
Create a new revenue accounting area by specifying the Area
2.3
Name and ID.
Assign the revenue accounting area to the relevant legal
2.4
entities.
2.5 Save and activate the revenue accounting area configuration.
Map revenue accounting areas to
3 3.1 Go to Transaction SPRO.
company codes
Navigate to Financial Accounting > Revenue Accounting
3.2 and Reporting > Basic Settings > Assign Revenue
Accounting Area to Company Code.
Select the company code and assign the corresponding revenue
3.3
accounting area.
Verify the mapping and ensure consistency across company
3.4
codes.
3.5 Save and activate the mapping configuration.
Configure accounting principles
4 4.1 Go to Transaction SPRO.
for revenue recognition
4.2 Navigate to Financial Accounting > Revenue Accounting
 Sub-
Step
Step Description Step Sub-Step Description
No
No
and Reporting > Basic Settings > Define Accounting
Principles.
4.3 Create a new accounting principle (e.g., IFRS, US GAAP).
Assign the accounting principle to the relevant revenue
4.4
accounting areas.
Define the revenue recognition rules for each accounting
4.5
principle.
4.6 Save and activate the accounting principle configuration.
Set up parallel accounting for
5 different accounting standards 5.1 Go to Transaction SPRO.
(IFRS, US GAAP)
Navigate to Financial Accounting > Revenue Accounting
5.2 and Reporting > Basic Settings > Define Parallel
Accounting.
5.3 Create parallel accounting principles (e.g., IFRS and US GAAP).
Assign each accounting principle to the relevant revenue
5.4
accounting areas.
Configure separate ledgers for each accounting principle (e.g.,
5.5
IFRS Ledger, US GAAP Ledger).
5.6 Map the ledgers to the corresponding company codes.
5.7 Save and activate the parallel accounting configuration.

Fiscal Year Variant, Posting Periods, and Document Types Configuration

 Sub-
Step
Step Description Step Sub-Step Description
No
No
Configure fiscal year
19 variant for revenue 19.1 Go to Transaction SPRO.
accounting
Navigate to Financial Accounting > Financial Accounting Global
19.2 Settings > Fiscal Year > Maintain Fiscal Year Variant (Maintain
Shortened Fiscal Year).
19.3 Create a new fiscal year variant or use an existing one.
19.4 Define the fiscal year structure (e.g., 12 months, 4-4-5, etc.).
19.5 Assign the fiscal year variant to the relevant company codes.
19.6 Save and activate the fiscal year variant configuration.
Define posting periods for
20 20.1 Go to Transaction SPRO.
revenue recognition
Navigate to Financial Accounting > Financial Accounting Global
20.2
Settings > Periods > Define Posting Periods.
Select the fiscal year variant and define posting periods (e.g., 12
20.3
regular periods, 4 special periods).
20.4 Specify open and close periods for revenue recognition.
20.5 Save and activate the posting period configuration.
Set up period control for
21 21.1 Go to Transaction SPRO.
revenue accounting
Navigate to Financial Accounting > Revenue Accounting and
21.2
Reporting > Basic Settings > Define Period Control.
Define period control rules for revenue recognition (e.g., open/close
21.3
periods).
21.4 Assign period control to the relevant revenue accounting areas.
21.5 Save and activate the period control configuration.
Configure document types
22 22.1 Go to Transaction SPRO.
for revenue accounting
Navigate to Financial Accounting > Revenue Accounting and
22.2
Reporting > Document Settings > Define Document Types.
 Sub-
Step
Step Description Step Sub-Step Description
No
No
22.3 Create a new document type (e.g., RAR for revenue accounting).
Define the attributes of the document type (e.g., account type, posting
22.4
key).
22.5 Assign the document type to the relevant revenue accounting areas.
22.6 Save and activate the document type configuration.
Define number ranges for
23 revenue accounting 23.1 Go to Transaction SPRO.
documents
Navigate to Financial Accounting > Revenue Accounting and
23.2
Reporting > Document Settings > Define Number Ranges.
Create a new number range interval for revenue accounting
23.3
documents.
23.4 Assign the number range to the relevant document type (e.g., RAR).
23.5 Save and activate the number range configuration.
 Basic Configuration for RAR
status
Ste Step Description Sub- Sub-Step Description
p Step
No No
14 Define and set up 14.1 Go to Transaction SPRO.
RAR legal entities
14.2 Navigate to Financial Accounting > Revenue Accounting and Reporting >
Basic Settings > Define Legal Entities.
14.3 Create a new legal entity by specifying the Legal Entity Name and ID.

14.4 Assign the legal entity to the relevant company codes.

14.5 Save and activate the legal entity configuration.
15 Define revenue 15.1 Go to Transaction SPRO.
accounting areas
15.2 Navigate to Financial Accounting > Revenue Accounting and Reporting >
Basic Settings > Define Revenue Accounting Areas.

15.3 Create a new revenue accounting area by specifying the Area Name and ID.

15.4 Assign the revenue accounting area to the relevant legal entities.
15.5 Save and activate the revenue accounting area configuration.
16 Map revenue 16.1 Go to Transaction SPRO.
accounting areas to
company codes
16.2 Navigate to Financial Accounting > Revenue Accounting and Reporting >
Basic Settings > Assign Revenue Accounting Area to Company Code.

16.3 Select the company code and assign the corresponding revenue accounting area.

16.4 Verify the mapping and ensure consistency across company codes.

16.5 Save and activate the mapping configuration.

17 Configure 17.1 Go to Transaction SPRO.
accounting
principles for
 revenue recognition
17.2 Navigate to Financial Accounting > Revenue Accounting and Reporting >
Basic Settings > Define Accounting Principles.
17.3 Create a new accounting principle (e.g., IFRS, US GAAP).
17.4 Assign the accounting principle to the relevant revenue accounting areas.

17.5 Define the revenue recognition rules for each accounting principle.
17.6 Save and activate the accounting principle configuration.
18 Set up parallel 18.1 Go to Transaction SPRO.
accounting for
different
accounting
standards (IFRS, US
GAAP)
18.2 Navigate to Financial Accounting > Revenue Accounting and Reporting >
Basic Settings > Define Parallel Accounting.
18.3 Create parallel accounting principles (e.g., IFRS and US GAAP).
18.4 Assign each accounting principle to the relevant revenue accounting areas.

18.5 Configure separate ledgers for each accounting principle (e.g., IFRS Ledger, US GAAP
Ledger).
18.6 Map the ledgers to the corresponding company codes.
18.7 Save and activate the parallel accounting configuration.
19 Configure fiscal 19.1 Go to Transaction SPRO.
year variant for
revenue accounting
19.2 Navigate to Financial Accounting > Financial Accounting Global Settings >
Fiscal Year > Maintain Fiscal Year Variant.
19.3 Create a new fiscal year variant or use an existing one.
19.4 Define the fiscal year structure (e.g., 12 months, 4-4-5, etc.).
19.5 Assign the fiscal year variant to the relevant company codes.
19.6 Save and activate the fiscal year variant configuration.
20 Define posting 20.1 Go to Transaction SPRO.
periods for revenue
recognition
 20.2 Navigate to Financial Accounting > Financial Accounting Global Settings >
Periods > Define Posting Periods.
20.3 Select the fiscal year variant and define posting periods (e.g., 12 regular periods, 4
special periods).
20.4 Specify open and close periods for revenue recognition.
20.5 Save and activate the posting period configuration.
21 Set up period 21.1 Go to Transaction SPRO.
control for revenue
accounting
21.2 Navigate to Financial Accounting > Revenue Accounting and Reporting >
Basic Settings > Define Period Control.
21.3 Define period control rules for revenue recognition (e.g., open/close periods).

21.4 Assign period control to the relevant revenue accounting areas.

21.5 Save and activate the period control configuration.
22 Configure document 22.1 Go to Transaction SPRO.
types for revenue
accounting
22.2 Navigate to Financial Accounting > Revenue Accounting and Reporting >
Document Settings > Define Document Types.
22.3 Create a new document type (e.g., RAR for revenue accounting).
22.4 Define the attributes of the document type (e.g., account type, posting key).

22.5 Assign the document type to the relevant revenue accounting areas.

22.6 Save and activate the document type configuration.

23 Define number 23.1 Go to Transaction SPRO.
ranges for revenue
accounting
documents
23.2 Navigate to Financial Accounting > Revenue Accounting and Reporting >
Document Settings > Define Number Ranges.
23.3 Create a new number range interval for revenue accounting documents.

23.4 Assign the number range to the relevant document type (e.g., RAR).
 23.5 Save and activate the number range configuration.
24 Define revenue GL 24.1 Go to Transaction SPRO.
accounts for
revenue recognition
24.2 Navigate to Financial Accounting > General Ledger Accounting > Master
Records > G/L Accounts > Define G/L Accounts.

24.3 Create new G/L accounts for revenue recognition (e.g., Revenue from Sales).

24.4 Assign the G/L accounts to the relevant revenue accounting areas.
24.5 Save and activate the G/L account configuration.
25 Configure contract 25.1 Go to Transaction SPRO.
liability (deferred
revenue) accounts
25.2 Navigate to Financial Accounting > General Ledger Accounting > Master
Records > G/L Accounts > Define G/L Accounts.

25.3 Create new G/L accounts for contract liability (e.g., Deferred Revenue).

25.4 Assign the G/L accounts to the relevant revenue accounting areas.
25.5 Save and activate the G/L account configuration.
26 Set up contract 26.1 Go to Transaction SPRO.
asset accounts
26.2 Navigate to Financial Accounting > General Ledger Accounting > Master
Records > G/L Accounts > Define G/L Accounts.

26.3 Create new G/L accounts for contract assets (e.g., Contract Asset).
26.4 Assign the G/L accounts to the relevant revenue accounting areas.
26.5 Save and activate the G/L account configuration.

27 Configure provision 27.1 Go to Transaction SPRO.

for PoC (percentage
of completion)
 accounts
27.2 Navigate to Financial Accounting > General Ledger Accounting > Master
Records > G/L Accounts > Define G/L Accounts.

27.3 Create new G/L accounts for PoC provisions (e.g., Provision for PoC).

27.4 Assign the G/L accounts to the relevant revenue accounting areas.
27.5 Save and activate the G/L account configuration.
28 Define expense 28.1 Go to Transaction SPRO.
accounts for cost of
goods sold
recognition
28.2 Navigate to Financial Accounting > General Ledger Accounting > Master
Records > G/L Accounts > Define G/L Accounts.

28.3 Create new G/L accounts for cost of goods sold (e.g., COGS).
28.4 Assign the G/L accounts to the relevant revenue accounting areas.
28.5 Save and activate the G/L account configuration.
29 Configure 29.1 Go to Transaction SPRO.
currencies for
revenue recognition
29.2 Navigate to Financial Accounting > Revenue Accounting and Reporting >
Basic Settings > Define Currencies.
29.3 Define the currencies to be used for revenue recognition (e.g., USD, EUR).

29.4 Assign the currencies to the relevant revenue accounting areas.

29.5 Save and activate the currency configuration.

30 Set up exchange 30.1 Go to Transaction SPRO.

rate types for
revenue accounting
30.2 Navigate to Financial Accounting > Revenue Accounting and Reporting >
Basic Settings > Define Exchange Rate Types.
30.3 Create new exchange rate types (e.g., M for average rate, P for spot rate).

30.4 Assign the exchange rate types to the relevant revenue accounting areas.

30.5 Save and activate the exchange rate type configuration.