General ledger accounts are classified by account type
A – Assets
D – Debtors (Customers)
K – Creditors(Vendors)
M– Material
S – General Ledger
Organizational Units
An organizational model object that maps a company’s structure. The purpose and role of each organizational unit are detailed.
Enterprise Structure -SAP S/4 HANA
Client
A client is defined as a self-contained commercial, organizational, and technical unit within an SAP System. This means that all business data within a client is protected from other clients.
- Production
- Test
- Customizing
- Demo
- Training/Education
- SAP reference
Company Code
Company codes are the lowest organizational entity that can have its own set of accounts.
The smallest organizational unit for which individual financial statements may be prepared in accordance with applicable commercial law is a company
A company can contain one or more company codes.
The company is the typical symbol used in local business law to represent the legal entity.
Chart of Accounts.
The structure comprising the G/L accounts utilized by one or more company identifiers is known as a “chart of accounts.”
When a user enters a financial transaction into the SAP system, that entry is posted to a general ledger account. These ledgers constitute the backbone of both internal and external financial statements. A SAP general ledger account can be referenced by a number between 1 and 10 digits in length. The accounts in SAP’s general ledger are the “master data” of the accounting process. The SAP term for the compilation of a business’s several types of general ledger accounts.
Structure
Charts of accounts can have three different functions:
- Operating chart of accountsThe operating chart of accounts contains the G/L accounts that you use for daily posting in your company code. Financial Accounting and Controlling both use this chart of accounts.You need to assign an operating chart of accounts to a company code.
- Group chart of accountsThe group chart of accounts contains the G/L accounts that are used by the entire corporate group. This enables group reporting.Assigning a group chart of accounts to an operating chart of accounts is optional.
- Country-specific chart of accountsA country-specific chart of accounts contains the G/L accounts needed to meet a specific country’s legal reporting requirements.Assigning a country-specific chart of accounts to a company code is optional.
Credit control area
Customer credit is provided and tracked in this organizational unit. Multiple business codes can share the same region if credit control is done similarly. Credit control sections in SAP S/4HANA are related to credit segments in SAP Credit Management at SAP Financial Supply Chain Management (FSCM). Calculating credit limits requires credit segments.
The delivery of goods to customers might be impeded by the implementation of credit limit restrictions and the monitoring of accounts receivable balances by the supplier by using credit control area.
Fiscal Year Variant
The fiscal year variation specifies the total number of fiscal posting periods as well as the total number of special posting periods.In the Controlling component (CO), you may set up to 16 posting times each fiscal year.
reference https://techconcepthub.com/fiscal-year-variant-in-sap/
Company Code is Productive
A single click can reset (remove) a business code or all submitted depreciation amounts if this indication is not productive. SAP does not need you to set your business code to productive, thus many organizations leave it on test mode, which was needed during implementation to load test data correctly. Many firms leave the test setting in place and never check this flag until mistakes emerge.
Field status variant
A specified set of filed statuses known as a “field status variant” governs the state of fields on a screen related to a certain SAP transaction or master record.
Posting Period Variant
A posting period variant is used to make it easier to open and close posting periods for closing operations.
Here are some examples: There are predefined items for different account types.
| Posting Period Variant | Account Type | Account Range |
|---|---|---|
| 1010 | A (Assets) | 100-149 |
| 1010 | A (Assets | 150-199 |
| 1010 | K (Supplier) | 200-299 |
| 1010 | M (Materials) | 300-399 |
Workflow Variant
The designated workflow variant establishes the workflow processes for the organization code. In order to initiate workflows, such as parked document approvals, the variant is required.
Profit Center
A profit center is a business unit that earns income, incurs expenditures, and is accountable for its own profit and loss. It is a concept in management accounting that is used to assess and monitor the performance of several business units within a company. Product lines, divisions, geographical regions, or any other logical grouping are frequently used to construct profit centers.
Segment
The organizational segment inside a corporation that is responsible for generating financial statements intended for external reporting purposes.
With segmented accounting, the financial success of a business is broken up into separate parts. There are many ways to divide a business into segments, such as by region, product line, or area of responsibilities. Comparing different parts of a business helps the whole company get a better picture of how well it’s doing.
Functional Area
A functional area refers to an attribute used for the purpose of categorizing operational expenditures based on their respective functions.
- Manufacturing
- Administration
- Sales and distribution
- Research and development
Cost of sales accounting requires you to categorize your operational costs by functional area.
Reference credit to : https://www.draxingerlentz.de/
Business Area
Business areas are used in external segment reporting (over and above company codes), based on the significant areas of operation of a company (for example, product lines, branches).
You must define the business area in the cost center master record.
If you enter a cross-company code document, you can post to different business areas across all company codes in one document. As a result, any number of combinations of company code and business area are possible.
Account Groups
The G/L accounts are organized by function into the several account groups. Each account in the general ledger (G/L) is placed in one of many account groups determined by its primary purpose. The number range an account can be formed in and the fields allowed for inclusion in the G/L account’s business code section are both determined by the account group the account belongs to.
refer : https://keyfactz.com/general-ledgers-and-chart-of-accounts-coa/?swcfpc=1
Maintaining General Ledger Accounts
General Ledger Numbering – Chart of Accounts
- Balance sheet account
A balance sheet is a type of financial account that shows the assets, liabilities, and shareholder ownership of a business at a certain point in time. - Primary costs or revenue
This account is for P&L accounts that are used to reflect normal operating costs
and revenues of the company. These accounts are integrated with CO. - Secondary costs
This account is for accounts used for internal cost allocations in CO. - Nonoperating expense or income
This account is for P&L accounts that reflect gains or losses from other than non operating activities that
aren’t from the main businesses of the company, such as profit from an asset sale or capital gains for a consulting firm. These aren’t integrated with CO.
Account Currency
The account’s main currency. It handles account posts. Current transaction posts and account balance are presented in this currency.
Tax Category
A tax category should be assigned to a particular country and only then the tax category be used in Customer or vendor or material master.
The tax category specifies eligible tax codes for account posting. Choose input or output tax, a specific tax code, any tax type, or leave blank to submit no tax. Use the Posting Without Tax Allowed checkbox to post to an account without its regular tax code. For safety, specify 0 percent tax codes for non-applicable taxes to prevent users from skipping them.
Alternative Account Number
If you choose a different chart of accounts, the GL master record will assign an alternate chart of account number, and the posting for that chart of accounts will take place from your usual chart of accounts.
Reconciliation Account for Account Type
Reconciliation accounts are G/L accounts to which postings are made automatically whenever a business transaction is entered on a subledger account (such as accounts receivable, accounts payable, or fixed assets).
Open Item Management
The requirement that certain items in a given account must be cleared by other items in the account.
Accounts for vendors and customers are consistently administered in this manner. This feature enables users to consistently track their outstanding payables and receivables. Open item administration must be specified for G/L accounts in the master record.
Sort Key
Sort Keys are used to populate the Assignment number field in the line items of customers or vendors or general ledgers.
Field Status Group
Field status group is assigned to GL account. Through field status group, one can define a field as optional, suppressed, or mandatory.
Global Financial Accounting Configuration
Parallel Accounting
When you run a global business, SAP S/4HANA Cloud’s parallel accounting features can help you meet your financial close and management reporting obligations. There are a variety of accounting rules that must be followed while closing the books and preparing reports. You’ll also need to comply with the applicable accounting regulations of each country or area in which you operate. You must also use the appropriate set of accounting principles for your organization. Group currency, business code currency, and perhaps a functional currency are all required for reporting purposes. ” ledger approach and the accounts approach “
Parallel accounting with ledgers
A method of parallel valuation accounting using ledgers to depict separate accounting principles.
Parallel accounting with accounts
A method of parallel valuation accounting using separate sets of G/L accounts for specific accounting functions that are valuated differently in the separate accounting principles.
Ledger Group Definition*
Extension Ledgers
A delta ledger that is added on top of a standard ledger for special valuation purposes.
Currencies
The legally recognized unit of payment within a nation is referred to as its currency. It is necessary to specify a currency for each monetary quantity. Using the ISO standard form, currencies are designated as EUR for euros or USD for US dollars, for example.
Currency Types
- 00 Document currency : This is the currency that an accounting document is posted in
- 10 Company code currency : This currency of the company code usually coincides with the currency of the country that the company code resides in
- 20 Controlling area currency : can only be used in controlling, and not in financial accounting
- 30 Group currency : If a company derives revenue in more than one currency, or has subsidiaries or divisions in foreign countries
- 40 Hard currency : This currency is used for external reporting for some countries with high inflation
- 50 Index-based currency : This currency is used for external reporting for some countries with really high inflation
- 60 Global company currency : The group currency is used as the global currency, which allows amounts to be compared in a single currency (currency type 30)
- 70 CO object currency : This is the currency type of the controlling object, such as a cost center, internal order, production order, or work breakdown structure (WBS) element.
Reference : https://blog.sap-press.com/defining-currency-types-for-the-general-ledger-in-sap-s4hana
Document Types and Number Ranges
Document types serve as crucial identifiers that differentiate various business transactions for the purpose of posting. The classification of a document dictates where it will be stored and designates the sorts of accounts to whom it will be posted.Regarding the creation of the document.
Document Types in the Standard System
| Document Type | Description |
|---|---|
| AB | General document |
| DG | Customer credit memo |
| DZ | Customer payment |
| DR | Customer invoice |
| KZ | Vendor payment |
| KG | Vendor credit memo |
| KN | Vendor net invoice and credit memo |
| KR | Vendor invoice |
| SA | General G/L accounts |
Number range
The document type determines the sequential numbers that will be used when posting documents.
Reverse DocumentType
When you reverse a document that was posted with a certain document, the system will automatically give the reversal document the document type specified in this field. If you don’t enter anything into the field, the system will use the default document type. To undo postings made with document type SA, the system, as established, would utilize document type AB.
Authorization Group
By allocating an authorization group, it is possible to restrict the posting privileges for users of a certain document type to just those individuals who possess roles that are associated with the allocated authorization group.
Account Types Allowed
This feature aids in restricting the utilization of the document type to the particular business scenarios it was intended for, hence providing a certain level of protection against inadvertent or incorrect posts.
Posting Keys
The two-character numerical key, in conjunction with the account number, serves as a control mechanism for posting at the line item level.
Reference : sap.com
SAP delivers predefined posting keys with the standard system. The following table lists some of the posting keys in the standard system:
| Debit | Credit | Account Type |
| 01-09 | 11-19 | Customer |
| 21- 29 | 31-39 | Vendor/supplier |
| 40 | 50 | General Ledger |
| 80- 86 | 90- 96 | General Ledger (MM integration with G/L) |
| 70 | 75 | Asset |
| 89 | 99 | Material |
Tolerance Groups
SAP Tolerance Groups set the maximum amount an employee can post, post as line items in a customer or vendor account, assign a cash discount percentage to a line item, and tolerate for payment differences.
- Employee tolerances
- General ledger account tolerances
- Customer or vendor tolerances
Tax Solution
The following types of taxes during posting..
- Value-added tax (or goods and services tax)
- Sales tax
- Withholding tax
- Other types of tax
Tax Category Field
| Tax Category Field | Description |
| Blank | Not tax relevant |
| > | Output tax account |
| < | Input tax account |
| + | Output tax relevant |
| – | Input tax relevant |
| * | Relevant for all kinds oftax |
| ## | Specific tax code only |
Document Splitting
You can use the document splitting procedure to split up line items for selected dimensions (such as receivable lines by profit center) or to effect a zero balance setting in the document for selected dimensions.
more detail : reference https://help.sap.com/docs/SAP_ERP/1936ae52f8b94c21848595a8270126b8/4911c9cc2a934a18e10000000a42189b.html?version=6.02.latest
Passive document split
The system references account assignments. Line items are divided using account assignments. All account assignments set as document splitting characteristics in Customizing are applied (Profit Center and Segment).
Active document split
You can change this to the “normal” document rule-based splitting process, and the system will split based on rules that you set.
Zero balance clearing line
Zero Balance Setting indicator for the document splitting characteristic, the system then creates any necessary clearing lines to ensure that the characteristics produce a balance of zero in each document.
Changing Documents
SAP document change rules can be used during customization to make changes to specific non-editable data on a document without having to undo them. These can be used to fix incorrect values in fields such as amount or document type.
Reversing Documents
It is possible to cancel an invalid document and finish any outstanding tasks. Reversal of a document is possible only if
- It contains no cleared items.
- It contains only customer, vendor, and G/L account items.
- It was posted with Financial Accounting.
- All entered values (such as business area, cost center, and tax code) are still valid.
Cross-Company Code Postings
Several company codes are involved in a cross-company code transaction. In a cross-company code transaction, the system posts a separate document with its own document number in each of the company codes.
Individual documents are linked by a common cross-company code number. The system generates line items automatically (receivables and payables arising between company codes) in order to balance the debits and credits in each document.
You may use only one company code for offsetting entries. That is to say, regardless of the number of company codes involved, you must make one of the following entries:
- Only one company code on the debit side and the rest on the credit side.
- Only one company code on the credit side and the rest on the debit side.
