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SAP FICO FREE STUDY MATERIAL FROM F2F INFOWARE, BANGALORE

Finance

Client: In commercial, organizational and technical terms, a self-contained unit in an R/3 System with separate master records and its own set of tables.

Company Code: The smallest organizational unit of Financial Accounting for which a complete self-contained set of accounts can be drawn up for purposes of external reporting.

Business Area: An organizational unit of financial accounting that represents a separate area of operations or responsibilities within an organization and to which value changes recorded in Financial Accounting can be allocated.

Enterprise structure: A portrayal of an enterprise's hierarchy. Logical enterprise structure, including the organizational units required to manage the SAP System such as plant or cost center.

Social enterprise structure, description of the way in which an enterprise is organized, in divisions or user departments.The HR application component portrays the social structure of an enterprise

fiscal year variant: A variant defining the relationship between the calendar and fiscal year. The fiscal year variant specifies the number of periods and special periods in a fiscal year and how the SAP System is to determine the assigned posting periods.

Fiscal Year: A period of usually 12 months, for which the company produces financial statements and takes inventory.

Annual displacement/Year shift: For the individual posting periods various entries may be necessary. For example, in the first six periods the fiscal year and calendar year may coincide, whereas for the remaining periods there may be a displacement of +1.

Chart of Accounts: Systematically organized list of all the G/L account master records that are required in a company codes. The COA contains the account number, the account name and control information for G/L account master record.

Financial statement version: A hierarchical positioning of G/L accounts. This positioning can be based on specific legal requirements for creating financial statements. It can also be a self-defined order.

Account group: An object that attributes that determine the creation of master records. The account group determines: The data that is relevant for the master record A number range from which numbers are selected for the master records.

Field status group: Field status groups control the additional account assignments and other fields that can be posted at the line item level for a G/L account.

Posting Key: A two-digit numerical key that determines the way line items are posted. This key determines several factors including the: Account type, Type of posting (debit or credit),Layout of entry screens .

Open item management: A stipulation that the items in an account must be used to clear other line items in the same account. Items must balance out to zero before they can be cleared. The account balance is therefore always equal to the sum of the open items.

Clearing: A procedure by which the open items belonging to one or more accounts are indicated as cleared (paid).

Reconciliation account: A G/L account, to which transactions in the subsidiary ledgers (such as in the customer, vendor or assets areas) are updated automatically.

Special G/L indicator: An indicator that identifies a special G/L transaction.Special G/L transactions include down payments and bills of exchange.

Special G/L transaction: The special transactions in accounts receivable and accounts payable that are shown separately in the general ledger and sub-ledger.

They include:

• Bills of exchange
• Down payments
• Guarantees

House Bank: A business partner that represents a bank through which you can process your own internal transactions.

Document type: A key that distinguishes the business transactions to be posted. The document type determines where the document is stored as well as the account types to be posted.

Account type: A key that specifies the accounting area to which an account belongs.

Examples of account types are:

• Asset accounts
• Customer accounts
• Vendor accounts
• G/L accounts

Dunning procedure: A pre-defined procedure specifying how customers or vendors are dunned.

For each procedure, the user defines

• Number of dunning levels
• Dunning frequency
• Amount limits
• Texts for the dunning notices

Dunning level: A numeral indicating how often an item or an account has been dunned.

Dunning key: A tool that identifies items to be dunned separately, such as items you are not sure about or items for which payment information exists.

Year-end closing: An annual balance sheet and profit and loss statement, both of which must be created in accordance with the legal requirements of the country in question.

Standard accounting principles require that the following be listed:

• All assets
• All debts, accruals, and deferrals
• All revenue and expenses

Month-end closing: The work that is performed at the end of a posting period.

Functional area: An organizational unit in Accounting that classifies the expenses of an organization by functions such as:

• Administration
• Sales and distribution
• Marketing
• Production
• Research and development

Classification takes place to meet the needs of cost-of-sales accounting.

Noted item: A special item that does not affect any account balance. When you post a noted item, a document is generated. The item can be displayed using the line item display. Certain noted items are processed by the payment program or dunning program - for example, down payment requests.

Accrual and deferral: The assignment of an organization's receipts and expenditure to particular periods, for purposes of calculating the net income for a specific period.

A distinction is made between:

• Accruals -

An accrual is any expenditure before the closing key date that represents an expense for any period after this date.

• Deferral -

Deferred income is any receipts before the closing key date that represent revenue for any period after this date.

Statistical posting: The posting of a special G/L transaction where the offsetting entry is made to a specified clearing account automatically (for example, received guarantees of payment).

Statistical postings create statistical line items only.

Valuation area: An organizational unit in Logistics subdividing an enterprise for the purpose of uniform and complete valuation of material stocks.

Chart of depreciation: An object that contains the defined depreciation areas.It also contains the rules for the evaluation of assets that are valid in a specific country or economic area. Each company code is allocated to one chart of depreciation. Several company codes can work with the same chart of depreciation.The chart of depreciation and the chart of accounts are completely independent of one another.

Asset class: The main criterion for classifying fixed assets according to legal and management requirements.

For each asset class, control parameters and default values can be defined for depreciation calculation and other master data.

Each asset master record must be assigned to one asset class.

Special asset classes are, for example:

• Assets under construction
• Low-value assets
• Leased assets
• Financial assets
• Technical assets

Depreciation area: An area showing the valuation of a fixed asset for a particular purpose (for example, for individual financial statements, balance sheets for tax purposes, or management accounting values).

Depreciation key: A key for calculating depreciation amounts.

The depreciation key controls the following for each asset and for each depreciation area:

• Automatic calculation of planned depreciation
• Automatic calculation of interest
• Maximum percentages for manual depreciation

The depreciation key is defined by specifying:

• Calculation methods for ordinary and special depreciation, for interest and for the cutoff value
• Various control parameters

Period control method: A system object that controls what assumptions the system makes when revaluating asset transactions that are posted partway through a period.

Using the period control method, for example, you can instruct the system only to start revaluating asset acquisitions in the first full month after their acquisition.

The period control method allows different sets of rules for different types of asset transactions, for example, acquisitions and transfers.

Depreciation base: The base value for calculating periodic depreciation.

The following base values are possible, for example:

• Acquisition and production costs
• Net book value
• Replacement value

Controlling

Controlling Area: An organizational unit within a company, used to represent a closed system for cost accounting purposes. A controlling area may include single or multiple company codes that may use different currencies. These company codes must use the same operative chart of accounts.

Cost center std Hierarchy : Indicated hierarchy of cost center groups in which all cost centers in a controlling area are gathered together.

Cost element : A cost element classifies the organization's valuated consumption of production factors within a controlling area. A cost element corresponds to a cost-relevant item in the chart of accounts.

Primary cost element: A cost element whose costs originate outside of CO and accrual costs that are used only for controlling purposes

Secondary cost element: A cost element that is used to allocate costs for internal activities. Secondary cost elements do not correspond to any G/L account in Financial Accounting. They are used only in Controlling and consequently cannot be defined in FI as an account.

Cost element category: The classification of cost elements according to their usage or origin.

Examples of cost element categories are:

• Material cost elements
• Settlement cost elements for orders

Cost elements for allocating internal activities

Reconciliation ledger: A ledger used for summarized display of values that appear in more detailed form in the transaction data.

The reconciliation ledger has the following functions:

• Reconciles Controlling with Financial Accounting: The reconciliation ledger provides reports for monitoring the reconciliation of Controlling with Financial Accounting by account.

• It can identify and display value flows in Controlling across company code, functional area, or business area boundaries

• Provides an overview of all costs incurred : Reconciliation ledger reports provide an overview of the costs and are therefore a useful starting point for cost analysis. For example, an item in the profit and loss statement from the Financial Information System (FIS) can be examined in the reconciliation ledger reports with respect to the relevant costs. For more detailed analysis, reports from other components within Controlling can be accessed from the reconciliation ledger reports.

Cost Center: An organizational unit within a controlling area that represents a defined location of cost incurrence.

The definition can be based on:

• Functional requirements

• Allocation criteria

• Physical location

• Responsibility for costs

Cost center category: An attribute that determines the type of cost center.

Example

• F - Production cost center
• H - Service cost center

Controlling area: An organizational unit within a company, used to represent a closed system for cost accounting purposes.

A controlling area may include single or multiple company codes that may use different currencies. These company codes must use the same operative chart of accounts.

All internal allocations refer exclusively to objects in the same controlling area.

Statistical key figure: The statistical values describing:

• Cost centers
• Orders
• Business processes
• Profit centers

There are the following types of statistical key figures:

• Fixed value - Fixed values are carried forward from the current posting period to all subsequent periods.
• Total value -

Totals values are posted in the current posting period only

Activity type: A unit in a controlling area that classifies the activities performed in a cost center.

Example

Activity types in production cost centers are machine hours or finished units.

Allocation cost element : A cost element used to illustrate activity allocation in terms of values. The allocation cost element is a secondary cost element , under which the activity type or business process is allocated.

The allocation cost element is the central characteristic used in all CO postings. It is therefore also an important criterion for reporting - for example, many reports are structured according to the posted cost elements.

Assessment cost element: A secondary cost element for costs that are assessed between Controlling objects.

Reposting: A posting aid in which primary costs are posted to a receiver object under the original cost element (the cost element of the sender object).

Repostings are used to rectify incorrect postings. The following methods are available:

• Transaction-based reposting -

Each posting is made in real time during the current period.

• Periodic reposting -

Produces the same results as transaction-based reposting. The costs being transferred are collected on a clearing cost center and then transferred at the end of the period according to allocation bases defined by the user.

Distribution: A business transaction that allocates primary costs.

• The original cost element is retained in the receiver cost center.
• Information about the sender and the receiver is documented in the Controlling document.

Assessment: A method of internal cost allocation by which you allocate the costs of a sender cost center to receiver CO objects (such as orders and other cost centers) using an assessment cost element.

The SAP System supports the following:

• Hierarchical method (where the user determines the assessment sequence)
• Iterative method (where the SAP System determines the sequence of assessment using iteration).

Example:

The costs from the cafeteria cost center could be assessed based on the statistical key figure "employee", which was set up on the receiver cost center.

Receiver cost center I has 10 employees, receiver cost center II has 90. The costs of the cafeteria cost center would be transferred (assessed) to receiver cost center I (10%) and receiver cost center II (90%). The credit on the cafeteria cost center and the debit of the two receiver cost centers are posted using an assessment cost element. Depending on the system setting, the total costs or some of the costs for the cafeteria cost center would be

Internal order: An instrument used to monitor costs and, in some instances, the revenues of an organization.

Internal orders can be used for the following purposes:

• Monitoring the costs of short-term jobs
• Monitoring the costs and revenues of a specific service
• Ongoing cost control

Internal orders are divided into the following categories:

• Overhead orders - For short-term monitoring of the indirect costs arising from jobs. They can also be used for continuous monitoring of subareas of indirect costs. Overhead orders can collect plan and actual costs independently of organizational cost center structures and business processes, enabling continous cost control in the enterprise.

• Investment orders - Monitor investment costs that can be capitalized and settled to fixed assets.

• Accrual orders - Monitor period-based accrual between expenses posted in Financial Accounting and accrual costs in Controlling.

• Orders with revenues - Monitor the costs and revenues arising from activities for partners outside the organization, or from activities not belonging to the core business of the organization.

Order type: A tool that categorizes orders according to purpose.

The order type contains information which is necessary for managing orders. Order types are client-specific. The same order type can be used in all controlling areas in one client.

Example

• Production orders
• Maintenance orders
• Capital investment orders
• Marketing orders

Cost of sales accounting: A type of profit and loss statement that matches the sales revenues to the costs or expenses involved in making the revenue (cost of sales).

The expenses are listed in functional areas such as:

• Manufacturing
• Management
• Sales and distribution
• Research and development

Cost of sales accounting displays how the costs were incurred. It represents the economic outflow of resources.