FICO FAQ-4

‘Financial Accounting (FI)’ in SAP?

The ‘FI (Financial Accounting)’ module of SAP is the back-bone, which records, collects, and processes financial transactions or information on a 75. Explain real-time basis to provide the necessary inputs for external (statutory) reporting. The module is integrated with other modules (such as Material Management (MM), Sales & Distribution (SD), Human Resources (HR), Production Planning (PP), Controlling (CO), etc.). The module FI has several sub modules that are tightly integrated.

 What are the ‘Sub modules’ within FI?

1. FI-AA Asset Accounting

Integrated with FI-GL, FI-AR, FI-AP, CO, MM, PP and PM, this module manages the

financial side (depreciation, insurance, etc.) of the assets throughout their entire lifecycle starting with procurement of assets and ending with scrapping or sales.

2. FI-AP Accounts Payable

Integrated with FI-GL, FI-AA, FI-TR and MM, this sub module manages vendor transactions by linking with material management, asset accounting, travel management, etc. Notable is the ‘payment program’ for making payments to vendors.

3. FI-AR Accounts Receivable

Integrated with FI-GL, FI-AA, FI-TR, MM and SD, this sub module manages customers and receivables, and integrates with SD. It is well-known for credit management functionalities and the ‘dunning’ program.

1)    FI-BL Bank Accounting

2)    FI-FM Funds Management

3)    FI-GL General Ledger Accounting

This sub module is integrated with all other sub modules within FI and outside FI.

4. FI-SL Special Purpose Ledger

This sub module is used to provide the summary information from multiple applications at a level of detail that the user defines.

5. FI-LC Legal Consolidations

This sub module helps in the central task of combining the financial operating results of the companies within a group to provide overall results for the group.

6. FI-TM Travel Management

Name the Sub modules Within FI, from Which FI-GL Gets Simultaneous Postings?

􀂃 Accounts Receivable (FI-AR)

􀂃 Accounts Payable (FI-AP)

􀂃 Asset Accounting (FI-AA)

Name Three Distinct Characteristics of FI-GL.?

􀂃 Multi-currency capability

􀂃 Flexible real-time reporting

􀂃 Real-time transaction entries

What do you mean by ‘Organizational Units’ in SAP?

The ‘Organizational Units’ in SAP are the elements or structures representing business functions, and are used in reporting. For example, Client (across the various modules) Company Code (FI), Controlling Area (CO), Plant (logistics), Sales Organization (SD), Purchasing Organization (MM), Employee Group (HR), etc.

What are the Important ‘Organizational Units’ in FI?

1. Company

2. Company Code

3. Business area

What is a ‘Company’?

A ‘Company’ in SAP is represented by a 5-character alphanumeric code and usually represents the enterprise or the group company. A Company can include one or more Company Codes. The creation of a Company, in SAP, is optional.

What is a ‘Company Code,’ and how is this different from a ‘Company’?

A ‘Company Code’ in SAP is the smallest organizational unit for which you can draw individual Financial Statements (Balance Sheet and Profit & Loss Account) for your external statutory reporting. It is denoted by a 4-character alphanumeric code. The creation of a Company Code is mandatory; you need to have at least one Company Code defined in the system, for implementing FI.

You may define a Company Code by copying from an existing one (Copy, Delete, Check Company Code Option). You may also define the Company Code anew (the second option in the following figure), from scratch.

What are the Important ‘Global Settings’ for a Company Code?

General data:

􀂃 Company Code

􀂃 Company Name

􀂃 City

􀂃 Address

􀂃 Currency

􀂃 Country

􀂃 Language

Global data:

􀂃 Chart of Accounts

􀂃 Credit Control Area

􀂃 Fiscal Year Variant

􀂃 Field Status Variant

􀂃 Posting Period Variant

Can you assign more than One ‘Company Code’ to a ‘Company’?

All the Company Codes within a Company should use the same Chart of Accounts and the same Financial Year, though they all can have different Local Currencies.

What is a ‘Business Area’?

‘Business Areas’ correspond to specific business segments of a company, and may cut across different Company Codes (for example, product lines). They can also represent different responsibility areas (for example, branch units). The Business Areas are optional in SAP.

The financial statements drawn per business area are for internal reporting purposes. You need to put a check in the check box in the configuration for the company for which you want to enable business area financial statements. When transactions are posted in FI, you have the option of assigning the same to a Business Area so that the values are properly captured for internal financial statements.

Can You Attach a ‘Business Area’ to a Transaction?

Yes. The Business Area can also be derived from other account assignments; for example, cost center. But to do this, you need to define the Business Area in the master record of that particular cost center.

How do You Post Cross-company Code Business Area postings?

By using a cross-Company Code transaction, you should be able to post to different ‘Business Areas’ and cut across various Company Codes. Any number of ‘Business Area-Company Code’ combinations is possible.

What is the ‘Credit Control Area’ in SAP?

The ‘Credit Control Area’ in SAP helps administer credit management functions relating to customers. This organizational unit is used both in SD and FI-AR modules. By definition, you can have more than one credit control area in a Client, but each Company Code is assigned to one credit control area. However, it is true that you can attach many Company Codes to the same credit control area.

What is a ‘Chart of Accounts’?

A ‘Chart of Accounts’ is the list of GL accounts used in one or more Company Codes. All the GL accounts in a chart of accounts will have an account number, account name, and some control information. The control information decides how the GL account can be created.

What are all the Major Components of a ‘Chart of Accounts’?

A ‘Chart of Accounts’ includes the following components:

􀂃 Chart of account key

􀂃 Name

􀂃 Maintenance language

􀂃 The GL Account Number

􀂃 Controlling integration

􀂃 Group chart of accounts (consolidation)

􀂃 Block indicator

What is an ‘Operating Chart of Accounts’?

This chart is used for day-to-day postings and is also known as an ‘Operative’ or ‘Standard’ chart of accounts. Both FI and CO use a chart of accounts. It is mandatory that the chart of accounts be assigned to a Company Code.

How does ‘Group Chart of Accounts’ Differ from ‘Operating Chart of Accounts’?

The ‘Group Chart of Accounts,’ also known as the Corporate Chart of Accounts, is used for consolidating all Company Codes (with a dissimilar Operative Chart of Accounts) falling under a Company. This is the ‘universe’ of all-inclusive GL accounts from where the Operative Chart of Accounts is derived. A Company Code is not mandatory.

What is a ‘Country Chart of Accounts’? Why do you need This?

This chart of accounts, also known as an Alternate Chart of Accounts, contains the GL accounts necessary to meet the specific statutory/legal requirements of a company from which a Company Code operates. The assignment of this chart of accounts to a Company Code is also optional. It is possible that both the operative and the country chart of accounts are one and the same. In this case, you will not need two different charts of accounts.

In cases where the operative and country chart of accounts are different, a link needs to be established by entering the GL account number from the ‘Country Chart of Accounts’ in the GL master record (under the Company Code section) of the ‘Operative Chart of Accounts’ in the field ‘Alternate Account Number.’

Can one ‘Chart of Accounts’ be Assigned to Several Company Codes?

Yes. One chart of accounts can be assigned to several Company Codes. However, the reverse is not possible; i.e., you will not be able assign more than one chart of accounts to a single Company Code.

What is a ‘Fiscal Year’ and ‘Fiscal Year Variant’?

A ‘fiscal year’ is the accounting period, which normally spreads over 12 months. Financial statements are drawn for a fiscal year. The fiscal year, in SAP, is defined as a ‘Fiscal Year Variant.’ All Calendar Year Fiscal Year Variants, in standard SAP, are denoted usually as K1, K2, etc.

The fiscal year may or may not correspond to the calendar year. In the standard SAP system, the Non-Calendar Fiscal Year Variants are denoted V1, V2, etc. It is also possible that the fiscal year may be shorter than 12 months, and this is called a

‘Shortened Fiscal Year’

How do You Assign a ‘Fiscal Year Variant’ to a Company Code?

One ‘Fiscal Year Variant’ can be assigned to one or more Company Codes.

What is a ‘Posting Period’?

A fiscal year, in SAP, is divided into various ‘Posting Periods,’ with a start and end date defined for each of these periods. Any document posting is possible only when the ‘posting periods’ are in place in the system. Normally there will be 12 posting periods. A posting period consists of a month and year.

How does the System Identify a ‘Posting Period’?

Based on the posting date entered into the system while posting a document, the system automatically determines the period by looking at the document date and the year. However, for this to occur you should have properly defined the fiscal year variant.

What Happens when You Post to Year 2006 when You are inv 2007?

First of all, to post a document relating to a previous year, say 2006 when you are in 2007, the relevant posting period should be ‘open’ in the system. When such a posting is done, the system makes some adjustments in the background:

One: the carry-forward balances of the current year, already done, are updated in case the posting affects balance sheet items.

Two: if the posting is going to affect the Profit & Loss accounts, then the system adjusts the carried forward profit or loss balances to the Retained Earnings account(s).

What do You Mean by ‘Opening/Closing’ Posting Periods?

Postings in SAP are controlled by the ‘opening’ or ‘closing’ of posting periods. Normally, the current posting period is open for document posting and all other periods are closed. At the end of the period (month), this posting period is closed and the new one is opened for postings. This way it provides better control. It is, however, possible to keep all the periods or select periods open.

What is a ‘Posting Period Variant’?

A ‘Posting Period Variant’ is useful in ‘opening/closing’ posting periods across many Company Codes at one time. You define a posting period variant and assign it to various Company Codes. Since the posting period variant is cross-Company Code, the opening and closing of the posting period is made simple. Instead of opening and closing individually for different Company Codes, you just need to open or close the posting period variant.

Can You Selectively ‘Open’ and ‘Close’ accounts?

Yes. It is possible to selectively control the ‘opening’ and ‘closing’ for various types of accounts. Usually, a ‘+’ is mentioned in the top-most entry indicating that all the account types are allowed for posting. Now, for the GL(S) accounts, you will need to specify the period which needs to be opened. This ensures that all the account types are open for the current period, indicated by ‘+,’ and only the GL accounts are open for the previous period. Select account types can also be opened or closed for a specific period; select accounts within an account type can also be opened or closed.

Why is it not Possible to Post to a Customer A/C in a Previously Closed ‘Period’?

When you want to selectively ‘close’ or ‘open’ the posting period of some accounts (account range), there will be no problem with that if you are doing it for GL accounts. But, if it is a sub ledger account (such as the customer), it has to be achieved via opening or closing the account interval of the ‘reconciliation account’ of that account type.

Can You Open a ‘Posting Period’ only for a Particular User?

Yes. SAP allows you to open or close the posting period only for specific users. This can be achieved by maintaining an authorization group at the document header level.

What is a ‘Special Period’? When do You Use it?

Besides the normal posting periods, SAP allows for defining a maximum four more posting periods, which are known as ‘Special Periods’ as these are used for year-end closing activities. This is achieved by dividing the last posting period into more than one (maximum four) period.

However, all the postings in these special periods should fall within the last posting period. The special periods cannot be determined automatically by the system based on the posting date of the document. The special period needs to be manually entered into the ‘posting period’ field in the document header.

What is the Maximum Number of ‘Posting Periods’ in SAP?

Under GL accounting, you can have a maximum of 16 posting periods (12 regular plus 4 Special Periods). However, you can have up to a maximum of 366 posting periods as is the case in ‘special purpose ledgers.’

What is a ‘Special Purpose Ledger’?

‘Special Purpose Ledgers’ (FI-SL) are used in reporting. These are basically user-defined ledgers, which can be maintained either as GL or subsidiary ones with various account assignment objects (with SAP-dimensions such as cost center, business area, profit center, etc., or customer-defined dimensions such as region, area, etc.).

Once defined, this functionality helps you to report at various levels. Ideally you collect the information, combine it, and create the totals. This is something such as an additional reporting feature, and use of this feature will have no effect on the regular functionalities of SAP.

What is known as ‘Year Shift/Displacement’ in a Fiscal Year?

When the fiscal year is not the same as the calendar year, we need to define a ‘displacement factor’ for each of the posting periods to correctly identify the number of posting periods.

For example, consider the fiscal year variant V3 (Figure 25). The fiscal year starts on April 1st and ends on March 31st of the next calendar year so the displacement factor or year shift from April to December is ‘0,’ and for January to March, it will be ‘􀃬1’. By defining it this way, the system is able to recognize the correct posting period. A posting made on January 25th, 2006 will then be interpreted as the 10th posting period in fiscal year 2005.

What is a ‘Year-dependent’ Fiscal Year?

A calendar year fiscal variant, when defined as ‘year-dependent,’ is relevant and valid only for that year.

What Precautions should you Take while Defining a ‘Shortened Fiscal Year’?

Note that the ‘Shortened Fiscal Year’ is always year-dependent. This has to be followed or preceded by a full fiscal year (12 months). Both the shortened and the full fiscal year, in this case, have to be defined using a single fiscal year variant.

Tell me more about a Shortened Fiscal Year?

As mentioned already, a ‘Shortened Fiscal Year’ is one containing less than 12 months. This kind of fiscal year is required when you are in the process of setting up a company, or when you switch over one fiscal year (e.g., calendar year) to another type of fiscal year (non-calendar).

How do You Open a new ‘Fiscal Year’ in the System?

You do not need to ‘open’ the new fiscal year as a separate activity. Once you make a posting into the new fiscal year, the new fiscal year is automatically opened. Or, the new fiscal year is automatically opened when you run the ‘balance carry-forward’ program.

However, you need to have (1) the relevant posting period already open in the new fiscal year, (2) completed the document number range assignment if you are following a year-dependent number range assignment, and (3) defined a new fiscal year variant if you follow the year-dependent fiscal year variant.

How do you ‘Carry-Forward’ Account Balances?

If you have already posted into the new fiscal year, you do not need to ‘carry-forward’ the balances manually. But you can use the various ‘carry-forward’ programs supplied by SAP for this task.

Can You Explain how ‘Carry-Forward’ Happens in SAP?

Sure. For all the Balance Sheet items, the balances of these accounts are just carried forward to the new fiscal year, along with account assignments if any. This also true for customer and vendor accounts.

In the case of Profit & Loss accounts, the system carries forward the profit or loss (in the local currency) to the Retained Earnings account, and the balances of these accounts are set to ‘0.’ No additional account assignments are transferred.

Is there a Prerequisite for ‘Carry-Forward’ Activity?

Yes, for Profit & Loss accounts, you should have defined the Retained Earnings account in the system. Additionally, you should have also specified the ‘Profit & Loss Account Type’ in the master record of each of these for Profit & Loss accounts.

There are no such requirements for GL accounts, customer and vendor accounts.

How many ‘Retained Earnings’ A/C can be Defined?

You can define as many ‘Retained Earnings Accounts’ as you need. But normally, companies use only one retained earnings account. Remember, to define more than one, you should use the profit & loss account type.

Can You have Multiple ‘Retained Earnings’ A/C?

Normally it is sufficient if you use one ‘retained earnings’ account. However, if you are configuring for a multinational company where the legal requirements require treating some of the tax provisions differently from other countries, then you will need more than one retained earnings account.

How do You Maintain ‘Currency’ in SAP?

‘Currency’ (the legal means of payment in a country) in SAP is denoted by a 3-character Currency Code, maintained per ISO standards. Example: USD (U.S. Dollars), INR (Indian Rupee), GBP (Great Britain Pound), etc. Each currency code in the system will have a validity defined.

A currency is defined in SAP using the IMG path: General settings>Currencies >Check exchange rate types.

What is a ‘Local Currency’?

When you define a Company Code, you also need to mention in which currency you will be maintaining the accounts/ledgers in financial accounting. This currency is called the ‘Local Currency.’ This is also known as ‘Company Code Currency.’

What is a ‘Parallel Currency’?

When defining the currencies for a Company Code, it is possible to maintain, for each of these company Codes, two more currencies in addition to the ‘Local Currency.’ These two currencies are called the ‘Parallel Currencies,’ which can be the:

􀂃 Group Currency

􀂃 Hard Currency

􀂃 Global Company Currency

􀂃 Index-based Currency

To translate the values from one currency to the other, you will need to maintain an exchange rate for each pair of the defined currencies in the system. When parallel currencies are defined, the system maintains the accounting ledgers in these currencies as well, in addition to the local currency.

What is a ‘Group Currency’?

This is the currency defined at the Client level.

What is the ‘Global Company Code Currency’?

The currency defined for the Company (or the Consolidated Company) is called the ‘Global Company Code Currency.’

What is an ‘Account Currency’?

When defining the GL accounts in the system, you are required to define a currency in which an account will be maintained, and this is called the ‘Account Currency.’ This is defined in the ‘Company Code’ area of the GL master record, and is used for postings and account balance display.

What are all the Prerequisites for Posting in a ‘Foreign Currency’?

The following are the prerequisites you need to consider before posting in a foreign currency:

􀂃 Local currency already defined for the Company Code (in the global parameters)

􀂃 Foreign currency defined in the currency code Table

􀂃 Exchange rate defined for the foreign currency and the local currency

􀂃 Translation Ratio maintained for the local and foreign currency

How are ‘Exchange Rates’ Maintained in SAP?

An ‘Exchange Rate’ is defined for each pair of currencies, and for each ‘exchange rate type’ defined in the system. The exchange rate is defined at the document header level.

What is an ‘Exchange Rate Type’? List some of them?

The ‘Exchange Rate Type’ is defined according to various purposes such as valuation, translation, planning, conversion, etc. The commonly used exchange rate types include:

What is known as the ‘Translation Factor’?

The relation between a pair of currencies per ‘exchange rate type’ is known as the ‘Translation Factor.’ For example, the translation factor is 1 when you define the exchange rate for the currencies USD and INR:

Is there an Easy Way to Maintain Exchange Rates in SAP?

SAP offers a variety of tools to maintain exchange rates on an on-going basis. The tools include:

􀂃 Exchange Rate Spreads

􀂃 Base Currency

􀂃 Inversion

Use the SAP supplied program, RFTBFF00, for populating the exchange rate table automatically from an input file in a multi-cash format from a commercially available input file.

What is known as an ‘Exchange Rate Spread’?

The difference between the ‘bank-buying rate’ and the ‘bank selling rate’ is known as the ‘Exchange Rate Spread,’ which remains almost constant. When you maintain the exchange rate spread, it is sufficient if you maintain the ‘average rate’ for that currency in question in the system as you will be able to deduce the buying/selling rate by adding/subtracting the spread to/from the average rate.

 Explain the use of ‘Direct’ or ‘Indirect Quotations.’?

It is possible to maintain the exchange rates, in SAP, by either of these two methods. What determines the use of a particular type of quotation is the business transaction or the market standard (of that country).

SAP adopts two prefixes to differentiate direct and indirect quotes during entering/displaying a transaction:

􀂃 ‘’—Blank, no prefix. Used in Direct Quotation

􀂃 ‘/’—Used in Indirect Quotation

When there is no prefix entered, (blank), the quotation is construed as the ‘direct quote’ by the system. Possible scenarios include:

􀂃 The company in question is mainly using the ‘Indirect Quotation.’

Use ‘’ (blank) as the prefix for default notation for indirect quotation. Use ‘*’ as the prefix for the rarely used direct quotation. If someone tries entering a transaction using direct quotation, but without the ‘*’ in the exchange rate input field, the system will issue a warning.

􀂃 The company in question is mainly using the ‘Direct Quotation.’

You do not need any specific settings as the default is the ‘’ (blank) prefix for the direct quotation, and ‘/’ for the indirect quotation. So, unless you make a transaction entry with ‘/’ prefix, the system takes all the entries as that of direct quotation.

􀂃 There could be instances where you are required to configure in such a way that a prefix is mandatory irrespective of the type of quotation. In this case, define the direct quotation prefix as ‘*’, and the indirect one as the system default ‘/’ prefix. This necessitates a prefix each of the entries either by ‘*’ or ‘/.’ Otherwise, the user will get a warning to correct the entry.

Explain how ‘Taxes’ are Handled in SAP?

SAP takes care of tax calculation, tax postings, tax adjustments, and tax reporting through the three FI components; namely GL, AP, and AR. The processing of the following kinds of taxes is possible:

1. Tax on Sales and Purchases

a. Input Taxes (Purchase Tax)

b. Output Taxes (Sales Tax)

2. Additional Taxes (these are country specific and in addition to the tax on sales and

purchases)

3. Sales Tax

4. Withholding Tax

a. Classic Withholding Tax

b. Extended Withholding Tax

SAP allows taxation at three levels:

1. National level or federal level (Europe, South Africa, Australia, etc.)

2. Regional or jurisdiction level (USA)

3. National and Regional level (India, Canada, Brazil etc.)

How is Tax Calculated in SAP?

SAP uses a technique called ‘Condition Method’ to calculate taxes (except Withholding Tax) in the system. The system makes use of ‘Tax (Calculation) Procedures’ defined in the system together with the Tax Codes for calculating the quantity of tax.

1. The Tax Code is the starting point in the tax calculation. The tax code is country specific, with every country having a country specific Tax Procedure defined in the standard system, which is used as the template for defining various tax codes. The system uses the tax code to verify the following:

a. Tax type

b. Amount of tax calculated/entered

c. GL account for tax posting

d. Calculation of additional tax portion, if any

2. Tax Rates are defined for each of the tax codes. The tax rates are then associated with Tax Types, which are included in the tax procedures. (Because of this relationship, it is technically possible that a single tax code can have multiple tax rates for various tax types.)

3. The tax code is assigned to a Tax Procedure, which is tagged to a GL master record. A particular tax procedure is accessed whenever that GL account is used in document processing.

A Tax Procedure contains the following:

􀂃 Steps— To determine the sequence of lines within the procedure.

􀂃 Condition Types— Indicates how the tax calculation model will work (whether the

records are for fixed amount or percentages and whether the records can be processed automatically, etc.)

􀂃 Reference Steps— Where the system obtains the amount/value it uses in its calculation (for example, the base amount)

􀂃 Account/Process Keys— Provide the link between the tax procedure and the GL

accounts to which tax data is posted. This helps in automatic tax account assignments. To enable that these keys have the necessary information for automatic assignment, you need to define the following:

o Posting keys (unless you have a specific requirement, it will be sufficient to use

the GL posting keys: Debit: 40, Credit: 50)

o Rules to determine on which fields the account determination is to be based

(such as the tax code or country key)

o Tax accounts to which the postings need to be made

SAP comes with a number of predefined account/process keys, and it is recommended that the standard keys be used.

4. The Access Sequence helps in identifying the sequence of Condition Tables to be used and identifying which field contents are the ‘criteria’ for reading the Condition Tables (a group of Condition Types).

5. The tax amount so calculated is normally posted to the same side as the GL posting that contains the tax code. When exchange rate differences occur (due to tax adjustments in foreign currencies) these differences are generally posted to the specific account(s) for exchange rate differences. However, it is possible to specify (per Company Code) that the exchange rates for tax items can also be entered manually or determined by the posting or the document date, and the resulting differences posted to a special account.

6. R/3 has a number of predefined account keys, and it is recommended that the standard keys be used.

Explain the Configurations Required for Taxes in SAP?

You need to define the following to customize SAP for this purpose:

1. Base Amount for Tax Calculation

For each Company Code you need to define whether the Base Amount includes the cash discount as well. If the base amount includes the discount, then the tax base is called ‘Gross,’ otherwise, it is ‘Net.’ You may also define a similar base amount for calculating the ‘Cash Discount.’ This also has to be maintained for each of the Company Codes.

2. Tax Codes

The Tax Code is a 2-digit code specifying the percentage of tax to be calculated on the base amount. While defining the tax code, you will also specify the ‘Tax Type’ to classify a tax code relating to either ‘Input Tax’ or ‘Output Tax.’ The tax types are country specific and determine how a tax is calculated and posted.

3. Tax Rate

The Tax Rate is the percentage of tax to be calculated on a base amount. You will be able to define tax rates for one or more tax types when you define a single tax code.

4. Check Indicators

By using the check indicators, you configure the system to issue Error/Warning

Messages when the tax amount entered manually is incorrect.

What is a (Tax) ‘Jurisdiction Code’?

A ‘Jurisdiction Code,’ used in countries such as the United States, is a combination of the codes defined by tax authorities. It is possible to define up to four tax levels below the federal level. The four levels can be the:

􀂃 Sub-city level

􀂃 City level

􀂃 Country level

􀂃 State level

Before you can use the jurisdiction codes for tax calculation, you need to define the following:

1. Access Sequence (to include the country/tax code/jurisdiction fields)

2. Condition Types (which references the access sequence as defined above)

3. Jurisdiction Codes

The tax rates are defined in the tax code by jurisdiction. When posting taxes with a jurisdiction code, note that the taxes may be entered per jurisdiction code or per tax level.

Tell me about the ‘Tax Reports’ in SAP?

SAP comes delivered with country-specific default ‘Tax Reports’ to meet your tax-reporting requirements. However, it is not uncommon to use third-party software for the same purpose. As a process, it is recommended that the ‘closing operations’ are completed before running the tax reports. This will ensure that the system makes relevant adjustment entries (between payables and receivables, exchange rate differences, etc.) so that the correct tax amounts are reported.

How is ‘Master Data’ different from ‘Transaction Data’?

There are three kinds of data residing in any SAP system:

1. Table Data

2. Transaction Data

3. Master Data

Table Data refers to the customized information for a particular Client. This includes data such as payment terms, discounts, pricing, tolerance limits, etc., which you do not normally change on a day-to-day basis.

Transaction Data is the day-to-day recording of business information such as purchase orders, sales returns, invoices, payments, collections, etc. This includes both system-generated data (tax, discount, etc., automatically calculated by the system during document posting) as well as user generated data.

Master Data is the control information required to decide how transaction data gets posted into various accounts (such as customers, vendors, GL, etc.). The master data is usually shared across modules (for example, customer master records are common both to FI and SD in SAP) obviating the need for defining it in various application areas. The master data remains in the system for fairly a long period.

In the case of GL Master Records, the data is created in two areas:

1. Chart of Accounts Area (common to all Company Codes: Chart of accounts, GL

account number, account name (short and long text), B/S or P&L indicator, account group, etc.).

2. Company Code Area (specific to that particular Company Code: Company Code, tax code, currency, open item management, line item display, sort key, etc.).

In the case of the Customer/Vendor Master Record, the data is created in two areas:

1. Client Specific (general data such as account number, name, telephone, bank

information, etc., which is common to all the Company Codes using this master).

2. Company Code Specific (valid only for the Company Code, this includes: terms of

payment, dunning procedure, reconciliation account, sort key, sales area, purchasing

information, etc.).

Can You Post an A/C Document if the ‘Credit’ is not Equal to the ‘Debit’?

In general, unless the ‘debits’ equal the ‘credits’ in a document, you will not be able to post the document. However, the system allows you to post some of the documents, even if this not true, which includes the following:

􀂃 Noted items: this will contain only a debit or credit. Since there is no updating of

accounting entries, the system will allow you to go ahead with the posting of these items.