General Leger Accounting in SAP FI module
SAP General Ledger is comprehensive picture for external accounting reports. Whatever value we does store in General ledger accounting. Whatever values are recorded in your ledger. General ledger accounting is fully integrated with other operation area of an organization. Which is company code?
It makes sure that accounting data always complete and accurately fill and posted .It is very important part of accounting.
In general ledger accounting Following point to be covers under
General ledger Accounting in SAP FI
- How to create a chart of Accounts
- Create Accounts groups
- Splitting for GL Accounts
- Defined retained earning Accounts
- Maintain Number range
- Creation of GL master records
- Unit testing
What is Chart of Accounts ?
- Contains the definition of all GL accounts in ordered form
- Each general ledger is set up according to chart of Accounts
- Many company code may use the same COA
- All group organizational Units use the same chart of Accounts
- In simple terms we can say chart of accounts the list of all General ledger accounts that is use by any company or legal entity.
- Chart of accounts contains the structure and the basic information about GL master.
- For each GL master chart of accounts contains accounts number accounts name and technical information about the GL accounts . Technical information who created the GL and date of creation. Changes in GL accounts.
- For each company code a chart of accounts is needed
Therefore for each company code a chart of accounts has to be assigned. You can use the same chart of accounts to multiple company code.
Company code 1100 and Company code 1200 thus both can have same chart of accounts COA 1000,if we have the same chart of accounts for two or more company code then we can have a consolidated reports. So we have corporate group reports.
In case of separate chart of accounts its difficult to have consolidated repots .Therefore we have same chart of accounts if it in the same country.
Chart of accounts are of three types
- Operative chart of accounts (mandatory)
- Country specific chart of accounts (optional)
- Group chart of accounts (optional)
The maximum lenth of COA is 10 characters
Operative chart of accounts (mandatory)
When we start working in SAP we need to create COA which is to be assin to company code that chart of accounts is known as Operative chart of accounts. That because operative chart of accounts contains the day to day activities of the organization. It means day to day daily transaction on the basis of that all the values of transaction are updated in the COA.Its mandatory.
Country specific chart of accounts
When a company has business in different countries to follow the legal rules and taxes of that country a company needs to have county specific chart of accounts.
Group of chart of accounts
If you have a separate chart of accounts for your different company code and now you have a group reporting for those case we assign a group chart of accounts to both the respective chart of accounts which are separate and consolidate as group chart of accounts for reports.
A chart of accounts defines what will be the code or length of character every ledger accounts. In SAP every ledger or GL has been given a unique number and that number can be of 1 digit or maximum 10 digit. It depends upon client to client how much digit they wants. It can be 4 ,6 8 or 10 character.
Create Accounts group:
Accounts group control the data that need to entered while creating master record creation. Accounts group consist definition of GL accounts vendor customer master etc.
So Accounts group is a classifying features with in the GL account master record. Account group control the number range and creation of GL master with in the specific number range.
P redefine a number interval for similar GL master records and GL master with the same number interval are created in the same account group.
In order to manager or arrange large number of ledger accounts accounts groups are created in SAP systems. There are huge list of ledger accounts and if you want to group them in certain parameter such cash group, bank group, income and expenditure group asset and liability group.
If you group them there numbering should be same means in the same sequence.
Accounts group control number range and creation of GL master. In this we group financial statement in different grouping like balance sheet can be grouped under Asset and liabilities .Such 1 is for assets and 2 is for liability 3 as an income and 4 as an expense.
One can even sub group this group also. Such as Assets can be subgroup as Current assets or non-currents
Document splitting For GL accounts
IN this SAP system decide how the particular group range is part of balance sheet or income statement. Every GL accounts is assign to item category are in standard SAP system. When we define group these group are assign with item category and these item category are related with assets liability revenue and expense. According to this item category system decide whether a particular GL account is part of balance sheet or income statement. Therefore automatically system is defined.
- To create financial statement at company code level at any time
- Every Gl Accounts is assign to an item category Item categories are in standard SAP system.
Retain earning accounts
- Assign a retained earning accounts to each P&L account by specifying a P&L statement account type in the chart of accounts area of each profit and loss accounts in SAP.
- Multiple Profit and loss can also be assigned .Each GL accounts will be assigned to only one retained earning accounts.
- At fiscal year-end system carries forward the P/L accounts balance to retained earning account.
We assign a ledger accounts as retain earning ledger so that the system can calculate the profit or loss at the end of the year .SAP gives you the flexibility to calculate the retained earning automatically, More over if you assign more than one retained earning accounts its is possible in SAP.
Each ledger which is part of income statement will be assign to one retain earning. When we create the ledger master at that point of time we select the option of profit and loss or balance sheet .
Accordingly sap decide in which system it will be implemented profit and loss or balance sheet.
GL Master Record
- A data record containing information that control how data is entered into GL account and how that account is manage.
- This include for example the currency in which an accounts is managed.
- It controls entry of data or posting of transaction to the general accounts.
- For each transaction we need to create a ledger master accordingly we can post the transaction.
- It is basically configuring the system for transaction
Number range determined the accounts document number. Every posting in the system is done through a document.
There are two type of number assignment.
- Internal number assignment occurs automatically in R3 systems.
- External number assignment is performed by the users.
- It is basically refers to voucher numbers.It can be refer in futureto know for which transaction its generated.In sap for every business transaction a number is generated that is termed as accounting document number or voucher number.
- The voucher number and accounting document number is generated along with the fiscal year.
- The process by which number are allocated to business objects are of two type
- Internal number and external nuber
Internal number : where we decide the range to the system wherever any transaction takes place the sap system automatically give you a number.
External number : where the user who is posting the transaction himself gives voucher number .
In practical scenario always a internal number is preferred.