GENERAL LEDGER CONCEPTS:
'HOW TO CREATE GENERAL LEDGER MASTERS :
A) Chart of Accounts Level
B) At Company Code Level
C) Centrally
At Chrtof A/c Level At Company Code Level Centrally
1.Account Number2.Account Group3.Company Code4.Wether it is P&LA/c5.Wether it is B/S Item6.DescriptionA)Short Text -Max 20 CharB)Long Text-Max 50 Char 1.A/c Currency2.Only Balance in Local Currency3.Tolerance Group4.Line Item Display5.Open Item Management6.Sork Key7.Field Status Group All Fields of Cht. of A/c + Company Code Leveare available in Centrally Area
SAMPLE DOCUMENT:
This is used for Month End Provisions. For this purpose we create Sample Doc.
Ex:Salaries A/c Dr.500000
Wages A/c Dr.600000
Rent A/c Dr.100000 To O/ s Exp A/ c1,200,000
Sample Document template will not update the ledger . Every month end we copy the template and change the amount and post the Document.
Advantages of Sample Document:
•Sample Document Saves times
•When we create Sample Document Template, we will not Forget any provisions
•Any Provision in the Template is paid in the same month . No provisonis required for that account. So When we copy the template for the month, for that account Enter Amount" ZERO"
Cashier/ Accountant Acc.Manager/ Sr. Person
Enter the Transaction and Park the Document for Approval of SeniorParking will not Update the Ledger After Parking Cashier will Send Message to Senior for Release / Approval of Doc. Sr. Verify the Parked Doc and make corrections if need and Releases the Doc.Releasing will updated the Ledger
After Releasing Sr. will send reply to Cashier
PARKING OF DOCUMENTS :
ParkingofDocumentsareusedwhereapprovalbySr.Personis requiredforthePostedDocuments.ForExample,ifinanycompanyCashieror AccountantandAccountsManager/Sr.Personarethere.
HOLD DOCUMENTS:
ThisisusedforthepurposeofAdjustmentEntries.Hold DocumentsareforDebitandCreditoronlyCreditalso.Whenweholdthe document,itwillaskforaTemporaryDocumentNumberwhichcanbeanything. Wehavetheoptiontodeletetheholddocumentalso.Holddocumentwillnotupdate theledgeruntilitispostedasnormalDocument.
If we made Hold document for Cash Account, then Physical Cash Balance will be SAP Balance + Hold Documents amount. /
:
RECURRINGDOCUMENTS
¢Recurring Documents are used when date and amount are fixed.
¢Ex: Prepaid Expenses / Hire Purchase Installments.
FOREIGN CURRENCY TRANSACTIONS:
There are 3 types of Exchange Rates defined by SAP
TypePurposeType Defined by SAP
1.Bank Buying RateExports PurposeG Type
2.Bank Selling RateImports/ ExpB Type
3. Average RateMM / SD users onlyM Type /
Foreign Currency Postings : There are two typsof options for Foreign currency postings. OPTION -1OPTION-2
When Exchange Rate is not enteredWhen Exchange Rate is entered at the
at the time of Posting the Documenttime of Posting the Document
In Option 1, system take the Ex. RateRates are entered by End User, but not
from ForexTablethe System.
It takes the Latest Rate from Table
Ex.on 01.06.14 Rate is 58
on 09.06.14 Rate is 59
If we want to enter document on 20.07.09, system will take the rate of 58 not 59
To Enter Default Exchange Rate type based on Document Type.
Document TypeNature of DocumentType of Ex. Rate
SAGeneral Ledger PostingB
KRFI Purchases MMB
REPurchases FI SalesB
DR SD SalesB
RVB
NOTE: If we do not specify the Ex Rate Type, system will take automatically"( Average)
MONTH END PROVISONS: We have 2 options for Month End provisions
Option1:Accrual/DeferralDocumentMethodUnderoption1ofAccrual/Deferral Documentmethod,ontheMonthendwemakeprovisionandonnextmonth 1stworkingday,wereversetotalprovisionmade.ATthetimeofmaking paymentwewilltaketheactualpaymentmade.ForEx:
On31.07.09 Provision for Salaries
Salaries A/ c Dr100000
to O/s Expenses100000
On01.08.09 Reversal of Provison
O/s. Expenses A/c100000
to Salaries 100000
On05.08.09 Salaries Payment
Salaries Account105000
to Bank/ Cash105000
Option2:OpenItemManagementUnderOpenItemManagement,attheendofthe monthwemaketheprovision.Atthetimeofpaymentweadjusttheprovision.IfExcess paymentismade,differencebetweenactualpaymentandprovisionisbookedas expenditureforthatmonth.
For Ex:
On31.07.09 Provision for Salaries
Salaries A/c Dr100000
to O/s Expenses100000
On05.08.09 Salaries Payment
Outstanding Exp100000
Salaries A/c5000
To Bank A/c105000
In both the options effect will be same. In Option 2 Tracking of Provision Made is important which is not possible in practical live environment.
Note:InLiveEnvironmentProvisionsWillBeMadeByAccountantAnd PaymentWillBeMadeByCashier.TheCashierAtTheTimeOfMakingPayment ShouldKnowTheAmountOfProvisionAndHowMuchHeHasToClearAtThe TimeOfPayment.TrackingIsRequiredInOption2.InLiveEnvironment CompaniesFollowOPTION-1
OPTION-2: OPENITEMMANAGEMENT
This is used for Vendors / Customers / Balance Sheet Accounts, where Clearing is Required.
IN Balance Sheet Accounts it is applicable like
1.Where there is Provision and Payment will be made in future Ex. O/S. Exp
2.Where there is Recovery and Payment Afterwards Ex: TDS/PF Etc.,
ConceptofOpenItemManagementislikeBillWiseAdjustmentsinOtherAccounting Softwares.
ForMakingOpenItemManagementactive,wehavetoselectthe"OpenItem Management"CheckBoxatthetimeofGLMasterCreations.
SupposeConsiderOutstandingExpensesAccount,ifweseeaccountatthe endoftheyear,therewillbesomanydebitsandcredits.Wedon'tknowwhichitemis paidandwhichispayable.IfweselecttheOpenItemManagementcheckBoxatthe timeofGLMasterCreation,whileatthetimeofmakingpaymentsystemwillaskabout thepaymentisagainstwhichprovision.OnceweselectedpaymentagainstRent Provison,thatitemwillbeclearedfromOpenItemsList.
We can see the Outstanding Expenses in 3 ways.
a)Open Items : Payable Items
b)Cleared Items: Amount paid Items
c)All Items: All items of Payable and Paid items.
Scenario No Type Remarks
1st Scenario2nd Scenario3rd Scenario FullClearingPartialClearingResidualClearing ProvisonAmountandPaymentaresamePartpaymentagainstProvisionsPartpaymentagainstProvisions
IN SAP we have 3 scenarios for Open Item Management
Partial Clearing Residual Clearing
A) Rent Provison A) Rent Provison
Rent A/c Dr. 70000 Rent A/c Dr. 70000
To O/S. Exp A/c 70000 To O/S. Exp A/c 70000
B) Partial Payment of 2000 by using Partial B) Partial Payment of 3000 by using Partial
Clearing Method Clearing Method
O/S. Exp A/c Dr 2000 O/S. Exp A/c 80000
To Bank/ Cash A/c 2000 To Bank/ Cash A/c 3000
To O/S Exp A/c 77000
O/S. Exp A/c at the end of the period
Open Items 70000 Cr Open Items 77000 Cr
Cleared Items 2000 Dr Cleared Items 80000 Cr
Open Items 68000 Cr 80000 Dr
Scenario 2 & 3:Partial Clearing and Residual Items Method:
Nature of the Transactions how system works under Partial Clearing or Residual Items Method is explained with the following Example for understanding.
REVERSALS:
When we post a Wrong Entry in SAP , we have go for Reversals or pass a
Rectification Entry. There are so many Types of Reversals allowed in SAP.
They are
1.Individual Document Reversal
2.Reversal of Reversed Document (Work Around Method –Indirect Method)
3.Mass Reversal
4.Cleared Items Reversals
5.Accrual / Deferral Documents Reversal (Topic covered at Month End provisons)
Interest calculations
Type 1 Type 2
A. Balance Interest Calculations Item Interest Calculation
B. Defined as Type "S" Defined as Type "P"
C. Used for General Ledger A/c Used for Vendors/ Customers
'HOW TO CREATE GENERAL LEDGER MASTERS :
A) Chart of Accounts Level
B) At Company Code Level
C) Centrally
At Chrtof A/c Level At Company Code Level Centrally
1.Account Number2.Account Group3.Company Code4.Wether it is P&LA/c5.Wether it is B/S Item6.DescriptionA)Short Text -Max 20 CharB)Long Text-Max 50 Char 1.A/c Currency2.Only Balance in Local Currency3.Tolerance Group4.Line Item Display5.Open Item Management6.Sork Key7.Field Status Group All Fields of Cht. of A/c + Company Code Leveare available in Centrally Area
SAMPLE DOCUMENT:
This is used for Month End Provisions. For this purpose we create Sample Doc.
Ex:Salaries A/c Dr.500000
Wages A/c Dr.600000
Rent A/c Dr.100000 To O/ s Exp A/ c1,200,000
Sample Document template will not update the ledger . Every month end we copy the template and change the amount and post the Document.
Advantages of Sample Document:
•Sample Document Saves times
•When we create Sample Document Template, we will not Forget any provisions
•Any Provision in the Template is paid in the same month . No provisonis required for that account. So When we copy the template for the month, for that account Enter Amount" ZERO"
Cashier/ Accountant Acc.Manager/ Sr. Person
Enter the Transaction and Park the Document for Approval of SeniorParking will not Update the Ledger After Parking Cashier will Send Message to Senior for Release / Approval of Doc. Sr. Verify the Parked Doc and make corrections if need and Releases the Doc.Releasing will updated the Ledger
After Releasing Sr. will send reply to Cashier
PARKING OF DOCUMENTS :
ParkingofDocumentsareusedwhereapprovalbySr.Personis requiredforthePostedDocuments.ForExample,ifinanycompanyCashieror AccountantandAccountsManager/Sr.Personarethere.
HOLD DOCUMENTS:
ThisisusedforthepurposeofAdjustmentEntries.Hold DocumentsareforDebitandCreditoronlyCreditalso.Whenweholdthe document,itwillaskforaTemporaryDocumentNumberwhichcanbeanything. Wehavetheoptiontodeletetheholddocumentalso.Holddocumentwillnotupdate theledgeruntilitispostedasnormalDocument.
If we made Hold document for Cash Account, then Physical Cash Balance will be SAP Balance + Hold Documents amount. /
:
RECURRINGDOCUMENTS
¢Recurring Documents are used when date and amount are fixed.
¢Ex: Prepaid Expenses / Hire Purchase Installments.
FOREIGN CURRENCY TRANSACTIONS:
There are 3 types of Exchange Rates defined by SAP
TypePurposeType Defined by SAP
1.Bank Buying RateExports PurposeG Type
2.Bank Selling RateImports/ ExpB Type
3. Average RateMM / SD users onlyM Type /
Foreign Currency Postings : There are two typsof options for Foreign currency postings. OPTION -1OPTION-2
When Exchange Rate is not enteredWhen Exchange Rate is entered at the
at the time of Posting the Documenttime of Posting the Document
In Option 1, system take the Ex. RateRates are entered by End User, but not
from ForexTablethe System.
It takes the Latest Rate from Table
Ex.on 01.06.14 Rate is 58
on 09.06.14 Rate is 59
If we want to enter document on 20.07.09, system will take the rate of 58 not 59
To Enter Default Exchange Rate type based on Document Type.
Document TypeNature of DocumentType of Ex. Rate
SAGeneral Ledger PostingB
KRFI Purchases MMB
REPurchases FI SalesB
DR SD SalesB
RVB
NOTE: If we do not specify the Ex Rate Type, system will take automatically"( Average)
MONTH END PROVISONS: We have 2 options for Month End provisions
Option1:Accrual/DeferralDocumentMethodUnderoption1ofAccrual/Deferral Documentmethod,ontheMonthendwemakeprovisionandonnextmonth 1stworkingday,wereversetotalprovisionmade.ATthetimeofmaking paymentwewilltaketheactualpaymentmade.ForEx:
On31.07.09 Provision for Salaries
Salaries A/ c Dr100000
to O/s Expenses100000
On01.08.09 Reversal of Provison
O/s. Expenses A/c100000
to Salaries 100000
On05.08.09 Salaries Payment
Salaries Account105000
to Bank/ Cash105000
Option2:OpenItemManagementUnderOpenItemManagement,attheendofthe monthwemaketheprovision.Atthetimeofpaymentweadjusttheprovision.IfExcess paymentismade,differencebetweenactualpaymentandprovisionisbookedas expenditureforthatmonth.
For Ex:
On31.07.09 Provision for Salaries
Salaries A/c Dr100000
to O/s Expenses100000
On05.08.09 Salaries Payment
Outstanding Exp100000
Salaries A/c5000
To Bank A/c105000
In both the options effect will be same. In Option 2 Tracking of Provision Made is important which is not possible in practical live environment.
Note:InLiveEnvironmentProvisionsWillBeMadeByAccountantAnd PaymentWillBeMadeByCashier.TheCashierAtTheTimeOfMakingPayment ShouldKnowTheAmountOfProvisionAndHowMuchHeHasToClearAtThe TimeOfPayment.TrackingIsRequiredInOption2.InLiveEnvironment CompaniesFollowOPTION-1
OPTION-2: OPENITEMMANAGEMENT
This is used for Vendors / Customers / Balance Sheet Accounts, where Clearing is Required.
IN Balance Sheet Accounts it is applicable like
1.Where there is Provision and Payment will be made in future Ex. O/S. Exp
2.Where there is Recovery and Payment Afterwards Ex: TDS/PF Etc.,
ConceptofOpenItemManagementislikeBillWiseAdjustmentsinOtherAccounting Softwares.
ForMakingOpenItemManagementactive,wehavetoselectthe"OpenItem Management"CheckBoxatthetimeofGLMasterCreations.
SupposeConsiderOutstandingExpensesAccount,ifweseeaccountatthe endoftheyear,therewillbesomanydebitsandcredits.Wedon'tknowwhichitemis paidandwhichispayable.IfweselecttheOpenItemManagementcheckBoxatthe timeofGLMasterCreation,whileatthetimeofmakingpaymentsystemwillaskabout thepaymentisagainstwhichprovision.OnceweselectedpaymentagainstRent Provison,thatitemwillbeclearedfromOpenItemsList.
We can see the Outstanding Expenses in 3 ways.
a)Open Items : Payable Items
b)Cleared Items: Amount paid Items
c)All Items: All items of Payable and Paid items.
Scenario No Type Remarks
1st Scenario2nd Scenario3rd Scenario FullClearingPartialClearingResidualClearing ProvisonAmountandPaymentaresamePartpaymentagainstProvisionsPartpaymentagainstProvisions
IN SAP we have 3 scenarios for Open Item Management
Partial Clearing Residual Clearing
A) Rent Provison A) Rent Provison
Rent A/c Dr. 70000 Rent A/c Dr. 70000
To O/S. Exp A/c 70000 To O/S. Exp A/c 70000
B) Partial Payment of 2000 by using Partial B) Partial Payment of 3000 by using Partial
Clearing Method Clearing Method
O/S. Exp A/c Dr 2000 O/S. Exp A/c 80000
To Bank/ Cash A/c 2000 To Bank/ Cash A/c 3000
To O/S Exp A/c 77000
O/S. Exp A/c at the end of the period
Open Items 70000 Cr Open Items 77000 Cr
Cleared Items 2000 Dr Cleared Items 80000 Cr
Open Items 68000 Cr 80000 Dr
Scenario 2 & 3:Partial Clearing and Residual Items Method:
Nature of the Transactions how system works under Partial Clearing or Residual Items Method is explained with the following Example for understanding.
REVERSALS:
When we post a Wrong Entry in SAP , we have go for Reversals or pass a
Rectification Entry. There are so many Types of Reversals allowed in SAP.
They are
1.Individual Document Reversal
2.Reversal of Reversed Document (Work Around Method –Indirect Method)
3.Mass Reversal
4.Cleared Items Reversals
5.Accrual / Deferral Documents Reversal (Topic covered at Month End provisons)
Interest calculations
Type 1 Type 2
A. Balance Interest Calculations Item Interest Calculation
B. Defined as Type "S" Defined as Type "P"
C. Used for General Ledger A/c Used for Vendors/ Customers
