Maximizing SAP General Ledger

Shivesh Sharma has worked in the SAP Financials area for six years, for companies such as IBM, CSC, and Fujitsu Consulting. His areas of expertise include business process design, FI-AP, GL. AR, Banking, Asset Management, Funds Management, and Special Purpose Ledger.

... Acknowledgments ... 17 ... Preface ... 19 PART I ... Introduction to SAP General Ledger ... 23 1 ... General Ledger Accounting: An Introduction ... 25 1.1 ... Accounting Standards ... 26 1.1.1 ... Trends in Accounting Standards ... 26 1.1.2 ... U.S. GAAP ... 28 1.1.3 ... International Financial Reporting Standards (IFRS) ... 29 1.1.4 ... Comparing IFRS and U.S. GAAP ... 29 1.1.5 ... Technological Challenges of Moving from GAAP to IFRS ... 30 1.2 ... SAP General Ledger Evolution ... 35 1.2.1 ... Classic General Ledger ... 36 1.2.2 ... Special Purpose Ledger ... 37 1.2.3 ... SAP General Ledger ... 39 1.2.4 ... Comparison of SAP General Ledger and Special Purpose Ledger ... 43 1.3 ... Reporting Structure in SAP General Ledger ... 45 1.3.1 ... Data Structure ... 45 1.3.2 ... New SAP Tables ... 47 1.3.3 ... Reporting Considerations ... 47 1.3.4 ... Sizing and Performance Considerations ... 49 1.4 ... Summary ... 49 2 ... Parallel Accounting ... 51 2.1 ... Implementation Options in SAP General Ledger ... 52 2.1.1 ... Parallel Ledgers ... 55 2.1.2 ... Parallel Accounts ... 57 2.1.3 ... Parallel Special Purpose Ledgers ... 59 2.1.4 ... Parallel Company Codes ... 63 2.1.5 ... Comparison Summary ... 64 2.2 ... Parallel Accounting in SAP ERP Components ... 65 2.2.1 ... Financial Accounting ... 65 2.2.2 ... Asset Accounting ... 71 2.3 ... Key Concepts for the Ledger Approach ... 74 2.3.1 ... Leading Ledger ... 74 2.3.2 ... Non-Leading Ledger ... 75 2.3.3 ... Ledger Group ... 75 2.3.4 ... Representative Ledger ... 75 2.3.5 ... Ledger Selection ... 77 2.4 ... Customizing Settings: Ledger and Parallel Accounting ... 77 2.4.1 ... Defining Ledgers for General Ledger Accounting ... 78 2.4.2 ... Defining Currencies for the Leading Ledger ... 78 2.4.3 ... Defining and Activating Non-Leading Ledgers ... 80 2.4.4 ... Assigning Scenarios and Customer Fields to Ledgers ... 81 2.4.5 ... Activating Cost of Sales Accounting ... 82 2.4.6 ... Defining Ledger Groups ... 83 2.4.7 ... Defining and Assigning Accounting Principles ... 83 2.5 ... Summary ... 84 3 ... General Ledger Account Master Data ... 85 3.1 ... Structure and Environment of the General Ledger Account Master Record ... 86 3.1.1 ... Structure ... 86 3.1.2 ... Environment ... 87 3.2 ... Master Data at the Chart of Accounts Level ... 88 3.2.1 ... Setup ... 88 3.2.2 ... Cost Accounting ... 91 3.2.3 ... Master Record ... 92 3.3 ... General Ledger Account Master Data Customization ... 94 3.3.1 ... Number Intervals ... 95 3.3.2 ... Screen Layout ... 96 3.4 ... General Ledger Account Master Data in Company Code ... 97 3.4.1 ... Control Data ... 97 3.4.2 ... Create/Bank/Interest Tab ... 104 3.5 ... Retained Earnings Account ... 107 3.6 ... Editing General Ledger Account Master Records ... 109 3.6.1 ... Central versus Decentralized Organization ... 110 3.6.2 ... Changes to Chart of Accounts ... 111 3.6.3 ... Changes to Company Code Area ... 111 3.6.4 ... Blocking a General Ledger Master Record ... 111 3.6.5 ... Marking a General Ledger Master Record for Deletion ... 112 3.7 ... Process Flow for Maintaining a General Ledger Master Record ... 113 3.7.1 ... Process Flow for Creating a General Ledger Master Record ... 113 3.7.2 ... Service-Oriented Architecture (SOA) Components for Financial Accounting Master Data Management ... 114 3.8 ... Summary ... 115 4 ... General Ledger Accounting Documents ... 117 4.1 ... Document Lifecycle ... 118 4.1.1 ... Data Entry to Posting ... 119 4.1.2 ... Posting to Change ... 121 4.1.3 ... Posting to Archiving ... 122 4.1.4 ... Business Process Flow for Documents ... 123 4.2 ... Special Documents ... 125 4.2.1 ... Sample Documents ... 126 4.2.2 ... Recurring Documents ... 126 4.3 ... Document Views ... 127 4.3.1 ... Entry View ... 127 4.3.2 ... General Ledger View ... 127 4.4 ... Document Structure ... 128 4.4.1 ... Header ... 128 4.4.2 ... Line Item ... 130 4.5 ... Customization Settings for Documents ... 130 4.5.1 ... Document Type ... 131 4.5.2 ... Document Numbering ... 134 4.6 ... Summary ... 138 PART II ... Integration with Other SAP Components ... 139 5 ... General Ledger Integration with Order-to-Cash and Procure-to-Pay Scenarios ... 141 5.1 ... Business Process Flow ... 142 5.1.1 ... Order-to-Cash ... 142 5.1.2 ... Procure-to-Pay ... 144 5.1.3 ... Effect on SAP General Ledger ... 146 5.2 ... Order-to-Cash Scenarios ... 146 5.2.1 ... Sales of Non-Stock Items with Order-Specific Procurement ... 147 5.2.2 ... Sales Processing Using a Third Party with Shipping Notification ... 148 5.2.3 ... Sales Order Processing with Customer Down Payment ... 149 5.2.4 ... Cross-Company Sales Order Processing ... 150 5.2.5 ... Free-of-Charge Delivery ... 152 5.2.6 ... Customer Consignment Process ... 152 5.3 ... Procure-to-Pay Scenarios ... 154 5.3.1 ... Procurement Contract ... 155 5.3.2 ... Subcontracting ... 156 5.3.3 ... Procurement and Consumption of Consigned Inventory ... 157 5.3.4 ... Common SAP Terms Related to Procure-to-Pay Scenarios ... 158 5.4 ... SAP General Ledger Customization Settings for Order-to-Cash ... 160 5.4.1 ... Prepare Revenue Account Determination ... 161 5.4.2 ... Perform Document Summarization for Sales and Distribution ... 163 5.5 ... SAP General Ledger Customization Settings for Procure-to-Pay ... 164 5.5.1 ... Define Accounts for Materials Management ... 164 5.5.2 ... Perform Document Summarization for Materials Management ... 167 5.6 ... Summary ... 168 6 ... SAP General Ledger, Business Processes, and Logistics Execution ... 169 6.1 ... Business Process Flows ... 170 6.1.1 ... Time to Market ... 170 6.1.2 ... Forecast to Stock ... 173 6.1.3 ... Service Management ... 175 6.2 ... Transportation Processes ... 177 6.2.1 ... Transportation Process Flow ... 177 6.2.2 ... Key Concepts ... 178 6.2.3 ... Inbound Shipments ... 183 6.2.4 ... Outbound Shipments ... 184 6.3 ... Integrating Transportation Processes with SAP General Ledger: Customization Settings ... 185 6.3.1 ... Shipment Cost Document ... 187 6.3.2 ... Settlement ... 190 6.4 ... Summary ... 191 7 ... Integration of Financial Subledgers with SAP General Ledger ... 193 7.1 ... Financial Subledgers: Business Processes ... 194 7.1.1 ... Accounts Payable ... 195 7.1.2 ... Accounts Receivable ... 196 7.1.3 ... Asset Accounting ... 199 7.1.4 ... Cash Management and Bank Accounting ... 201 7.1.5 ... Lease Accounting ... 203 7.2 ... Financial Subledgers: Configuration Settings ... 205 7.2.1 ... Accounts Payable and Accounts Receivable ... 206 7.2.2 ... Cash Management and Bank Accounting ... 210 7.2.3 ... Asset Accounting ... 214 7.2.4 ... Lease Accounting ... 217 7.3 ... Summary ... 219 8 ... Real-Time Integration of Financial Accounting and Controlling ... 221 8.1 ... Introduction to Controlling ... 224 8.1.1 ... Cost Center Planning ... 224 8.1.2 ... Core Concepts in Controlling ... 225 8.2 ... Setting Up Financial Accounting for Integration with Controlling ... 227 8.2.1 ... Cost Element ... 228 8.2.2 ... Default Account Assignments ... 228 8.3 ... Setting Up Controlling for Integration with Financial Accounting ... 231 8.3.1 ... Reconciliation Ledger ... 231 8.3.2 ... Real-Time Integration ... 233 8.4 ... Summary ... 239 9 ... Integration of SAP General Ledger with SAP ERP Human Capital Management ... 241 9.1 ... Introduction to SAP ERP HCM ... 242 9.1.1 ... SAP ERP HCM Business Processes ... 242 9.1.2 ... SAP ERP HCM Solution Overview ... 244 9.1.3 ... Shared Services ... 246 9.2 ... Integration of SAP ERP HCM with SAP ERP Financials ... 249 9.2.1 ... Integrated Process Flow ... 249 9.2.2 ... Key Organizational Entities ... 250 9.3 ... Time Management and Payroll Processes ... 252 9.3.1 ... Time Management ... 252 9.3.2 ... Payroll Process ... 253 9.4 ... Payroll Accounting ... 255 9.4.1 ... Payroll Calculation Schema ... 255 9.4.2 ... Payroll Accounting Area ... 256 9.4.3 ... Interface Implementation Scenarios ... 256 9.4.4 ... Payroll Configuration Settings for Integration with SAP ERP Financial Accounting ... 258 9.5 ... Summary ... 259 10 ... Integration of SAP General Ledger with SAP Travel Management ... 261 10.1 ... Introduction to Travel Management ... 262 10.1.1 ... SAP Travel Management Process Flow ... 263 10.1.2 ... SAP Travel Management User Interface ... 264 10.2 ... SAP Travel Management Integration ... 268 10.2.1 ... Integration Process Flow ... 269 10.2.2 ... Implementation Scenarios: Infrastructure ... 269 10.3 ... Configuration Settings for Integration with Financial Accounting ... 272 10.3.1 ... Assignment of Wage Type to Symbolic Account ... 273 10.3.2 ... Conversion of Symbolic Account to Expense Account ... 275 10.4 ... Summary ... 277 PART III ... Maximizing Effectiveness of SAP General Ledger Business Processes ... 279 11 ... Business Transactions in SAP General Ledger ... 281 11.1 ... Posting Documents ... 282 11.1.1 ... Enjoy Posting Document Structure ... 282 11.1.2 ... Posting Documents ... 284 11.1.3 ... Posting Documents to One Ledger Group ... 289 11.1.4 ... Posting Documents with Reference ... 290 11.1.5 ... Customizing the User Interface for Posting Documents ... 292 11.2 ... Processing Open Items ... 294 11.2.1 ... Automatic Selection and Clearing ... 295 11.2.2 ... Manual Selection of Open Items for Clearing ... 300 11.3 ... Business Transaction Customization Settings ... 303 11.3.1 ... G/L Account Posting Enjoy ... 303 11.3.2 ... Prepare Cross-Company Code Transactions ... 306 11.3.3 ... Open Item Clearing ... 307 11.4 ... Summary ... 312 12 ... Profit Center Accounting and Segment Reporting Using SAP General Ledger ... 313 12.1 ... Implementation Options ... 314 12.2 ... Profit Center Accounting ... 317 12.2.1 ... Assignment of Profit Centers ... 317 12.2.2 ... Differences Between Profit Center Accounting, Profitability Analysis, and the Special Purpose Ledger ... 318 12.3 ... Segment Reporting ... 320 12.3.1 ... Accounting Standards ... 321 12.3.2 ... Segment Reporting Processes ... 321 12.4 ... Master Data for Profit Center Accounting and Segment Reporting ... 322 12.4.1 ... Segment ... 323 12.4.2 ... Profit Center ... 327 12.4.3 ... Cost Center ... 331 12.4.4 ... Derivation of Master Data During Postings ... 332 12.5 ... Summary ... 333 13 ... Document Splitting ... 335 13.1 ... Introduction to Document Splitting ... 336 13.1.1 ... Document Splitting Process ... 338 13.1.2 ... Document Splitting Advantages ... 342 13.2 ... Implementation Options ... 343 13.2.1 ... Migrating to SAP General Ledger ... 344 13.2.2 ... Scenario 6: Implementing Document Splitting after SAP General Ledger Is Implemented ... 347 13.3 ... Basic Document Splitting Configuration ... 348 13.3.1 ... Classify G/L Accounts for Document Splitting ... 351 13.3.2 ... Classify Document Types for Document Splitting ... 352 13.3.3 ... Define Zero Balance Clearing Account ... 354 13.3.4 ... Define Document Splitting Characteristics for General Ledger Accounting ... 355 13.3.5 ... Define Document Splitting Characteristics for Controlling ... 356 13.3.6 ... Edit Constants for Nonassigned Processes ... 357 13.3.7 ... Define Post-Capitalization of Cash Discount to Assets ... 358 13.3.8 ... Activate Document Splitting ... 358 13.4 ... Extended Document Splitting Configuration ... 360 13.4.1 ... Define Document Splitting Method ... 360 13.4.2 ... Define Document Splitting Rule ... 361 13.4.3 ... Assign Document Splitting Method ... 368 13.4.4 ... Define Business Transaction Variants ... 369 13.5 ... Summary ... 370 14 ... Cost of Sales Accounting ... 373 14.1 ... Introduction to Cost of Sales Accounting ... 374 14.1.1 ... Business Process Flow ... 374 14.1.2 ... Configuration Settings for Cost of Sales Accounting ... 379 14.2 ... Managing Functional Areas ... 382 14.2.1 ... Assignment of Functional Area Rules ... 383 14.2.2 ... Deriving Functional Areas ... 384 14.2.3 ... Functional Area Substitution and Enhancement ... 386 14.2.4 ... Functional Area Integration with Asset Accounting ... 389 14.2.5 ... Functional Area Integration with Cost Center Accounting ... 391 14.2.6 ... Changing Functional Area Rules ... 392 14.2.7 ... Message Control: Add Message (Warning) ... 392 14.3 ... Summary ... 393 PART IV ... Period-End Processes in SAP General Ledger ... 395 15 ... Revenue Recognition ... 397 15.1 ... Revenue Recognition Requirements ... 398 15.2 ... SAP ERP Approach to Revenue Recognition ... 400 15.3 ... Sales and Distribution Revenue Recognition ... 404 15.3.1 ... Revenue Recognition Types ... 407 15.3.2 ... Business Events for Revenue Recognition: Proof of Delivery ... 412 15.3.3 ... Revenue Recognition Transaction Codes ... 415 15.3.4 ... Data Changes that Affect Revenue Recognition ... 417 15.4 ... Business Process Scenarios: High Tech Industry (Software) ... 418 15.4.1 ... Sale of Software Bundle ... 418 15.4.2 ... Perpetual Software License Sales and Maintenance ... 420 15.4.3 ... Subscription-Based Software License Sales ... 421 15.4.4 ... Sale of Education and Training Services ... 421 15.4.5 ... Software Maintenance and Support Renewal ... 422 15.5 ... Technical Settings for Revenue Recognition ... 424 15.5.1 ... General Ledger Master Data ... 425 15.5.2 ... Sales and Distribution Item Categories and Their Settings ... 426 15.5.3 ... Revenue Recognition Type on Item Category Level ... 427 15.5.4 ... Account Determination ... 428 15.6 ... SAP Recommendations and Constraints of Revenue Recognition ... 428 15.6.1 ... SAP Recommendations ... 428 15.6.2 ... Constraints ... 430 15.7 ... Summary ... 431 16 ... Financial Statements ... 433 16.1 ... Financial Statement Reports ... 434 16.1.1 ... Standard Financial Statements Reports ... 434 16.1.2 ... Drill-Down Financial Statement Reports ... 438 16.1.3 ... SAP NetWeaver BW Financial Statement Reports ... 442 16.2 ... Configuring Financial Statements ... 444 16.2.1 ... Defining Financial Statement Versions ... 444 16.2.2 ... Creating Financial Statement Versions According to Cost of Sales Accounting ... 448 16.3 ... Summary ... 450 17 ... Period-End Processes ... 451 17.1 ... Period-End Processes by Business Functions ... 451 17.1.1 ... Period End Closing Activities for Financial Accounting ... 453 17.1.2 ... Period-End Closing for the "General" Plant ... 457 17.1.3 ... Period-End Closing for Service Orders ... 458 17.1.4 ... Period-End Closing for Sales and Distribution ... 459 17.1.5 ... Period-End Closing for Closing Projects ... 461 17.1.6 ... Period-End Closing for Inventory Valuation ... 462 17.1.7 ... Conclusion ... 463 17.2 ... SAP General Ledger Period-End Transactions ... 478 17.2.1 ... Check/Count ... 480 17.2.2 ... Valuate ... 482 17.2.3 ... Reclassify ... 492 17.2.4 ... Rollup ... 495 17.2.5 ... Allocations ... 496 17.2.6 ... Carry-Forward ... 498 17.3 ... Summary ... 501 ... Appendices ... 503 A ... Reporting, Closing Cockpit, and Authorizations ... 503 A.1 ... Reporting ... 503 A.2 ... Closing Cockpit ... 510 A.3 ... Authorizations in SAP General Ledger ... 518 B ... Glossary and SAP Abbreviations ... 525 C ... The Author ... 529 ... Index ... 531