Everything about General Ledger account

I can sense, after reading the title of this blog, half of the reader starts assuming the contents and topics should be discussed here, and probably not read this. So I have decided to give an overview of the topics at the start of the blog.

This post will be helpful for fresher to intermediates in the SAP FICO module along with a consultant from other modules, who want to fully understand the concept of the General Ledger account.

  • Prerequisites to create G/L accounts
  • Concept of Chart of accounts and their uses
  • How G/L accounts created in the international environment (Logic of number range and Groups)
  • What is the use of an Alternative G/L account or country-specific G/L account?
  • Use and impact of each field of G/L accounts
  • Importance of master data and Mistakes people often do
  • Retained Earning Account

This blog is divided into two parts:

Everything about General Ledger account – Part 1

Everything about General Ledger account – Part 2

Let’s start with the prerequisites for the G/L accounts:

G/L Account has two levels or let’s say G/L account is created on two levels:

  1. Chart of account (COA)
  2. Company code (CoCd)

Many will argue, G/L account is not created on company code level, it is just extended to company code from Chart of account, but then some will say, we don’t just extend, we expand the G/L account by adding extra views to it.

Chart of Account: A chart of accounts (COA) is an index of all the financial accounts in the general ledger of a company. In short, it is an organizational tool that provides a digestible breakdown of all the financial transactions that a company conducted during a specific accounting period, broken down into subcategories.    – by Investopedia

In simple language COA is a list of G/L accounts of a company.

A company can have multiple company codes.

The above statement shows the need of separately extending G/L accounts on company code level.

In the international environment, it is recommended to use a single Chart of Account for all company codes from different countries. (This means we can also have separate Chart of Account for each CoCd)

We will discuss more about ‘Concept of Chart of accounts and their uses’ in upcoming pages, now let’s understand the prerequisite to create G/L account.

From above we can assume now G/L account is created in two phase or it can also be created in one go with transaction FS00.

  1. To create G/L account in Chart of Account:

We will need one Chart of Account

Transaction code to do so -> OB13

Chart of Account

Name: Four digit alphanumeric names can be given to the chart of account

Maintenance Language: The language maintained here will be considered as a default language for the description of G/L accounts

Controlling Integration: Automatic creation of cost element, does not mean it will create cost element automatically, there is one prerequisite for this, we have to save the default cost element category for the G/L we are creating. How this works: In most of the cases G/L accounts ranges are fixed for one type of G/L accounts, so we can predict in which range Primary cost elements will be created, hence we can store the category for those G/Ls beforehand in customizing.

Group COA: In the same transaction Group chart of account is defined. Group Chart of Account is assigned when there are multiple Chart of Account used for different CoCd

Blocked: Set this indicator when the Chart of Account is not in used or not completed yet

Create Account group

After creation of chart of account, account group needs to be created for the same Chart of Account

Transaction code for Account Group: OBD4

G/L Account Groups

The account group determines the fields for the entry screens if you create or change a master record in the company code. The account group also determines in which number interval the account number must be.

Here we create different groups for G/L accounts (4 digit alphanumeric), Group controls the fields of G/L master record, because of this, you can notice some of the fields are not available while creating G/L accounts under some specific account group.

Mostly the account groups are created as below: G/L accounts are bifurcated in below groups:

Asset accounts

Balance sheet accounts

Profit and loss accounts

Material

G/L accounts

Once the account groups are created we are ready to create G/L account in Chart of account

Create G/L account in Char of account:

Transaction code is FSP0

The tabs available in this transaction code can be called global views of G/L accounts

G/L Master Data

Whatever settings we make here will be applicable to all Company codes, who shares same chart of accounts.

That’s why the maintenance of master data becomes crucial because even if you think of changing the name of G/L account, you should keep in mind that it will be changed for all the users across the world provided their company code uses the same chart of account.

Below are the settings we make on Global/Chart of Account level

  • Account Number
  • Account group
  • P&L OR Balance sheet A/C
  • Name of the G/L account
  • Group Account number
  • Description in different languages

Key word/ translation tab:

G/L Master Data

In this tab you can maintain keywords in different languages, so that the keyword in user logon language will be used for search.

In translation tab the transaction of short and long text is saved.

  • Extend G/L account to Company code

In order to create G/L account centrally or to extend already created G/L to company code, we have to do one more step along with above i.e. create field status group and assign it to Company code

Transaction code for field status group à OBC4

Field Status Groups

Field status group determines the screen layout for document entry.

Fields can have the following statuses:

  • Optional entry – you can enter data in the field
  • Mandatory entry – you must enter data in the field
  • Suppressed – the field does not appear on the screen

Use: To make the value date field mandatory for bank G/L

Assign the created field status variant to Company code in transaction OBC5

After this basic set up you are ready to extend G/L account to company code level

Execute transaction code FSS0

The G/L account cannot be directly created in company code (in this transaction code), the G/L account you are extending should be created in COA (FSP0)

G/L Master Company code level

In addition to the previous three views, here we will extend or add three more tabs to the G/L account, but the settings on these tabs will be valid to the specified company code only.

If you look at the above screenshot you will notice the ‘open item management’ is not available. This is because the group, which is selected for this G/L in COA level and that group’s field status has suppressed the field open item management.

The same G/L account can be extended to the multiple company codes with different parameters in transaction code FSS0.

G/L account also can be created centrally with transaction FS00

FS00

Here we can notice all the tabs available to create or change G/L account.

Continue reading….

Everything about General Ledger account – Part 2

In the second part, we will be having a deeper look into the G/L accounts master data and answers the questions like what is the use of a Country chart of account, Valuation group, exchange rate difference key and etc.

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SAP College July 17, 2020 2 Comments

Currencies in the SAP ECC and their impact on organizational structure

The currency type definition for company code and controlling area directly impacts how the organization structures are defined. An incorrect definition in this step can make it impossible to consolidate company codes situated in different countries at the same controlling area level.

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Currency type customization is subjective, which means that there is no customizing path where you can define all of the currencies at the same time. The currency types are determined during the customizing of other areas’ SAP ERP items. For example, when you are setting up the different SAP ERP clients (such as development, quality or test, and production) you must choose a currency for the client, which indirectly defines the currency type 30. This is one of the most common areas that can cause issues in SAP ERP, and it’s difficult or impossible to change or correct later. It’s crucial to analyse all of the requirements and consider them in the definition of the structures before beginning the customizing.

Note

All of the currency types should be defined in the project blueprint with consideration of all active components and the company needs. Never change the currency type in an environment with data because it will cause a system inconsistency.

Currency type 10

Currency type 10 is defined at the company code level. Each company code in SAP ERP has its own currency, and when you set this currency, you are actually creating the currency type 10 for that company code.

To maintain the company code currency, use Transaction OX02, or follow the IMG menu path Enterprise Structure → Definition → Financial Accounting → Edit, Copy, Delete, Check Company Code, which brings you to the screen shown in Figure

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By double-clicking on an entry in the Company Code column (e.g., company code FS00), you can view the basic information for each company code, as shown in Figure

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The Currency field in Figure is defined as “INR”—currency type 10 for company code FS00.

Currency type 20

Currency type 20 (controlling area currency) is the currency type defined in the controlling area settings. We don’t recommend that you use this type in a multi-currency organization because there is a possibility that the currency assigned to currency type 20 may not be available at the company code level. If this is the case, the system cannot assign the company code to the controlling area.

Currency type 30

Each SAP Client has its own currency. Any company code that uses currency type 30 as one of the three available will share the same currency. Currency type 30 is usually used for consolidation. A company doing business in many countries, for example, can assign currency type 30 to all company codes, and it will be available to consolidate the balance sheet, profit and loss, and other financial statements in the same currency.

To maintain the SAP Client currency, use Transaction SCC4, or follow menu path Tools → Administration → Administration → Client Administration → Client Maintenance, which brings you to the screen shown in below figure

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The currency (Crcy column shown in Figure) assigned to Client 001 is EUR. This means the client currency type or currency type 30 is EUR.

Currency type 40 and 50

Currency types 40 and 50 are defined in the country customizing. These can be used in countries where inflation is relevant, and accountants need a hard or indexed currency to be available for financial statements.

You maintain the currencies using Transaction OY01 or by following the IMG menu path NetWeaver → General Settings → Set Countries → Define Countries in mySAP Systems, which brings you to Figure

To see the information for the country, double-click in the Country column (e.g., US), and the corresponding country settings will open. There are two currency fields available in the settings: index-based curr. and hard currency, which are currency types 50 and 40, respectively. You can see in Figure that Country DE uses EUR as index-based currency or currency type 50, and EUR as hard currency or currency type 40.

Currency type 60

Currency type 60 is seldom used as a controlling area currency. It is normally defined in the trading partner customization. Company codes assigned to the same trading partner will share the same currency.

To maintain the trading partner currency, either use Transaction OX15, or follow the IMG menu path Enterprise Structure → Definition Financial Accounting → Define Company, which will open the screen shown in Figure. Double-clicking on an entry in the Company column, (e.g.,FS00) will open the screen as shown, Internal Trading Partner Details. (Note that the term “company” is synonymous with “trading partner” in SAP ERP.)

It is useless to have the currency type created if you don’t assign the currency type to the company code. Each company code can have three currency types assigned. This allows the accounting to be maintained in three different currencies.

To customize the currency at the company code level, use Transaction OB22, or follow the IMG menu path Financial Accounting (New) → Financial Accounting Global Settings (New) → Ledgers → Ledger → Define Currencies of Leading Ledger

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Hope you enjoy and learn a few things in this blog,

If you have any suggestions or questions do let us know in the comment section or you can also write us directly. 

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SAP College June 27, 2020 0 Comments