Notes on SAP FICO

1) Explain the term SAP FICO?

SAP FICO stands for FI (Financial Accounting) and CO (controlling). In SAP
FICO, SAP FI take cares about accounting, preparation of financial statements,
tax computations etc, while SAP CO take cares of inter orders, cost sheet,
inventory sheet, cost allocations etc. It is the software that stores data, and also
computes them and retrieves the result based on the current marketing scenario.
SAP FICO prevents data lost and also does the verification and reporting of data.

2) What are the other modules to which Financial Accounting is

integrated?
The other modules to which Financial Accounting is integrated are
o Sales and Distribution
o Material Management
o Human Resource
o Production Planning
o Controlling of financial transaction

3) In SAP FI what are the organizational elements?

The organizational elements in SAP FI are:
o Company Code
o Business Area
o Chart of Account
o Functional Area

4) In Asset accounting what is the organizational assignments?

In Asset Accounting, chart of depreciation is rated as the highest node, and this is
assigned to the company node. All the depreciation calculations are stored under
the chart of depreciation.

5) What is the importance of asset classes? What asset classes are

there?
The asset class is the main class to classify assets. Every asset must be assigned
to only one asset class. Example of asset class is Furniture & Fixtures, Plant &
Machinery, and Computers etc. The asset class also contains GL account, when
any asset is procured, GL account is debited. Whenever you create and asset
master, it becomes mandatory to mention the assets class for which you are
creating the required assets. So, whenever any asset transaction occurs, the GL
account attached to the asset class is automatically picked up and the entry is
passed. You can also specify the default values for calculating the depreciation
values and other master data in each asset class.

6) How many charts of accounts can company code have?

You can have one Chart of Account for one company code which is assigned.

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 Notes on SAP FICO

7) For a Company Code how many currencies can be configured?

There are three currencies that can be configured for a Company code, one is a
local currency and two are the parallel currencies.

8) What are the options in SAP for Fiscal years?

Fiscal year in SAP is the way financial data is stored in the system. In SAP, you
have 12 periods and four special periods. These periods are stored in fiscal year
variant that is:
Calendar Year: From Jan-Dec, April-March
Year dependent fiscal year

9) What is a year shift in SAP calendar?

SAP system does not know what broken fiscal year e.g is April 2014 to March
2015 and only understand the calendar year. If, for any business, the fiscal year
is not a calendar year but the combination of the different months of two
different calendar year and then one of the calendar year has to classified as a
fiscal year for SAP and the month falling in another year has to be adjusted into
the fiscal year by shifting the year by using the sign -1 or +1. This shift in the year
is known as year shift.

Example: April 2015 to Dec 2015 is our first calendar year, and Jan 2016 to
March 2016 is our second year, now if you are taking April-15 to Dec-15 as your
fiscal year, then Jan-16 to March-16 automatically becomes the second year, and
you have to adjust this year by using -1 shift, and vice versa if the scenario is
reversed, here you will use +1 shift.

10) What is year dependent fiscal year variant?

In a year dependent fiscal year variant, the number of days in a month is not as
per the calendar month. For example, in year 2015, month January end on 29th,
month Feb ends on 26th etc.

11) What is parallel and local currency in SAP?

Each company code can have two additional currencies, in addition to the
company code, currency entered to the company code data. The currency entered
in the company code creation is called local currency and the other two additional
currencies are called parallel currencies. Parallel Currencies can be used in
foreign business transactions. In order to do international transaction, parallel
currency can be used. The two parallel currencies would be GROUP CURRENCY
and HARD CURRENCY.

12) Where can you use the internal order?

To track the cost, internal orders are used; they are proposed to be incurred over
on a short term basis.

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 Notes on SAP FICO

13) Is it possible to calculate depreciation to the day?

Yes, it is possible to calculate depreciation, to do that you have to switch on the
indicator Dep. to the day in the depreciation key configuration.

14) Explain what is posting key and what does it control?

In order to determine the transaction type which is entered in the line item, a two
digit numerical is used known as Posting Key. Posting key determines
o Account Types
o Types of posting. Debit or Credit
o Field status of transaction

15) What is the company code in SAP?

To generate financial statements like Profit and Loss statement, Balance sheets
etc. company code is used.

Ledgers in FICO
You define the ledgers that are used by you in General Ledger Accounting.
The ledgers are based upon a totals table. Using the delivered standard totals
table FAGLFLEXT is recommended by SAP. The Ledgers that are available are
mentioned as follows:

Leading Ledger:
The leading ledger is classified in to three types. They are:
Two additional currencies apart from Local Currency
Fiscal year variant
Posting period variant

Note: Only the values from the leading ledger are posted to CO in standard
system.

Group currency: Group currency is the currency which is specified in the client
table or which is to be entered there.
Hard Currency: Hard currency is a country-specific second currency which is
used in countries with high inflation.
Index-based currency: Index-based currency is a country-specific fictitious
currency which is required in some countries with high inflation for external
reporting (for example, tax returns).
Global company currency: Global company currency is the currency which is
used for an internal trading partner. Maintaining the two parallel currencies

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 Notes on SAP FICO

would highly impact the system performance as the system is preparing

additional two ledgers, besides the normal ledger.

Note:
Index-based currency and Hard currency are maintained at country key level
(T.code: OY01)
Group Currency will update from the client currency (T.code: SCC4).
Global Company currency is maintained at company level (T.code: OX15).

NON-LEADING LEDGER

Currency types in non-leading should be in line to leading ledger currency types

i.e. currency types maintained at leading ledger and non-leading ledger is same.

Integration:

At what level is the FI-MM, FI-SD account determination settings?

They are at the chart of accounts level.

How do you go about setting the FI MM account determination?

FI MM settings are maintained in transaction code OBYC. Within these there are
various transaction keys to be maintained like BSX, WRX, GBB, PRD etc. In each
of these transaction keys you specify the GL accounts which get automatically
passed at the time of entry. Few examples could be: BSX- Stands for Inventory
Posting Debit GBB-Stands for Goods Issue/Scrapping/delivery of goods etc PRD-
Stands for Price Differences.

Can we change the valuation class in the material master once it is

assigned?

Once a material is assigned to a valuation class in the material master record, we

can change it only if the stocks for that material are nil. If the stock exists for that
material, then we cannot change the valuation class. In such a case, if the stock
exists, we have to transfer the stocks or issue the stocks and make the stock nil for
the specific valuation class. Then only we will be able to change the valuation
class.

What is Valuation and Account assignment in SAP?

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 Notes on SAP FICO

This is actually the link between Materials Management and Finance. The
valuation in SAP can be at the plant level or the company code level. If you define
valuation at the plant level then you can have different prices for the same
material in the various plants. If you keep it at the company code level you can
have only price across all plants. Valuation also involves the Price Control .Each
material is assigned to a material type in Materials Management and every
material is valuated either in Moving Average Price or Standard Price in SAP.
These are the two types of price control available.

What is Valuation Class?

The Valuation Class in the Accounting View in Material Master is the main link
between Material Master and Finance. This Valuation Class along with the
combination of the transaction keys (BSX, WRX, GBB, and PRD) defined above
determines the GL account during posting.

We can group together different materials with similar properties by valuation

class.

E.g.: Raw material, Finished Goods, Semi Finished. We can define the following
assignments in customizing:

All materials with same material type are assigned to just one valuation class.

Different materials with the same material type can be assigned to different
valuation classes.

Materials with different material types are assigned to a single valuation class.

Does the moving average price change in the material master during issue
of the stock assuming that the price control for the material is Moving
Average?

The moving average price in the case of goods issue remains unchanged. Goods
issues are always valuated at the current moving average price. It is only in goods
receipt that the moving average price might change. A goods issue only reduces
the total quantity and the total value in relation to the price and the moving price
remains unchanged.

What is the accounting entry in the financial books of accounts when the
goods are received in unrestricted use stock? Also mention the settings to
be done in the Automatic postings in SAP for the specific G/L accounts?

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 Notes on SAP FICO

On receipt of the goods in unrestricted-use stock, the Inventory account is

debited and the GR/IR account gets credited. In customization, in the automatic
postings, the Inventory G/L account is assigned to the Transaction event key BSX
and the GR/IR account is assigned to the Transaction event key WRX.

What is the procedure in SAP for initial stock uploading? Mention the
accounting entries also?

Initial stock uploading in SAP from the legacy system is done with inventory
movement type 561(a MM transaction which is performed).

Material valuated at standard price: For a material valuated at standard price, the
initial entry of inventory data is evaluated on the basis of standard price in the
material master. If you enter an alternative value at the time of the movement
type 561, then the system posts the difference to the price difference account.
Material valuated at moving average price. The initial entry of inventory data is
valuated as follows:

If you enter a value when uploading the initial data, the quantity entered is
valuated at this price.

If you do not enter a value when entering initial data, then the quantity entered
is valuated at the MAP present in the material master.

The accounting entries are: Inventory account is debited and Inventory Historical
upload account is credited

To know the link between FI-MM-SD, we should know the link between
SD-MM, Next the link between SD-FI, later FI-MM and at last FI-SD
integrations.

Link between SD and MM:

When you create sales order in SD, all the details of the items are copied from
Material master of MM.
MRP and availability check related data is also taken from MM although you
control this data in SD also.
While you create inbound/outbound delivery with reference to a sales order, the
shipping point determination takes place with the help of the loading group,
plant data, shipping conditions etc. This also refers to Material Master.
The material which you are entering in a sales order must be extended to the
sales area of your sales order/customer otherwise you cannot transact with this
material.

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 Notes on SAP FICO

Note: There are many such links between SD and MM.

Link between SD and FI:

Whenever you create a delivery with reference to a sales order, goods movement
takes place in the background. E.g. In case of standard sales order, you create an
outbound goods delivery to the customer.
Here movement 601 takes place. This movement is configured in MM. Also, this
movement hits some G/L account in FI. Every such movement of good s hits
some G/L account.
The accounts posting in FI is done with reference to the billing documents
(invoice, debit note, credit note etc) created in SD. Thus this is a link between SD
and FI
Tax determination: In case of a tax determination also, there is a direct link
between SD and MM

Note: SD Integration points with other modules. SD module is highly integrated

with the other modules in SAP.

Link between FI-MM:

Transaction code : OBYC (in easy access)

In this transaction we have to specify GL account codes for material valuation
created by MM consultants. The process in MM is here below,
Purchase Order : Tr code ME21N - here no integration required with FI
Goods Issue : Tr Code MIGO - here no integration with FI
Invoice Receipt - Tr Code MIRO - here when the invoice is received & MM
process the transaction based on OBYC configuration system will generate FI
document. System also generates Material document as well
Payment : Tr code F110 - Here also the the transaction affects FI

Link between FI-SD:

This integration is done by using Tr Code VKOA. Here we have to define GL

account codes to Condition types. The process is here below,
SD Raises Sales Order - No implication in FI
SD raises Delivery doc - No implication in FI
SD processes billing - no implication in FI
SD releases billing doc to FI - FI document gets generated (Tr Code VFX3)

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