FI Configuration-08: Define Document Number Range

The document number range in SAP is used to define the allowable range (number interval) in which an SAP document number must be positioned and cannot overlap. It is used in all SAP modules, for example in Material Management (MM), we must assign a number range to Purchase Requisition (PR), Request For Quotation (RFQ), Purchase Order (PO), Outline Agreement documents, etc; in Sales Distribution (SD) we must assign a number range to Quotation, Sales Order, Delivery Order, Billing documents, etc. In FI module we must also assign number range to several FI documents, such as Customer Invoice, Customer Credit Memo, Customer Payment, Vendor Invoice, Vendor Credit Memo, Vendor Payment, G/L Account Posting documents.

The number range can be: Continue reading

FI Configuration-07: Posting Periods

In the previous article we have defined fiscal year variant that determines the beginning and end of fiscal year; the number of “normal” and “special” posting periods; and the posting period length. For every company code, we must assign a fiscal year variant to it.

Now, we will explain about the posting period. What exactly is posting period? Posting period is a period within a fiscal year, such as a particular month, for which SAP transaction figures are updated. Every SAP transaction that is posted is assigned to a particular posting period. The transaction figures are then updated for this period.

By dividing a fiscal year into some posting periods, we can restrict that at a point of time we can only post to a certain periods, so we can do the closing process. After performing a closing procedure at the end of a certain period, we can then restrict that we can not post to the previous period, so (as usually required by management and law) the figure of our financial statement at the end of that period stays the same, does not change since then.

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FI Configuration-06: Maintain Fiscal Year Variant and Assign it to Company Code

The fiscal year is a period for which company produces financial statement, such as one year (from January 1st to December 31st; or April 1st to March 31st; or other period) that can be divided into 12 shorter periods, such as months.

In a company, usually there is a need to record the business transactions in a certain period that might be separated with similar business transactions in other period. For example, for internal purpose, a company usually generates a report that summarizes the Cost of Goods Sold (COGS), operational expenses, or sales revenue on a monthly basis, so it can be used by management to make business decisions.

In SAP FI module, to separate business transactions into different periods, we must define a fiscal year with its posting periods.

The fiscal year is defined as a variant. With variant principle in SAP R/3, we can assign special properties to one or more R/3-objects. For example we can define a fiscal year variant, define properties to that variant (such as the number of the posting periods), and assign it to multiple company codes.

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FI Configuration-05: Define Retained Earnings Account

If you’re new to accounting, you should read our article about Financial Reports (Balance sheet and Profit & Loss Statement).

Retained earning account is an Equity account (of a Balance sheet) that records cumulative (from year to year) net income/loss which is retained by the corporation rather than distributed to its owners as dividends.

In the closing procedure of financial report (e.g. annually), the balance of Profit & Loss (P&L;) Statement accounts are carried forward to a retained earnings account, and the Profit/Loss statement accounts is set to zero.

Retained Earning = Retained Earning from previous period + Net Income – Dividends.

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FI Configuration-04: Define Account Group

Account group is a group of General Ledger (G/L) accounts that has same characteristic in term of:

  • the number interval in which the G/L accounts have.
  • which fields are suppressed/required/optional/displayed entries when creating and changing master records.

When we create a G/L account, we must specify the account group of that G/L account.

We use account groups to combine G/L accounts according to the above characteristics. For example, we define an account group for Current Assets, an account group for Fixed Assets, an account group for Liabilities, an account group for Equity, and other account group for P&L; accounts. You can define your own account group according to your accounting business process needs.

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