There are many transactions in Material Management (MM) that relevant for Accounting. These transactions must be recorded in accounting documents that contain the postings made to the G/L accounts in Financial Accounting (FI). The mostly used MM transactions that relevant for FI can be seen at Accounting Journals of SAP Material Management (MM) Transactions.

For those transactions, as far as possible, the SAP R/3 System should determine automatically the G/L account numbers that are involved in the accounting journal. By doing so, we can minimize the inputs and error possibilities made by MM end-users who perform the transactions as they don’t determine the G/L account numbers.

We can do this by Automatic Account Determination process in MM configuration (T-code: SPRO). The automatic account determination process must be done together with Accounting Department.

The influencing factors that determine how SAP choose the G/L account numbers that are involved in the accounting journal for MM transactions are: Continue reading →

Accounting (FICO) Journals of SAP Material Management (MM) Transactions

SAP R/3 is an Enterprise Resource Planning (ERP) software that makes an enterprise able to integrate all of its business processes so it can be run more efficient. It can reduce the duplication of data and process. Data recorded by one department can be used by other departments in a real-time process. As an example we will explain the typical business process in an enterprise.

Demand for finished products from customer will be recorded by Sales department in a sales order document. Sales order data can be analyzed by Inventory department. If there are not enough finished products in current stock, the sales order can trigger a production order that request the Production department to start producing the finished products. In order to produce the finished products maybe it requires some raw materials that have to be bought from vendors. The production order can trigger a purchase requisition for the raw materials. The purchase requisition will be processed by Procurement department to be a purchase order that is sent to vendor. Vendor will deliver the raw materials and Inventory department will receive them. Accounting department will record the vendor’s invoice and Finance department will process the payment. Once the raw materials are available, the Production process begins. Then the finished products will be delivered to the customer, and Finance department will send invoice to the customer.All of the above processes need man powers that are managed by HR department and paid by Payroll Accounting department.

All of the above processes can be recorded by SAP R/3 in: Continue reading →

Goods Issue(GI)
T-Code used: MIGO or MB1A.

The Goods Issue transaction will trigger cost accounting process. Cost accounting will record the expense occurred from the goods issue transaction whether it will be charged to cost center, cost of goods sold, or other objects.

The required field that must be filled in all Goods Issue process:

• Material number which will be issued
• Quantity issued
• Plant from where the material issued
• Storage location from where the material issued

Continue reading →

GR for initial entry for stock balance (movement type: 561).

T-Code used: MIGO or MB1C.

In the GR for initial entry for stock balance transaction, no physical movements actually take place.

The the typical accounting journal is: Continue reading →