BBP - Fico - V 2.0

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Project: XXXXX
ABC PHARMA LTD
Business Blueprint
Financial Accounting and controlling (FICO)
BBP_FICO_V.2.0
SIGNATORY
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TITLE
DATE
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Reviewed/
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Business Blue Print

DOCUMENT NUMBER:BBP_FICO_V.1
PAGE:
2 of 207
TITLE: Business Blue Print

ADDENDUM/AMENDMENT #:
SUPERSEDES:
TABLE OF CONTENTS
1.
INTRODUCTION
2.
FINANCIAL ACCOUNTING KEY COMPONENTS
2.1
2.2
3.
ENTERPRISE STRUCTURE
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
3.10
3.11
3.12
3.13
3.14
3.15
3.16
4.
CONTROLLING AREA
COMPANY CODE
FISCAL YEAR VARIANT
POSTING PERIOD VARIANT
SALES ORGANIZATION
DIVISIONS
PLANTS
PURCHASING ORGANIZATION
PURCHASE GROUPS
CHART OF ACCOUNTS
CREDIT CONTROL AREA
CONTROLLING AREA
COST CENTER ACCOUNTING
PROFIT CENTERS
OPERATING CONCERN
SEGMENTS
GENERAL SETTINGS
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13
5.
FI MODULE OVERVIEW
CO MODULE OVERVIEW
CURRENCY
DOCUMENT TYPES
DOCUMENT NUMBERING
POSTING KEY
FOREIGN EXCHANGE RATES
FIELD STATUS GROUP (FI DOCUMENT ENTRY)
TOLERANCE GROUPS
TOLERANCE GROUPS FOR G/L ACCOUNTS
INTEREST CALCULATION
OPEN AND CLOSE POSTING PERIODS
TAX PROCEDURE
NEW GL WITH DOCUMENT SPLITTING
RETAINED EARNINGS ACCOUNT
FI CO MASTER DATA
5.1
5.2
GENERAL LEDGER
CUSTOMER ACCOUNT
Revision Date: Tuesday, December 22, 2015
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5.3
5.4
5.5
5.6
5.7
5.8
5.9
5.10
5.11
5.12
5.13
6.
VENDOR ACCOUNT
BANK ACCOUNTING
HOUSE BANKS
FIXED ASSETS
COST ELEMENTS
COST CENTER
ACTIVITY TYPES
INTERNAL ORDER
PROFIT CENTERS
PRODUCT COST CONTROLLING
MATERIAL MASTER
FI - BUSINESS PROCESSES
6.1
6.1.1
6.1.2
6.1.3
6.1.4
6.1.5
6.1.6
6.1.7
6.1.8
6.1.9
6.1.10
6.1.11
6.1.12
6.1.13
6.1.14
6.1.15
6.2
6.2.1
6.2.2
6.2.3
6.2.4
6.2.5
6.2.6
6.2.7
6.2.8
6.2.9
6.2.10
6.2.11
6.2.12
6.3
6.3.1
6.3.2
6.3.3
6.3.4
6.3.5
GENERAL LEDGER ACCOUNTING

POSTING GENERAL LEDGER JOURNAL VOUCHERS
FAST ENTRY SCREENS
RECURRING ENTRIES
SAMPLE DOCUMENTS
PARKING AND POSTING PARKED DOCUMENTS
POSTING PARKED DOCUMENTS
CLEARING OF LINE ITEMS
PARTIAL CLEARING
RESIDUAL CLEARING
VALIDATION IN ACCOUNTING DOCUMENTS
ACCOUNT ASSIGNMENT MODEL /TEMPLATES
VALUATION OF G/L ACCOUNTS IN FOREIGN CURRENCY
FINANCIAL STATEMENT VERSIONS
CLOSING OPERATIONS
GL PROCESS STEPS
ACCOUNTS RECEIVABLE
SALES INVOICES POSTING TO ACCOUNTING
CASH / CHECK RECEIPTS FROM CUSTOMER
POST DATED CHECK FROM CUSTOMER
BILLS OF EXCHANGE / LETTERS OF CREDIT FROM CUSTOMERS
CREDIT MEMO PROCESSING
CUSTOMER DOWN PAYMENT
CUSTOMER INCOMING PAYMENT
USAGE OF BILLS OF EXCHANGE/ LETTERS OF CREDIT FROM CUSTOMERS
DUNNING CUSTOMERS FOR OVERDUE RECEIVABLES
CREDIT MANAGEMENT
AR CLOSING OPERATIONS
AR PROCESS STEPS
ACCOUNTS PAYABLE
VENDOR INVOICE WITHOUT PURCHASE ORDER (DIRECT EXP. BOOKING)
GOODS RECEIPT BASED VENDOR INVOICE VERIFICATION
GR BASED VENDOR INVOICE VERIFICATION FOR IMPORTS
INVOICE FOR DELIVERY COSTS
PAYMENTS TO VENDORS
SUPERSEDES:
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6.3.6
6.3.7
6.3.8
6.3.9
6.3.10
6.3.11
6.4
6.4.1
6.4.2
6.4.3
6.4.4
6.5
6.5.1
6.5.2
6.5.3
6.5.4
6.5.5
6.5.6
6.5.7
6.5.8
6.5.9
6.5.10
6.5.11
6.5.12
6.5.13
6.5.14
6.5.15
6.5.16
7
7.1
7.1.1
7.1.2
7.2
7.3
7.4
7.5
7.5.1
7.5.2
7.6
7.7
7.8
7.9
7.9.1
7.9.2
7.9.3
7.9.4
7.9.5
7.10
DOWN PAYMENT TO VENDORS

TAX DEDUCTED AT SOURCE (TDS)
VALUATION OF FOREIGN CURRENCY OPEN ITEMS
LOANS / ADVANCE TO EMPLOYEES
CLOSING OPERATIONS
AP PROCESS STEPS
GENERAL FINANCE PROCESS
DOCUMENT CHANGE
DOCUMENT REVERSAL
OPEN ITEM CLEARING
TAXES
FIXED ASSET ACCOUNTING
CHART OF DEPRECIATION
CALCULATION OF DEPRECIATION
DEPRECIATION KEY
CUTOFF VALUE KEY
ACQUISITION OF FIXED ASSET
ASSETS UNDER CONSTRUCTION ACCUMULATION AND CAPITALIZATION
EVALUATION GROUPS
ASSET TRANSFER PROCEDURES
TREATMENT OF LOW VALUE ASSET
INSURANCE
SALE / RETIREMENT / SCRAPPING OF FIXED ASSET
POSTING OF DEPRECIATION
DOWN PAYMENT FOR CAPITAL (TANGIBLE) ASSETS
PHYSICAL INVENTORY OF ASSETS
CLOSING OPERATIONS
ASSET ACCOUNTING PROCESS STEPS
CO BUSINESS PROCESS
COST CENTER PLANNING
COST ELEMENTS / ACTIVITY INPUT PLANNING
COST ELEMENTS WISE ACTIVITY DEPENDENT PLANNING
ACTIVITY OUTPUT / PRICES
ACTIVITY OUTPUT PLANNING FOR A COST CENTER
STATISTICAL KEY FIGURE PLANNING
COST CENTER ALLOCATIONS
ASSESSMENT
DISTRIBUTION
AUTOMATIC ACCOUNT ASSIGNMENTS
ACTUAL POSTING IN COST CENTER ACCOUNTING
PERIOD END CLOSING ACTIVITIES IN COST CENTER ACCOUNTING
INTERNAL ORDER ACCOUNTING
INTERNAL ORDER MASTER MAINTENANCE
BUDGET MANAGEMENT FOR INTERNAL ORDERS
AVAILABILITY CONTROL FOR INTERNAL ORDERS
ACTUAL POSTING TO INTERNAL ORDER
INTERNAL ORDER PERIOD END CLOSING ACTIVITIES
SUPERSEDES:
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102
102
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7.10.1
7.10.2
7.11
7.12
5.3.1
7.13
7.14
7.15
7.15.1
7.15.2
7.15.3
7.15.4
7.15.5
7.15.6
7.16
7.16.1
7.16.2
7.16.3
7.16.4
7.16.5
7.16.6
8
INTEGRATION
7.1
7.2
7.3
7.4
7.5
7.6
7.7
PRODUCT COST PLANNING

PRODUCT COSTING
BATCH VALUATION
COSTING OF PROCESS ORDERS
WORK IN PROCESS CALCULATION
VARIANCE CALCULATION
PROFIT CENTER ACCOUNTING
STANDARD HIERARCHY
PROFIT CENTER ASSIGNMENTS
PROFIT CENTER PLANNING
AUTOMATIC DERIVATION OF PROFIT CENTER IN ACTUAL TRANSACTIONS
ACTUAL POSTING IN PROFIT CENTRE ACCOUNTING
PROFIT CENTRE ACCOUNT ANALYSIS
PROFITABILITY ANALYSIS (CO-PA)
OPERATING CONCERN:
DATA STRUCTURE
CHARACTERISTICS:
VALUE FIELDS:
FLOW OF ACTUAL VALUES INTO PROFITABILITY SEGMENTS:
INFORMATION SYSTEM IN CO-PA:
CHART OF ACCOUNTS:
GENERAL LEDGER ACCOUNT:
FI CO INTEGRATION:
MM FI INTEGRATION:
SD FI INTEGRATION:
PRODUCTION PLANNING
HR FI INTEGRATION:
SCRIPTS & REPORTS REQUIREMENTS AND WORKAROUNDS

9.1
REPORTS REQUIREMENTS
SUPERSEDES:
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137
140
144
145
146
146
147
148
149
152
153
155
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156
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157
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159
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187
187
10. FUNCTIONAL REQUIREMENTS AND WORKAROUNDS
191
11. AUTHORIZATION CONSIDERATION
197
12. MASTER DATA CONSIDERATION
197
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SUPERSEDES:
1. Introduction
The purpose of this document is to compile the requirements gathered during business process design
workshops and it documents the business process requirements of the company. With this, you can better
understand how the company intends to run its business within the SAP System.
This document describes the design of the proposed solution and implications for the business process. This
document is to communicate the new business solution and expected changes to the business process. The
information needs to include:
Enterprise organizational structures
The proposed integrated business processes
Associated function definitions
Business requirements in term of reports/script and functionality
Authorizations
With the information conveyed by this document, the business should be able to approve the proposed
solution. The Process Definition Document becomes the master deliverable/document, which serves as a
basis for the entire project.
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SUPERSEDES:
2. Financial Accounting Key Components

The Financial Accounting Module is a complete accounting system capable of recording all business
transactions. The system has the following features:
1. Powerful tools for real-time evaluation and reporting of current accounting data.
2. Comprehensive tools (balance lists, journals, balance audit trails and other standard reports) for
documenting accounts.
2.1
FI Module Overview
Financial Accounting having the following sub-modules

General Ledger Accounting
Accounts Receivables
Accounts payables
Fixed Assets
Bank Accounting
Periodic Processing
FI is being used for external / statutory reporting. Financial Statements are prepared through financial
accounting. FI is being integrated with all other SAP Modules. Necessary Accounting entries are being posted
automatically, based on the business process requirements.
2.2
CO Module Overview
Controlling provides you with information for management decision-making. It facilitates coordination,
monitoring and optimization of all processes in an organization. This involves recording both the consumption
of production factors and the services provided by an organization.
As well as documenting actual events, the main task of Controlling is planning. You can determine variances
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by comparing actual data with plan data. These variance calculations enable you to control business flows.
Income statements are used to control the cost efficiency of individual areas of an organization, as well as the
entire organization. The various components of CO include:
Cost and Revenue Element Accounting
Cost and Revenue Element Accounting provides you with an overview of the costs and revenues that occur in
an organization. It provides the structure for the assignment of CO data through the classification of transaction
line items according to the nature of the cost or revenue posting to an object in CO. Most of the values are
moved automatically from Financial Accounting to Controlling.
Cost Center Accounting

This component is used to track the occurrence of costs in the organization. As costs are incurred, they are
assigned or posted to the appropriate Cost Center. The posting and assignment of costs to Cost Centers not
only makes Managerial Accounting possible but is a vital step in using other CO components. The standard
hierarchy of the CO Area includes all Cost Centers and provides the ability to analyze costs at different
positions.
Internal Orders
It is a very flexible tool that can be used for a wide variety of purposes to collect costs and also Revenues, it
provides capabilities for planning and monitoring and allocation of costs. While Overhead Orders are used to
monitor overhead costs for particular purposes, Investment Orders are used to collect costs incurred in the
creation of a Fixed Asset
Product Cost Controlling
It is concerned with all aspects of planning the cost of producing products as well as analyzing and tracking the
actual costs in the production process. It has the following sub-components
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a. Product cost planning refers to the creation of cost estimates for the production of goods.
b. Cost Object Controlling where the actual costs incurred in the production of a good is collected using
Process Orders. It also provides the tools for calculating the Work in Process and the variances at the period
end closing.
Profitability Analysis (CO-PA)

Profitability Analysis analyzes the profit or loss of an organization by individual market segments. The system
allocates the corresponding costs to the revenues for each market segment. Profitability Analysis provides a
basis for decision-making, for example, for price determination, customer selection, conditioning, and for
choosing the distribution channel.
Profit Center Accounting (EC-PCA)
It lets you analyze internal profit and losses so that evaluating different areas or units within an organization is
possible. Profit Structure can be structured according to the region, function or product classifications.
3. Enterprise Structure
Within the Financial Accounting Module, specific high-level organizational structures are defined. These
Enterprise Structures provide a direction for how the solution operates and how business functions, data and
reporting are defined.
The Enterprise Structure in SAP Financial Accounting and integrated Modules consists of the following
3.1
Controlling Area
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Controlling Areas is an organizational unit within an Organization. Controlling Areas is being used to represent
a closed system for cost accounting purposes. Controlling Areas is used for internal reporting purposes.
Multiple Company Codes can be used same Controlling Area, to have a uniform Costing Systems in place. All
the company codes in the controlling area must use one Chart of Accounts and Fiscal Year Variant.
Controlling Area 1000- ABC - Standard Hierarchy are to be used for all Company Codes
SL No
Controlling
Area
1000
1000
Hyderabad Chemicals Limited
1000
2000
Hyderabad Chemical Products Limited
1000
3000
Neo Seeds India Limited
3.2
Company code
Company Code name
Company Code
Company Code is the Organizational Unit of Financial Accounting for which a complete self-contained set of
accounts can be drawn up for purposes of external reporting. This includes recording of all relevant
transactions and generating all supporting documents required for financial statements. At each Company
Code level Balance Sheet and Profit and Loss Account and all financial statements can be generated.
Statements required for Legal Reporting can be generated / balanced at Company Code level. Company code
is used for various processes within Financial Accounting in order to balance entries, post transactions and
manage security.
ABC group will be using three Company Codes.
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SUPERSEDES:
SL No
Company Code ID
Company Code Description
1000
2000
3000
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3.3
SUPERSEDES:
Fiscal Year Variant
Fiscal year variant represents the accounting period as per the financial year of an organization. A fiscal year
is usually for 12 months (12 periods). A fiscal year need not correspond to the calendar year. The fiscal year
variant specifies the number of posting periods and special periods in a fiscal year. The fiscal year variant also
determines the posting periods during posting.
In addition to the normal 12 posting periods, SAP supports additional 4 months to post the Book Closure, Audit
and Year end entries.
Fiscal year variant can be as follows for different company codes of Hyderabad
Chemicals as follows
Sl. No.
Fiscal
Variant
V3
V3
V3
3.4
Year
Company Code
Company Code Description and Country
1000
2000
Apr to March , 4 Special Periods

3000
Posting Period Variant
The Financial Year of the organization is split into different posting periods based on the fiscal year Variant.
The transaction postings in a company code are controlled through the Posting Period Variant. A separate
posting period variant is defined for each company code. The name of the variant corresponds to the name of
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the company code. Through this posting period variant, one can specify which periods are open for posting.
Each month can be considered as one posing period. The following Posting Period Variants are required to
control the posting period.
Sl
No
1
2
3
3.5
Company Code
Posting period Variant
Description
1000
2000
3000
1000
2000
3000
PP Variant for 1000

PP Variant for 2000
PP Variant for 3000
Sales Organization
A sales organization is responsible for the sale and distribution of goods and services. It is an organizational
unit within logistics that structures the company according to its sales requirements. The Sales Organizations
for ABC are:
The Sales Organizations are:
Company Code
Sales Org Code
Sales Organization Description
1000
1000
2000
2000
3000
3000
1000
1500
2000
2500
3000
3500
Domestic Sales Organization ABC

Export Sales Organization-----ABC
Domestic Sales Organization HCPL
Export Sales Organization-----HCPL
Domestic Sales Organization -- Neo Seeds
Export Sales Organization Neo Seeds
3.6
Divisions
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A division can be defined as a Product group or business segment or line of business that could be made up of
a wide-ranging spectrum of products. This entity normally groups together saleable materials and services for
the purpose of responsibility and analysis.
Division
Description
10
11
12
Pesticides(insecticides/fungicides/weedicides ,etc)
Bio Fertilizers ,
Soluble Fertilizers
13
14
15
Bio Pesticides
Power
Agri Farms
20
Active Ingredients
21
22
23
Bulk Formulations
By Products
Miscellaneous ( Packing mat/Assets /Raw)
30
31
Germ plasm
Breeder seed
32
33
34
Foundation (Certified/Truthful)
Hybrid seeds
OP seeds (Certified/Truthful)
35
00
Reminent Seeds
Common division
3.7
Plants
Plant is an operational unit within a Company Code. A Plant is an organizational unit that structures the
enterprise from the production, procurement, distribution, Stock Storage Area and Inventory Management. The
following are the plants in Hyderabad Chemicals Limited.
S no
1
Company
1000
Plant
1100
Description
Plant Location
Balanagar
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S no
Company
Plant
SUPERSEDES:
Description
Plant Location
Jammu
1000
1200
1000
1800

Wind Power,Kadavakallu ,Anathapur Dist ,AP
(ABC)
1000
1801
Wind Power , Lathur ,Maharashtra (ABC)
Lathur
1000
1900
Agri Farms, Achampet Mahabubnagar , AP
Achampet
2000
2100
Hyderabad Chemicals Products Limited
Pashamayalaram
2000
2200
Humnabad
2000
2800
Hyderabad Chemicals Products Limited

Wind Power, Kadavakallu ,Anathapur Dist ,AP
(HCPL)
2000
2801
Wind Power , Lathur ,Maharashtra ( HCPL)
Lathur
10
2000
2802
Wind Power , Tamil Nadu (HCPL)
Tamil Nadu
11
2000
2900
Achampet
12
2000
2901
Agri Farms , Gomaram, Medak , AP
Gomaram
13
2000
2902
Agri Farms ,Kalakal, Medak,AP
Kalakal
14
3000
3100
Medchal
15
3000
3900
Agri Farms , Masaiapet , Medak .AP
Masaiapet
Description
ABC Depot
ABC Depot
ABC Depot
ABC Depot
ABC Depot
ABC Depot
ABC Depot
ABC Depot
ABC Depot
ABC Depot
ABC Depot
ABC Depot
ABC Depot
ABC Depot
ABC Depot
ABC Depot
ABC Depot
ABC Depot
Plant Location
Hyderabad
Nandyal
Rajahmundry
Guntur
Vijayawada
Warangal
Nellore
Khammam
Toophranpet
Cuttack
Bellary
Gulbarga
Sindhanur
Hubli
Erode
Indore
Akola
Sholapur
Ananthapur
Ananthpur
Depots (Plant)
S no
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
Company
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
Plant
7101
7102
7103
7104
7105
7106
7107
7108
7109
7110
7151
7152
7153
7154
7155
7156
7157
7158
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S no
34
35
36
37
38
39
40
41
42
43
S no
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
Company
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
Company
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
2000
3000
3000
3000
3000
3000
3000
3000
3000
3000
3000
3000
3000
3000
3000
3000
Plant
7159
7160
7176
7177
7178
7179
7180
7181
7182
7183
Plant
7210
7251
7252
7253
7255
7256
7257
7259
7260
7261
7276
7277
7278
7284
7301
7302
7303
7304
7305
7306
7307
7308
7309
7310
7353
7354
7356
7357
7358
SUPERSEDES:
Description
ABC Depot
ABC Depot
ABC Depot
ABC Depot
ABC Depot
ABC Depot
ABC Depot
ABC Depot
ABC Depot
ABC Depot
Description
HCPL Depot
HCPL Depot
HCPL Depot
HCPL Depot
HCPL Depot
HCPL Depot
HCPL Depot
HCPL Depot
HCPL Depot
HCPL Depot
HCPL Depot
HCPL Depot
HCPL Depot
HCPL Depot
Neo Seeds Depot
Neo Seeds Depot
Neo Seeds Depot
Neo Seeds Depot
Neo Seeds Depot
Neo Seeds Depot
Neo Seeds Depot
Neo Seeds Depot
Neo Seeds Depot
Neo Seeds Depot
Neo Seeds Depot
Neo Seeds Depot
Neo Seeds Depot
Neo Seeds Depot
Neo Seeds Depot
Plant Location
Rajkot
Ahmadabad
Sirsa
Bathinda
Sri Ganganagar
Ghaziabad
Ludhiana
Hissar
Rudrapur
Lucknow
Plant Location
Cuttack
Bellary
Gulbarga
Sindhanur
Erode
Indore
Akola
Rajkot
Ahmadabad
Yanam
Sirsa
Bathinda
Sri Ganganagar
Delhi
Hyderabad
Nandyal
Rajahmundry
Guntur
Vijayawada
Warangal
Nellore
khammam
Toophranpet
Cuttack
Sindhanur
Hubli
Indore
Akola
Sholapur
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73
74
3000
3000
7377
7381
Neo Seeds Depot

Neo Seeds Depot
SUPERSEDES:
Bathinda
Hissar
Logical Plants (Bonded Warehouse)

S no
75
76
77
78
79
80
3.8
Company
1000
1000
1000
2000
2000
2000
Plant
8101
8102
8103
8201
8202
8203
Description
ICD
CFS
Navaseva
ICD
CFS
Navaseva
Plant Location
Hyderabad
Chennai
Mumbai
Hyderabad
Chennai
Mumbai
Purchasing Organization
Purchasing organization is an organizational unit responsible for procuring materials or services for one or
more plants and for negotiating general conditions of purchase with vendors. The purchasing organization
assumes legal responsibility for all external purchase transactions. ABC will have the following Purchasing
Organizations
Purchase Org.
Description
1000
Central Purchase Organization
1100
Plant specific Purchase Organization Balanagar
1200
Plant specific Purchase Organization Jammu
2100
Plant specific Purchase Organization Pashamayalaram
2200
Plant specific Purchase Organization Humanabad
3100
Plant specific Purchase Organization Medchal
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3.9
SUPERSEDES:
Purchase Groups
Purchasing group: The purchasing organization is further subdivided into purchasing groups (buyer groups),
which are responsible for day-to-day buying activities.
A purchasing group can also act for several purchasing organizations.
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3.10
Purchasing Group
Description
P01
Purchase Group 001
P02
Purchase Group 002
P03
Purchase Group 003
P04
Purchase Group 004
P05
Purchase Group 005
P06
Stores 001
P07
Stores 002
P08
Stores 003
P09
Stores Jammu
P10
Production 001
P11
Quality Dept 001
P12
P & M 001
P13
Wind Mill
P14
A& F
P75
Sub Contracting
P80
Services
P90
Stock Transfer
P99
Transportation
SUPERSEDES:
C
h
ar
t
of
Accounts
A chart of accounts provides a framework for the recording of values, in order to ensure an orderly rendering of
accounting data. The general ledger accounts they contain are used by one or more company codes.
Hyderabad Chemicals Limited will operate under the single chart of accounts that will be centrally maintained.
Chart of Account 1000 Chart of Account is to be defined to meet the requirements of Hyderabad
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SUPERSEDES:
Chemicals
SL No
Chart of Accounts
1000
Description
Hyderabad Chemicals
Chart of Account is having the following Characters:

Length of GL Account ID
Language
8
English
The First Digit of the GL account number for ABC Group is as follows:
Sl.No
Group
1
2
3
4
Liabilities
Assets
Revenues
Material Consumption & Manufacturing Expenses, Administration and
Selling overheads
Chart of account 1000 will be used as Operative Chart of Account. Required GL Accounts will be created in
the Chart of Account.
3.11 Credit Control Area

It is an organizational unit that represents an area responsible for granting and monitoring credit. Credit
information can be made available per customer within a credit control area. For Hyderabad Chemicals
Limited, there will be Three Credit Control Areas
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SL No
Credit Controlling Area
1000
2000
3000
SUPERSEDES:
Credit Controlling Area Description

3.12 Controlling Area

Controlling provides you with information for management decision-making. It facilitates coordination,
of production factors and the services provided by an organization. Controlling Area 1000 ABC Group
Controlling Area will be defined to meeting the requirements of ABC group. All company codes will use the
one Controlling area.
As well as documenting actual events, the main task of Controlling is planning. You can determine variances
by comparing actual data with plan data. These variance calculations enable you to control business flows.
3.13 Cost Center Accounting

This component is used to track the occurrence of costs in the organization. As costs are
incurred, they are assigned or posted to the appropriate Cost Center. The posting and
assignment of costs to Cost Centers not only makes Managerial Accounting possible but is a vital
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SUPERSEDES:
step in using other CO components. The standard hierarchy of the CO Area includes all Cost
Centers and provides the ability to analyze costs at different positions.
SL.No. Controlling
Area
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
Cost
Centre
10000501
10000502
10000503
10000701
10000702
10000703
10000704
10000705
10000706
11000101
11000102
11000103
11000201
11000301
11000401
11000701
12000101
12000102
12000103
12000201
12000301
12000401
12000701
18000901
18000902
18000903
18000904
18000905
18010901
18010902
18010903
18010904
18010905
Name
Marketing -1
Marketing (KSV)
Testing (Marketing)
Finance
General Admn
HR
Insurance
Canteen
EDP
Production-1
Production-2
Production-3
Maintaince-1
QA
R&D
Finance (canteen)
Production-1
Production-2
Production-3
Maintaince-1
QA
R&D
Finance (canteen)
Machine
Machine
Machine
Machine
Machine
Machine
Machine
Machine
Machine
Machine
Profit Centre
1000
1000
1000
1000
1000
1000
1000
1000
1000
1100
1100
1100
1100
1100
1100
1100
1200
1200
1200
1200
1200
1200
1200
1800
1800
1800
1800
1800
1800
1800
1800
1800
1800
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34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
18010906
18010907
19001001
71010801
71010802
71020801
71020802
71030801
71030802
71040801
71040802
71050801
71050802
71060801
71060802
71070801
71070802
71080801
71080802
71090801
71090802
71100801
71100802
71510801
71510802
71520801
71520802
71530801
71530802
71540801
71540802
71550801
71550802
71560801
71560802
71570801
71570802
71580801
SUPERSEDES:
Machine
Machine
Agrifarms
Hyderabad
Hyderabad Jammu
Nandyal
Nandyal jammu
Rajahmundry
Rajahmundry
Jammu
Guntur
Guntur jammu
Vijayawada
Vijayawada jammu
Warangal
Warangal jammu
Nellore
Nellore jammu
khammam
khammam jammu
Toophranpet
Toophranpet jammu
Cuttack
Cuttack jammu
Ballary
Ballary-Jammu
Gulberga
Gulberga-Jammu
Sindhanoor
Sindhanoor-Jammu
Hubli
Hubli-Jammu
Erode
Erode-Jammu
Indore
Indore-Jammu
Akola
Akola-Jammu
Sholapur
1800
1800
1900
7101
7101
7102
7102
7103
7103
7104
7104
7105
7105
7106
7106
7107
7107
7108
7108
7109
7109
7110
7110
7151
7151
7152
7152
7153
7153
7154
7154
7155
7155
7156
7156
7157
7157
7158
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72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
SL.No.
1
6
7
8
9
10
11
12
13
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
Contriling
Area
1000
1000
1000
1000
1000
1000
1000
1000
1000
71580802
71590801
71590802
71600801
71600802
71760801
71760802
71770801
71770802
71780801
71780802
71790801
71790802
71800801
71800802
71810801
71810802
71820801
71820802
71830801
71830802
SUPERSEDES:
Sholapur-Jammu
Rajkot
Rajkot- Jammu
Ahmadabad
Ahmadabad-Jammu
sirsa
sirsa- Jammu
Batinda
Batinda-Jammu
Sri Ganganager
Sri GanganagerJammu
Gaziabad
Gaziabad-Jammu
Ludhiana
Ludhiana-Jammu
Hissar
Hissar-Jammu
Rudranager
Rudranager-Jammu
Lucknow
Lucknow-Jammu
Cost Centre
Name
20000501
20000601
20000602
20000701
20000702
20000703
20000704
20000705
20000706
Marketing -1
Purchase -1
Purchase -2
Finance & Admin -1
Finance & Admin -2
Finance & Admin -3
Finance & Admin -4
Finance & Admin -5
Finance & Admin -6
7158
7159
7159
7160
7160
7176
7176
7177
7177
7178
7178
7179
7179
7180
7180
7181
7181
7182
7182
7183
7183
Profit
Centre
2000
2000
2000
2000
2000
2000
2000
2000
2000
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14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
39
40
41
42
43
1000
1000
1000
1000
1000
SL.No.
Contriling
Area
20000707
21000101
21000201
21000301
21000401
21000701
21000702
22000101
22000201
22000301
22000401
22000701
22000702
72100526
72510511
72520512
72530513
72550515
72560516
72570517
72590519
72600520
72760521
72770522
72780523
72840531
28000901
29001001
29011001
29021001
Cost Centre
SUPERSEDES:
Finance & Admin -7
Production -1
Maintenance -1
QA-1
R & D-1
Finance & Admin -1
Finance & Admin -2
Production -1
Maintenance -1
QA-1
R & D-1
Finance & Admin -1
Finance & Admin -2
Cuttack Depo
Bellary Depo
Gulberga Depo
Sindhanoor Depo
Erode Depo
Indore Depo
Akola Depo
Rajkot Depo
Ahmedabad Depo
Sirsa Depo
Batinda Depo
Sri Ganganager
Depo
Delhi Depo
Wind Power
Agri Farms -1
Agri Farms -1
Agri Farms -1
Name
2000
2100
2100
2100
2100
2100
2100
2200
2200
2200
2200
2200
2200
7210
7251
7252
7253
7255
7256
7257
7259
7260
7276
7277
7278
7284
2800
2900
2901
2902
Profit
Centre
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1
2
1000
1000
30000501
30000601
1000
30000602
4
5
6
7
8
9
1000
1000
1000
1000
1000
1000
30000701
31000101
31000201
31000301
31000401
39001001
SUPERSEDES:
Marketing - 1
Purchase -1
Finance & Admin
-1
Finance & Admin
-2
Production -1
Maintenance -1
QA-1
R & D-1
Agri Farms -1
3000
3000
3000
3000
3100
3100
3100
3100
3900
3.14 Profit Centers
Profit Center analyzes internal profit and losses so that evaluating different areas or units within an
organization is possible. Profit Center Structure can be structured according to the region, function or product
classifications.
Sl.No.
Company Code
Profit Center
01
02
03
04
1000
1000
1000
1000
1000
1100
1200
1800
ABC Head Office

Balanagar Plant
Jammu Plant
Wind Power, Kadavakallu ,Anathapur Dist.AP
(ABC)
05
1000
1801
Wind Power ,Lathur ,Maharashtra (ABC)
Profit Center Description
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SUPERSEDES:
Sl.No.
Company Code
Profit Center
06
1000
1900
07
08
09
10
1000
2000
2000
2000
2000
2100
2200
2800
HCPL Head Office

Pashamayalaram Plant
Humnabad Plant
Wind Power, Kadavakallu ,Anathapur Dist.AP
(HCPL)
11
2000
2801
12
13
14
15
16
17
2000
2000
2000
2000
3000
3000
2802
2900
2901
2902
3000
3100
Wind Power , Lathur .Maharashtra

(HCPL)
Wind Power, Tamil Nadu (HCPL)
Agri Farms , Gomaram, Medak , AP
Agri Farms ,Kalakal, Medak,AP
Neo Seeds Head Office
Neo Seeds Medchal Plant
18
3000
3900
Agri Farms , Masaiapet , Medak .AP
Depot Profit Center

Sl.No.
Company Code
Profit Center
19
20
1000
1000
7101
Hyderabad
7102
Nandyal
21
1000
7103
Rajahmundry
22
1000
7104
Guntur
23
1000
7105
Vijayawada
24
1000
25
26
27
28
1000
1000
1000
1000
7106
7107
7108
7109
Warangal
Nellore
Khammam
Toophranpet
7110
Cuttack
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SUPERSEDES:
29
1000
7151
Bellary
30
1000
7152
Gulbarga
31
1000
7153
Sindhanur
32
1000
7154
Hubli
33
1000
7155
Erode
34
1000
7156
Indore
35
1000
7157
Akola
36
1000
7158
Sholapur
37
1000
7159
Rajkot2
38
1000
7160
Ahmadabad
39
1000
7176
Sirsa
40
1000
7177
Bathinda
41
1000
7178
Sri Ganganagar
42
1000
7179
Ghaziabad
43
1000
7180
Ludhiana
44
1000
7181
Hissar
45
1000
7182
Rudrapur
46
1000
7183
Lucknow
47
2000
7210
Cuttack
48
2000
7251
Bellary
49
2000
7252
Gulbarga
50
2000
7253
Sindhanur
51
2000
7255
Erode
52
2000
7256
Indore
53
2000
7257
Akola
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SUPERSEDES:
54
2000
7259
Rajkot
55
2000
7260
Ahmadabad
56
2000
7261
Yanam
57
2000
7276
Sirsa
58
2000
7277
Bathinda
59
2000
7278
Sri Ganganagar
60
2000
7284
Delhi
61
3000
7301
Hyderabad
62
3000
7302
Nandyal
63
3000
7303
Rajahmundry
64
3000
7304
Guntur
65
3000
7305
Vijayawada
66
3000
7306
Warangal
67
3000
7307
Nellore
68
3000
7308
khammam
69
3000
7309
Toophranpet
70
3000
7310
Cuttack
71
3000
7353
Sindhanur
72
3000
7354
Hubli
73
3000
7356
Indore
74
3000
7357
Akola
75
3000
7358
Sholapur
76
3000
7377
Bathinda
77
3000
7381
Hissar
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SUPERSEDES:
3.15 Operating Concern

Profitability Analysis analyzes the profit or loss of an organization by individual market segments. The system
allocates the corresponding costs to the revenues for each market segment. Profitability Analysis provides a
basis for decision-making, for example, for price determination, customer selection, conditioning, and for
choosing the distribution channel.
Operating concern is an organizational element to generate the Profitability Analysis reports. Based on the
ABCs requirements, 1000 will be defined as Operating Concern.
3.16 Segments
Segment is an Organizational unit for internal reporting. Segment is the can be an organizational unit or a
sales area or a division of the company. It has both the functionalities of the Business area as well as the Profit
Centre and it can be termed as an organization with in the main company code and is like a group of Profit
Centre. The segment as such is derived from the assigned profit centre. It can be used for Balance sheet and
Profit and Loss statement for internal reporting. It can span across company codes. ABCs line of Business for
each location (for chemicals, Agri Farms, wind power, seeds etc.) will be represented as Segment:
SL No
Segment
Code
Description
1000
Common Segment
1100
Chemicals
1200
Seeds
1300
Wind Mills
5
1400
Agri Farms
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SUPERSEDES:
4. General Settings
4.1
Currency
ABC will use Indian Rupees (INR) as the base currency. The Company will define all other currencies in
relation to the Indian Rupees. For Hyderabad Chemicals Industries INR currency will have the standard two
decimals.
4.2
Document types
Document types are required in R/3 system to create and post financial documents (e.g. Bank Payment
Voucher, Receipt Voucher etc.)
The document type controls the following:
Document Numbering
Account Types which can be entered in the Document (e.g. Vendors, Customers, General Ledger, Assets)
Apart from the key controls mentioned above, few other definitions are made at document type level for
the purpose of transactions processing which are driven by the business process needs.
Some of the document types are tabulated below:
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SUPERSEDES:
Document Type
Description
AA
Asset posting
AB
Accounting document
AF
Dep. postings
AN
Net Asset Posting
C0
Cash Voucher
C1
Cash Receipt
C2
Cash Payment
DA
Customer document
DG
CustomerCreditmemo
DR
Customer invoice
DZ
Customer payment
KA
Vendor document
KG
Vendor credit memo
KR
Vendor invoice
KZ
Vendor payment
RV
Billing Doc.transfer
SA
G/LAccountDocument
WA
Goods issue
WE
Goods receipt
X1
Recurring entry doc.
X2
Sample document
In addition to the above mentioned document types, ABC uses additional documents which
automatically triggers Sales and Distribution and materials management.
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4.3
SUPERSEDES:
Document Numbering
Each of the Documents defined would have identification no. R/3 system uses predefined number
ranges for the purpose. The number ranges may be defined to be internal i.e. automatically generated
by the system in chronological order. Alternatively they may be external i.e. entered by the transaction
user. The ABC will have an Internal numbering for all the documents. Number ranges are defined for
each of the company codes separately for a fiscal year. Each document type is then assigned with one
number range.
4.4
Posting Key
Posting Key controls Debit or Credit account indicator for each line item. The posting key also
describes the type of transaction that is entered in a line item and allowable account type, which may
be entered for the respective line item. Posting keys are defined at client level in R/3 system. The R/3
system provides certain predefined posting keys. These predefined posting keys would be used
wherever applicable. For every posting key, properties control the entry of the line item. The most
commonly used are:
Posting
keys
01
02
Debit/Credit
Account Types
D
D
D - Customers
D - Customers
09
Invoice
Reverse credit
memo
Special G/L debit
D - Customers
11
19
Credit memo
Special G/L credit
C
C
D - Customers
D - Customers
21
Credit memos
K Vendors
29
Special G/L debit
K Vendors
31
Invoice
K Vendors
32
Reverse credit
memo
K- Vendors
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4.5
SUPERSEDES:
Posting
keys
39
Debit/Credit
Account Types
Special G/L credit
K Vendors
40
Debit entry
S - General Ledger
50
Credit entry
S - General Ledger
70
Debit asset
A Assets
75
Credit asset
A Assets
Foreign Exchange Rates
The exchange rate would be referred for the purpose of financial transactions. Average Exchange rate for
conversion of each foreign currency into Indian Rupees quoted by bank i.e. State Bank would be entered on a
daily basis in the exchange rate master. The translation ratio for currency translation will be maintained as 1:1
for all the currencies. Indirect quotations would be maintained as the standard quotation for the exchange rate
for the currency INR.
The definition of exchange rate would be effective from a particular date. Only one exchange rate can be
maintained per currency on a particular date. If an exchange rate or the local and the foreign currency amount
were entered manually during document entry, then a comparison is made with the exchange rates stored in
the system.
Exchange Rate Type M- Average Rate Type is being used to convert the Foreign currency to INR i.e.
company currency.
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4.6
SUPERSEDES:
Field Status Group (FI Document Entry)
The field status group is being at the time of creation of GL Account Master. Based on the Fields Status group,
system will control the field at the document entry level. Based on the Field Status group system will change
the status of field as Input required (Mandatory), Surpress (will not be displayed on the screen), optional (entry
is optional for input). The various field status groups are attached to Field Status Variant in order to link it with a
company code. Each company code would have a field status variant containing possible combination of field
status groups. The Field Status Variant code would be the same as the company code
The following Field Status Groups under the Fields Status Variant:
Group
110B
150B
190A
190B
200A
200B
240B
240C
250B
260B
300A
300C
410B
G004
Text
General Liablities - Text Optional
A/P. Rec. a/c. Text / Assin - Optional
Payables Clearing Accounts
Freight/customs provisions/clearing (MM)
General for Assets (Text- mandatory)
General for Assets (Text- Optional)
A/R . Rec. a/c. Text / Assin - OPTIONAL
A/R . Rec. a/c.Text / Assin-OPT/OTH Fiel
Cash & bank- Assets(Text - Optional)
A/P.Advancesc.- PO Optional
Revenue accounts
Revenue accounts- Asset Retirement
MM adjustment accounts
Cost accounts
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4.7
SUPERSEDES:
Tolerance Groups
Tolerance groups are used to define different amount limits for the SAP users at ABC. These limits to
determine:
The maximum amount for which an SAP user is permitted to post a document
The maximum line item amount of a SAP user is permitted to enter in a customer, vendor or
general ledger account
The percentage amount a SAP user can enter in a line item
The maximum acceptable payment difference
Payment differences within certain tolerance groups are posted automatically. The system either
adjusts the discount or posts the difference to a separate expense or revenue account.
Since the same limits usually apply for a group of employees, enter the limits for employee groups.
These Tolerance limits will be defined based on the User groups to be provided by ABC.
4.8
Tolerance Groups for G/L Accounts

For G/L account clearing, tolerance groups define the limits within which differences are accepted and
automatically posted to predefined accounts. The groups defined here can be assigned in the general
ledger account master record.
4.9
Interest Calculation
Interest calculation can be done from the system. Interest calculation can be based on
Line item calculations
Balance calculations
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SUPERSEDES:
In case of line item calculation, interest is calculated per line item based on due dates. In case of
balance calculation, interest is calculated on the balance in the account as on the key date.
Interest calculation would be based on line items for customer overdue line items.
4.10 Open and Close Posting Periods

In this activity, we specify which periods are open for posting for each variant. Two time intervals (time
period 1 and time period 2) can be maintain in the system. In each interval, specify a period lower limit,
a period upper limit, and the fiscal year, one will be used for regular transactions and other one is being
used for posting the FI transactions at the time of Audit in the Special periods.
Close a period by selecting the period specifications so that the period to be closed does not fall within
them.
Authorization group also can be assigned to permit the posting periods. This means that in month-end
or year-end closing for example, can open some posting periods for specific users only. The
authorization group only has an effect on time period 1.
1. Specify the periods permitted for posting.
2. Enter the periods permitted for posting for all variants.
3. Specify entries for account types if the periods are to be further restricted for specific accounts.
4. In addition, enter an authorization group for each time period 1 in order to limit user access.
4.11 Tax procedure

Tax procedure contains the necessary specifications for the calculation and posting of taxes on
sales/purchases. Every calculation procedure groups several tax types together into a condition type (for
example, output tax or input tax) in the calculation procedure, and determines calculation rules for it.
It is mandatory to define a tax procedure in SAP System and assign to country. Tax procedure is defined for
each country. Input tax and out tax codes are created and defaulted for the country.
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Tax code
Country
SUPERSEDES:
Tax Procedure
Tax type
Other fields
A0
IN
1TAXINN
A (Sales tax)
All other active fields blank
V0
IN
1TAXINN
V (Purchase tax) All other active fields blank
4.12 New GL with Document Splitting

Online Split and scenario assignment
Document splitting enables a complex display of documents. Line items are split here for selected dimensions,
such as Segment and Profit Center. This ensures that ABC can draw up complete financial statements for the
selected dimensions at any time. Using the document splitting procedure, ABC can also create a segmented
display of a (partial) balance sheet according to a legal requirement or according to areas of responsibility.
Define Zero-Balance Clearing Account

This will ensure, if two dimensions are being posted in a document, balance will be made at each dimension
and offsetting posting will be made to this account.
Define Document Splitting Characteristics for GL Accounting
Here you specify to which document splitting characteristics document splitting applies, for example, profit
centre or segment. ABC requires to draw the P&L and Balance sheet based on Profit centre wise and Business
segments. To take care this business requirement both profit centre and segment is considered as scenario
which r equired to be mapped.
4.13 Retained Earnings Account

Before including P&L statement accounts in the chart of accounts, it is required to specify the retained earnings
account to which profits or losses are transferred. There is a special program designed to transfer these
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SUPERSEDES:
amounts to this account. In order for this program to be able to carry forward the profit or loss, it is required to
enter the number of this retained earnings account in the system.
Each P&L account is assigned to a retained earnings account via a key. You have to enter this key in the P&L
statement account type field found in the chart of accounts area of each P&L account.
Chart of Accounts
1000
P&L Statement Account Type

X
GL Account
1250100
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SUPERSEDES:
5. FI CO Master Data
5.1
General Ledger
The General Ledger serves as a complete record of all business transactions. It is the centralized, up-to-date
reference for the rendering of accounts. GL account records are maintained at the Chart of Accounts level and
at the Company Code level.
The Account Groups and the G/L Account Number Range for Chart of Accounts 1000 is as follows.
Chart Of Account
Accounts Groups
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
110
120
130
135
140
141
145
150
155
160
190
210
218
1000
1000
219
220
1000
230
Name
110 - SHARE CAPITAL
120 - RESERVES AND SURPLUS
130 - LONG TERM LOANS
135- WORKING CAPITAL LOANS
140- INTERCORPORATE DEPOSITS
141 - FIXED DEPOSITS
145- UNSECURED LOANS
150- CURRENT LIABILITIES
155- TDS DEDUCTION/ PAYABLE
160 -PROVISIONS
190 - CLEARING ACCOUNTS
210- FIXED ASSETS
218-CAPITAL WORK-IN-PROGRESS
219- ACCUMULATED
DEPRECIATION
220 - INVESTMENTS
230 - INVENTORY/CURRENT
STOCKS
From
Account
To
Account
11000000
12000000
13000000
13500000
14000000
14100000
14500000
15000000
15500000
16000000
19000000
21000000
21800000
11099999
12099999
13099999
13599999
14099999
14199999
14599999
15099999
15599999
16099999
19099999
21099999
21899999
21900000
22000000
21999999
22099999
23000000
23099999
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1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
1000
240
250
260
270
290
310
320
330
340
410
420
430
440
450
460
470
480
490
491
492
499
240- SUNDRY DEBTORS

250- CASH AND BANK BALANCES
260- LOANS & ADVANCES
270- EXCISE RELATED ACCOUNTS
290- DEFFERED EXPENSES
310- SALES REVENUES
320- OTHER INCOME
330-WIND MILL INCOME
340-AGRI INCOME
410- MATERIAL CONSUMPTION
420 - MFG. EXPENSES
430- EMPLOYEE BENEFITS
440- ADMINISTRATIVE EXPENSES
450- SELLING EXPENSES
460- SALES INCENTIVES
470- FREIGHT OUTWARD
480- INTEREST
490- DEPRECIATION
491 - DEFFERED EXPENSES
492- APPROPRIATIONS
499- NOTED ITEMS
SUPERSEDES:
24000000
25000000
26000000
27000000
29000000
31000000
32000000
33000000
34000000
41000000
42000000
43000000
44000000
45000000
46000000
47000000
48000000
49000000
49100000
49200000
49900000
24099999
25099999
26099999
27099999
29099999
31099999
32099999
33099999
34099999
41099999
42099999
43099999
44099999
45099999
46099999
47099999
48099999
49099999
49199999
49299999
49999999
Requirements of General Ledger Master Record

General Ledger account number is entered in the Chart of Accounts segment.
Few accounts may be managed by open items, which mean that in these accounts you have the possibility to
clear the open items. These accounts are used for managing and tracking open transactions. E.G. TDS
accounts, Advances accounts may be managed on the basis of open items.
Few additional definitions may be made at each account code level such as definition of line item display, sort
keys, field status etc.
Master data needed
Before updating General Ledger Master, the following masters need to be updated:
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Account Group
Tax Code Master
House Bank and Account id Master
General Ledger Master Data Maintenance Functions
SAP provides the following functionality for maintaining GL account master records:
Create a new account at Chart of Account Level
Extend the new account at Company Code Level
Create a new account centrally ( both COA and Company Code level)
Create a new account with template
Change an account
Display an account
Block/unblock an account for creation, posting
Mark an account for deletion
The above operations may be undertaken at the chart of accounts level, the company code level, or centrally
against both levels.
General Ledger Account Fields
There are two segments in the General Ledger Master record:
a. Chart of Accounts Segment
b. Company Code segment
The following table describes some of the important fields in the GL account master record and their
significance:
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SUPERSEDES:
Sr. No.
Field Description
Description
G/L Account Number
The G/L account number identifies the G/L account in a

chart of accounts
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Sr. No.
Field Description
Description
Company Code
The company code in which the GL account will get

used. This field will be populated in order to specify
company code specific items in the GL master.
G/L account group
An object whose attributes determine the creation of

master records. An account group must be assigned to
each master record. It controls account number ranges
and screen layouts.
Account is a balance sheet account
Indicates that the G/L account is managed as a balance

sheet account.
P&L statement account
Indicates that the G/L account is managed as a P & L

account.
Description (Short text)
Short text is used for online displays and evaluations

which do not have sufficient space for the long text. (20
Characters )
Description (Long Text)
Given sufficient space, long text is used for online

displays and Evaluations. (50 Characters )
Account currency
Enter the currency in which the account is to be

managed I.e. generally the company code currency.
Indicator: Only Manage Balances in Allows you to maintain balances only in local currency
Local Currency
10
Exchange Rate Difference Key
The system uses this key to find the accounts for gains
and losses for the valuation of foreign currency balances
11
Valuation Group
A valuation group can include a number of different freely

definable G/L accounts
12
Tax Category
Determines whether the account is a tax-relevant, a tax

account, a tax-relevant G/L account
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SUPERSEDES:
Sr. No.
Field Description
Description
13
Posting without tax allowed
Indicates that the account can still be posted to even if a

tax code has not been entered
14
Recon Account Type
An entry in this field characterizes the G/L account as a

reconciliation account for vendors, customers or assets.
The reconciliation account ensures the integration of a
sub ledger accounts into the general ledger.
15
Alternative account
company code
16
Indicator: Open item management
Setting this indicator on allows display of the open and

cleared items and amounts in an account.
17
Indicator: Line Items Display
Indicates that line item display is possible in this account.

Do not set this indicator for accounts in which the number
of postings is so great that line item display online would
not be advantageous.
18
Sort Key
Specifies a basis on which line item reports of that

particular GL account would be sorted.
19
Field status group
Determines the screen layout for document entry. Fields

can have the following statuses. (1)Optional entry - you
can enter data in the field. (2)Mandatory entry - you must
enter data in the field. (3)Suppressed - the field does not
appear on the screen.
20
Indicator: Posted automatically only
This indicator means that the account can be only posted

through by way of automatic system postings. No manual
entry would be possible.
number
in The alternative account number field in the company

code area is freely definable. This field can be used to
track the related legacy account number.
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5.2
SUPERSEDES:
Customer Account
Customer Accounts represent the various business partners to whom goods are sold or services performed
and from whom receivables are due for this. The Customer Master is used for Customer Requests, Deliveries,
Invoices and Payments.
Customer Masters are created as shared data on the client level and Company code-specific data for each
Company Code. The customer account number is assigned on the client level.
Accounts Receivable Master Data Maintenance Functions
SAP provides the following transactions for maintaining Accounts Receivable master records:
Create a new account
Change an account
Display an account
Block/unblock an account
Set the deletion indicator
The above operations may be undertaken at the general/company code level, the sales area level or centrally
against both levels.
The ABC accounts receivable account maintenance will be centralized with ABC Team, Hyderabad, and that
the creation of any new accounts will go through an approval process, internally.
Data in the customer master is stored in 3 views:
General Data: Data that applies to all company codes and sales areas (e.g. customers name,
addresses, language and telephone data).
Company Code/Accounting Data: Data that is specific to a company code (e.g. the reconciliation
account number, payment terms and dunning area).
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Sales Area Data: Data specific to the sales area of the company (e.g. sales office, sales district, pricing
information, as well as information relating to shipping and billing).
Customer Reconciliation Account

Customer account is linked with General ledger with a reconciliation account (operative chart of account). A
reconciliation account is account to which one or more customers account is attached. The reconciliation
account is to be maintained in customer master data.
Account Groups
The account group determines the data that is relevant for the master record, and a number range from which
numbers are selected for the master records. ABC uses the following account groups with external number.
The customer Account Groups and their number ranges for the Hyderabad Chemicals Limited are as under
Group
ZDOM
ZEXP
5.3
Name
Domestic customer
Export customer
Number
range
ZE
ZE
From
To
A
ZZZZZZZ
A
ZZZZZZZ
Vendor Account
Vendor Accounts represents the various business partners from whom materials or services are procured.
Vendor Masters are created as shared data on the client level and Company code-specific data for each
company code. The Vendor account number is assigned on the client level.
Accounts Payable Master Data Maintenance Functions
SAP provides the following transactions for maintaining Accounts Payable master records:
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Create a new account
Change an account
Display an account
Block/unblock an account
Set the deletion indicator
SUPERSEDES:
The above operations may be undertaken at the general/company code level, the purchasing organisation
level or centrally against both levels.
The ABC accounts payable account maintenance will be centralized with ABC Support Team, Hyderabad, and
that the creation of any new accounts will go through an approval process.
Data in the vendor master is stored in 3 views:
General Data: Data that applies to every company code and purchasing organisation (e.g. the vendors
name, addresses, language and telephone data).
Company Code/Accounting Data: Data that is specific to a company code (e.g. the reconciliation
account number, payment terms, and payment methods).
Purchasing Organisation Data: Data specific to the purchasing organisation of the company (e.g.
settings for request for quotations, purchase orders, invoice verification and inventory control). The
Materials Management module is required to enter this data and to print purchase orders.
Vendor Reconciliation Account

Vendor account is linked with General ledger with a reconciliation account. A reconciliation account is account
to which one or more vendor account is attached. The reconciliation account is to be maintained in vendor
master data.
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When you post items to a subsidiary ledger, the system automatically posts the same data to the general
ledger. These reconciliation accounts ensure that there are no differences between the balance of G/L account
and the total of subsidiary ledger. This means that you can draw up balance sheets at any time without having
to transfer totals from the sub ledgers to the general ledger.
You have to specify a reconciliation account in every vendor master record.
Account Groups
Account group determines the data that is relevant for the master record, and a number range from which
numbers are selected for the master records.
The Vendor Account Groups and their number ranges for the Hyderabad Chemicals Limited are as under
Group
ZDOM
ZIMP
ZSER
ZFIN
ZEMP
5.4
Name
Domestic Vendor (Ext. No.)

Imported Vendor (Ext. No.)
Service Vendor (Ext. No.)
Finance Vendor (Ext. No.)
Employees A/C (External No)
Number range
From
DM
IM
SR
FI
EM
100000
200000
300000
400000
500000
To
199999
299999
399999
499999
599999
Bank Accounting
Bank Accounting takes care of the transactions, which take place with the Banks the company, is dealing with.
It is further subdivided on the basis of incoming & outgoing payments. House banks take care of all the banks
with which the organization deals with on a day-to-day basis. House bank Master records contain all
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information about the particular house bank and also the Accounts maintained by the organization in the
respective House bank.
House Banks
5.5
A house bank is any banking institution with which the organization conducts business. Bank master record
data includes the bank key, the name of the bank, the address and country specification. Each house bank of a
company code is represented by a bank ID and every account at a House Bank by an account ID. G/L
accounts will be created and linked for the various bank accounts. The G/L account shall be managed in the
same currency as the account at the bank.
Bank Name
Account No.
Account Type
Account Purpose
Currency
CURRENT
Vendors cheques,
customer cheques
INR
State Bank of India
5.6
Fixed Assets
The asset master record contains detailed accounting information related to the purchase of the asset. The
asset master record also contains information, such as depreciation areas, description, asset class, scrapping
and date of purchase.
Fixed Asset Classes and its number ranges have been defined for the Hyderabad Chemicals Limited as below.
Asset Class
10000
20000
21000
30000
30900
31000
60000
61000
70000
Name
LAND
BUILDINGS - FACTORY
BUILDINGS - NON-FACT
PLANT&MACHINERY
PLANT&MACHINERY-LVA
ELECTRICAL INSTALLAT
OFFICE EQUIPMENT
FURNITURE& FIXTURES
COMPUTERS
Number range
1
2
2
3
3
4
5
6
7
Number interval
from
10000
20000
20000
30000
30000
40000
50000
60000
70000
To
19999
29999
29999
39999
39999
49999
59999
69999
79999
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80000
99000
5.7
VEHECLES
CWIP
SUPERSEDES:
8
9
80000
90000
89999
99999
Cost Elements
A cost element describes the nature and origin of costs. Cost Elements are defined as either Primary or
Secondary. Profit & Loss Accounts in Financial Accounting are created with corresponding Primary Cost
Elements in Controlling. G/L accounts which are Primary Cost Elements would require a compulsory cost
object whenever these accounts are credited or debited in the Financial Accounting.
Secondary Cost Elements are used exclusively in CO for the purpose of carrying out processes affecting CO
like allocations and settlements.
5.8
Cost Center
Cost Centers represents the location of cost occurrence. It can be set up based on function, geographical
location, area of responsibility, activities / service provided or allocation criteria. The cost center structure
serves the purpose of displaying cost reports separately wherever required for a department / function and
allocating these costs to various CO Objects.
Cost Center Hierarchy -1000STD has been maintained for Hyderabad Chemicals Limited as given below.
Sno
Controlling Area
Cost Center
Name
Profit
Center
01
1000
11000101
Production(Plant 1 )-ABC
1100
02
1000
10000401
Finance - ABC
1000
03
1000
31000101
Production - Neo Seeds
3100
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5.9
SUPERSEDES:
Activity Types
The Activity Type classifies the specific activities that are provided by one or more Cost Centers. If a Cost
Center provides activities for other Cost Centers, Orders, Processes, etc. then it implies that its resource is
being used. The costs of these resources need to be allocated to these receivers of the activity. Activity Types
serve as the tracing factors for this cost allocation. To plan and allocate the activities, the system records
quantities that are measured in activity units.
Activity
Activity Description
MACHIN
Machine Hour cost
LABOUR
Labour Hour Cost
5.10 Internal Order

Internal Orders are used to plan, collect and settle the cost of specific activity or task. They can be monitored
through their entire life-cycle i.e. from their initial creation, the planning and posting of actual costs and the final
settlement wherever required.
Statistical Internal Orders can be used for monitoring objects in Cost Accounting whereas Real Orders can be
used where the costs collected are to be capitalized.
Order type
Order
Number
0400
0450
0550
XXXXX
XXXXX
XXXXX
Order Description
Marketing
Telephones
Motor Vehicle
Responsible
cost center
11000101
10000201
71010501
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5.11 Profit Centers

Profit Center is an Organizational unit in accounting that reflects Management Oriented structure of the
Organization for internal purpose. Profit centers are not directly posted to they are assigned to all the objects
that contain related data. By making these assignments the system automatically transfers the data to Profit
Center Accounting when it is posted to the original object and you can display selected balance sheet items by
Profit Center.
Sl.No.
Company Code
Profit Center
01
02
03
04
1000
1000
1000
1000
1000
1100
1200
1800
05
1000
1801
ABC Head Office

Balanagar Plant
Jammu Plant
Wind Power, Kadavakallu, Anathapur Dist. AP
(ABC)
Wind Power, Lathur, Maharashtra (ABC)
06
1000
1900
Agri Farms, Achampet Mahabubnagar, AP
07
08
09
10
1000
2000
2000
2000
2000
2100
2200
2800
11
2000
2801
12
13
14
15
16
17
18
2000
2000
2000
2000
3000
3000
3000
2802
2900
2901
2902
3000
3100
3900
HCPL Head Office

Pashamayalaram Plant
Humnabad Plant
Wind Power, Kadavakallu,Anathapur Dist.AP
(HCPL)
Wind Power, Lathur. Maharashtra
(HCPL)
Wind Power, Tamil Nadu (HCPL)
Agri Farms, Gomaram, Medak , AP
Agri Farms,Kalakal, Medak,AP
Neo Seeds Head Office
Neo Seeds Medchal Plant
Agri Farms, Masaiapet , Medak .AP
Sl.No.
Company
Code
Profit Center
19
20
1000
1000
7101
Hyderabad
7102
Nandyal
21
1000
7103
Rajahmundry
22
1000
7104
Guntur
23
1000
7105
24
1000
710622, 2015
Revision Date: Tuesday, December
25
1000
7107
26
1000
7108
27
1000
7109
28
1000
7110
Vijayawada
Warangal
Nellore
Khammam
Toophranpet
Cuttack
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SUPERSEDES:
Sl.No.
Company Code
Profit Center
29
1000
7151
Bellary
30
1000
7152
Gulbarga
31
1000
7153
Sindhanur
32
1000
7154
Hubli
33
1000
7155
Erode
34
1000
7156
Indore
35
1000
7157
Akola
36
1000
7158
Sholapur
37
1000
7159
Rajkot2
38
1000
7160
Ahmadabad
39
1000
7176
Sirsa
40
1000
7177
Bathinda
41
1000
7178
Sri Ganganagar
42
1000
7179
Ghaziabad
43
1000
7180
Ludhiana
44
1000
7181
Hissar
45
1000
7182
Rudrapur
46
1000
7183
Lucknow
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SUPERSEDES:
Sl.No.
Company Code
Profit Center
47
2000
7210
Cuttack
48
2000
7251
Bellary
49
2000
7252
Gulbarga
50
2000
7253
Sindhanur
51
2000
7255
Erode
52
2000
7256
Indore
53
2000
7257
Akola
54
2000
7259
Rajkot
55
2000
7260
Ahmadabad
56
2000
7261
Yanam
57
2000
7276
Sirsa
58
2000
7277
Bathinda
59
2000
7278
Sri Ganganagar
60
2000
7284
Delhi
61
3000
7301
Hyderabad
62
3000
7302
Nandyal
63
3000
7303
Rajahmundry
64
3000
7304
Guntur
65
3000
7305
Vijayawada
66
3000
7306
Warangal
67
3000
7307
Nellore
68
3000
7308
Khammam
69
3000
7309
Toophranpet
70
3000
7310
Cuttack
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SUPERSEDES:
Sl.No.
Company Code
Profit Center
71
3000
7353
Sindhanur
72
3000
7354
Hubli
73
3000
7356
Indore
74
3000
7357
Akola
75
3000
7358
Sholapur
76
3000
7377
Bathinda
77
3000
7381
Hissar
5.12 Product Cost Controlling

Product Cost Controlling enables to find out the standard cost estimate of the products manufactured in
house. The Components covered under Product Cost Controlling for Hyderabad Chemicals Limited are
Product Cost Planning and Cost Object Controlling. Product Cost Planning includes tools for planning costs
and setting prices for materials (cost estimate with or without quantity structure) and for other objects of
cost accounting (base object costing, simulation costing). In Cost Object Controlling we can use cost
objects such as production orders, process orders,
Material cost will flow to costing from standard bill of material

Internal activity prices like machine hours, labor hours and setup time to be consider as overheads on process
order
Overheads are to be considered in categories of Raw material overheads, packing material overheads and
factory overheads.
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5.13 Material Master

They represent the various goods that are the subject of business activity. Material Masters are used for goods
which can be traded, used in manufacture, consumed, or produced.
The data contained in the material master record is required for many functions like Purchasing data for
ordering, Inventory management data for posting goods movements and managing physical inventory and also
accounting data for material valuation.
Since materials are processed by various functional groups within a company and each group will stores
different information for the materials, the material master is subdivided into information grouped by various
functions or uses. Each group has a different view of the material master record and is responsible for
maintaining the data to support its function.
The valuation area is the organizational level at which material is valuated. When stock is valuated at plant
level, you can valuate a material in different plants at different prices. For ABC, each Plant will represent a
Valuation Area. Existing Material Types and Valuation Classes are used for the valuation area of Company
code ABC.
The Accounting views contain important data which is relevant to the Financial Accounting. Consequently, only
the Finance Department will have the authorization to maintain this view.
Important fields
Price Control - indicates the price control used to valuate the stock of a material. In the SAP System, there
are two types of price control:
S - Standard price - A constant price at which a material is valuated without taking goods movements
and invoices into account.
V - Moving average price - Price that changes in consequence of goods movements and the entry of
invoices, and which is used to valuate a material. The moving average price is calculated by dividing
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SUPERSEDES:
the value of the material by the quantity of material in stock. It is recalculated automatically by the
system after each goods movement or invoice entry.
These two types of price control differ in how they handle price variances resulting from goods receipts or
invoice receipts
Valuation using a standard price has the following features:
All inventory postings are carried out at the standard price
Variances are posted to price difference accounts
Variances are updated
Price changes can be monitored
If a material is assigned a standard price (S), the value of the material is always calculated at this price. If
goods movements or invoice receipts contain a price that differs from the standard price, the differences are
posted to a price difference account. The variance is not taken into account in valuation.
Valuation using a moving average price results in the following:
Goods receipts are posted at the goods receipt value.
The price in the material master is adjusted taking into account the delivered price.
If a material is assigned a moving average price (MAP), the price is automatically adjusted in the material
master record when price variances occur. If goods movements or invoice receipts are posted using a price
that differs from the moving average price, the differences are posted to the stock account; as a result, the
moving average price and the value of the stock change.
For ABC materials like Raw materials, Intermediates, Finished Goods, etc., will be valued with Batch Split
Valuation.
Packing materials will be valued with Moving Average Price .
Valuation Class is used to combine materials for assigning G/L accounts so that you do not have to manage
a separate stock account for each material. Based on the Material Types the Valuation class will be assigned in
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SUPERSEDES:
the Material Master. Valuation Class determines which stock account and offsetting account to be posted
based upon goods movement. The various Valuation Classes which will be used by ABC are as follows:
Material Type
Valuation Class
Description
ZRAW
ZINT
ZSPA
ZPKG
ZCAP
ZSRP
ZTRG
ZRTP
ZFIN
1000
6000
3000
2000
4100
6900
4000
7900
7000
Raw materials 1
Semi-Finished
General Items
Packaging Material
Capital Goods
Scrap
Trading Material
Returnable Packing
Finished products
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SUPERSEDES:
6. FI - Business Processes
6.1
General Ledger Accounting
General Ledger is the sub-module in which all of the financial accounting data for the legal entity is recorded
either manually or automatically through integrated processes. Business transactions with a financial
accounting impact are posted to the General Ledger sub-module on a real-time basis either directly or through
integration from other modules and FI Sub-modules. Posting of entries in the general ledger are made using
the accounts as defined in the ABC Operating Chart of Accounts. The Financial General Ledger will allow
Hyderabad Chemicals Limited:
Automatically and simultaneously post all sub-ledger items in the appropriate general ledger accounts
(through reconciliation accounts)

Simultaneously update the general ledger and cost accounting areas
Real time evaluation and reporting on current accounting data, in the form of account. Displays, financial
statements and additional analyses
The general ledger will serve as a complete record of all business transactions for ABC. It is the centralized,
up-to-date reference for the rendering of accounts. Using the general ledger, Hyderabad Chemicals Limited will
be able to check any financial transaction in any general ledger account in real-time processing by displaying
the original documents, line items, and transaction figures at various levels.
New General Ledger

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New General Ledger in the SAP system offers a powerful feature known as document splitting. With document
splitting, accounting line items are split according to specific characteristics. You can create financial
statements for entities such as Segments and meet legal requirements.
You can use the document splitting procedure to split up line items for selected dimensions (such as receivable
lines by profit centre) or to effect a zero balance setting in the document for selected dimensions (such as
segment). This generates additional clearing lines in the document. Using the document splitting procedure is
the prerequisite for as well as an essential tool for drawing up complete financial statements for the selected
dimensions at any time.
You can choose between displaying the document with the generated clearing lines either in its original form in
the entry view or from the perspective of a ledger in the general ledger views.
Example 1: Invoice
Suppose a vendor invoice containing the following items is entered:
Posting Key
Account
Segment
Amount
31
Payables
-100
40
Expense
001
40
40
Expense
002
60
Document splitting then creates the following document in the General Ledger view:
Posting Key
Account
Segment
Amount
31
Payables
001
-40
31
Payables
002
-60
40
Expense
001
40
40
Expense
002
60
Using the document splitting procedure, you can also create a segmented display of a (partial) balance sheet
according to a set of legal requirements (for example, IAS) or according to areas of responsibility.
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Efficiently handle Financial Reporting, according to both local and international accounting
principles
Flexibly perform reporting tasks based on data reconciled in real time
Concept of Ledger
Leading Ledger
The leading ledger is based on the same accounting principle as that of the consolidated financial statement. It
is integrated with all subsidiary ledgers and is updated in all company codes. You must designate one ledger
as the leading ledger.
In each company code, the leading ledger automatically receives the settings that apply to that company code:
the currencies, the fiscal year variant, and the variant of the posting periods.
Non-Leading Ledger
The non-leading ledgers are parallel ledgers to the leading ledger. They can be based for example on local
accounting principles
For each ledger that you create, a ledger group of the same name is automatically created.
For general-ledger account postings that have a specified cost centre, the system always reconciles the profit
centre and general-ledger account simultaneously
Two views of the new General Ledger:
Regular entry view
General-Ledger View
Segment Reporting
IAS/IFRS/US GAAP requires Segmental reporting. Segment is provided in addition to Business area / Profit
centre. It is one of the standard account assignment objects available for running analysis below the company
code level.
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6.1.1 Posting General Ledger Journal Vouchers

ABC will post journal vouchers directly in the general ledger, which do not originate from a sub-ledger or
another module. Such entries could be to make corrections to the general ledger or part of the period end
process. Hyderabad Chemicals Ltd will be able to post only complete documents.
For posting a Journal Voucher, the following minimum information will be required in the document header:
Posting date: the date that general ledger account balances are updated. It determines the posting period.
Document date: Issue date of the original document (not necessarily the same as the posting date). For
invoices it is called the invoice date.
Document type: refers to the type of voucher pertaining to a specific Document Number Range
Currency: transaction currency in which the Document is posted.
Reference and Document header text will be additionally required for specific Document Types.
Each Journal Voucher will have at least two line items, a minimum of one debit and one credit, and at most 999
line items.
Every line item contains a:
Posting key - a two-digit numeric key that controls how document line items are entered and posted. The
posting key Specifies whether the line item is a debit or credit
Specifies the account type i.e. Customer, Vendor, General ledger account, Asset, Material
Contains Field Status definitions that are used as a factor in determining the screen layout while posting
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transactions.
G/L Account number The G/L Account created for Hyderabad Chemicals Limited in the operating Chart of
Accounts 1000 will be used while posting Documents.
Amount All amounts shall be converted to the Company Code currency INR if the Document Currency is a
foreign currency.
The Assignment field (alphanumeric, up to 18 characters) is updated automatically with the data from the field
referenced in the Sort Key field of the general ledger account. The Assignment field will be used to sort line
items during general ledger line item display and Automatic Clearing. A value in the Assignment field can also
be manually entered.
Since it is posted at the Company Code level, where balanced financial statements are ensured, a document
can only be posted if the debits equal the credits. In the system, a document is created for every business
transaction and receives a unique document number. Document number ranges are defined per company code
and are assigned to each document type in the system. Number ranges will be defined for each fiscal year.
6.1.2
Fast Entry Screens
Fast entry screens are used for quick entry of transactions having multiple line items. Fast entries screens may
be best used when majority of the fields are suppressed for a particular business process transaction. This
would simplify the procedure of document entry by adopting a simplistic screen for document entry.
Entries in the fast entry screens would have similar validations at the time of posting as compared to a normal
transaction entry screen. The users can use the fast entry screens for transactions with multiple line items.
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Fast entry screens may be best utilised for general ledger / customer / vendor transactions having multiple line
items.
SAP enjoy transactions provide for a viable alternative for fast entry of transactions. The advantage of using
enjoy transaction over fast entry is that posting keys which control the debit/credit need not be entered
6.1.3
Recurring Entries
Recurring entries are business transactions that are repeated regularly, such as rent or insurance. This acts as
standing order that we give to the bank to deduct rent, premium payments, or loan repayments. You enter this
recurring data in a recurring entry original document. This document does not update the transaction figures.
The recurring entry program uses it as a basis for creating accounting documents.
In the recurring entry document, you define when a posting is to be created with this document. Postings can
be made periodically or on a specific date:
For periodic postings, specify the first and last day of execution, as well as the interval in months.
To post recurring entry documents, you have to set up a separate number range for the company codes that
use them. You have to use key X1 for the number range. The system takes numbers for the recurring entry
original document from this number range.
6.1.4
Sample Documents
Sample documents acts as templates when manually entering a document. The use of sample documents is
beneficial if you need to enter many documents that are similar to each other.
We can use sample documents as reference documents entered specifically for this purpose. Sample
documents have a separate number range. When you enter and post a sample document, the system stores
the document, but does not update any transaction figures. They serve merely as data sources for an
accounting document.
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6.1.5
SUPERSEDES:
Parking and Posting Parked Documents
Hyderabad Chemicals Limited will be using the Document Park and Post functionality as a measure of
introducing internal control procedures. Both complete and incomplete documents can be parked and then
posted at a later date by a different user.
Parking Documents
Information entered as part of a parked document is only checked as to whether it exists. Only a few fields - for
example the posting key and account number will be the required entry fields.
The authorization checks carried out for document parking are basically the same as those made for standard
document entry and processing. Instead of the activity "posting", the activity "parking" is required for document
parking. Necessary authorizations will be assigned which differentiate between users who only have parking
authorization and those who can park and post documents.
The required entry fields defined using the field selection strings in the Posting Key and G/L Account Field
Status Group are reduced to the status of optional entry fields.
No tolerance checks will be carried out while parking a document. Though Account Assignment models can be
used, Reference Documents will not be available for Document Parking. Substitutions and validations will not
be supported while parking a document, but will be supported when parked documents are completed and
posted.
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Parked Documents will not update transaction figures but can be included in Document Journals and in the
reports for line items. Cash Management data will however be updated with the preliminary posting.
When a parked document is saved, a message containing the document number is displayed. Since these
numbers are assigned in the same way as the standard document posting function, the posted document will
retain the parked documents number.
6.1.6
Posting Parked Documents
A parked document can be changed and gradually completed. A large number of header and item fields can be
changed during this process, including the amounts. Certain values that cannot be changed are the currency
and the company code. The data in parked documents is deleted when they are posted, a document is written
to the document database and the appropriate data (transaction figures etc.) is updated. The number of the parked
document will be transferred to the posted document.
Parked documents can also be deleted. The Document No. of the deleted Parked Document cannot be
reused. A document which has been parked by one user can only be posted by another user.
6.1.7 Clearing of Line Items

Clearing process is used to clear open items in Customer, Vendor or General Ledger accounts. Clearing
process is used to clear one or more open line items within one account. On clearing open items, R/3 system
would create a clearing document.
For example
Customer receipts can be cleared against customer invoice posting
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TDS payable can be cleared against TDS payments
Process Overview
Clearing process in R/3 system may be automatic or manual.
Automatic Clearing clears the transactions in an account based on user defined criteria. Automatic
clearing is generally used for clearing bulk transactions. Manual clearing would clear all other
accounts.
Manual Clearing can be done in 2 ways
Partial Clearing
Residual Clearing
6.1.8
Partial Clearing
Partial Clearing is used in a business scenario where a part payment is either received or made for a customer
or vendor open item.
If the Partial Clearing is used, R/3 system would post a line item in credit for the payment received. The system
however, does not clear the invoice till the entire invoice amount is cleared. Till the invoice is cleared all such
line items are shown as open items.
However the disadvantage of using partial clearing method is that both the items i.e. the invoice and the part
payment remain open items. Hence the ageing analysis shows skewed results as the invoice amount debit is
shown from the invoice date and the part receipt amount is shown as credit received from the receipt date.
6.1.9
Residual Clearing
Residual clearing is also used for clearing open items in case of part payment etc.
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In case of residual clearing R/3 system clears the open line item to the extent and generates a new line item
for the balance receivable. The default baseline date for the new document would be Residual document date.
During the clearing, the residual amount i.e. the balance amount needs to be entered against the original open
item.
6.1.10
Validation in Accounting Documents
Validations will be used by Hyderabad Chemicals Limited to ensure integrity of data at the time of transaction
entry. Combination of specified criteria will be checked for validity before posting a document. With validations,
you can check values and combinations of values as they are being entered while posting documents. As data
is being entered, the system validates the data against the validation rules. Because data is validated before it
is posted, only valid information enters the system.
6.1.11
Account Assignment Model /Templates
An account assignment model is a pattern for document entry. For posting the various monthly closing entries,
multiple account assignment models will be used to enter items in list form using screen templates. The
posting in the account assignment model does not need to be complete. The blank fields will have to be filled
when the model is actually used.
The account assignment model will be primarily used to post transactions to general ledger accounts rather
than sub-ledger accounts. At the time of posting, the account assignment model can be called up multiple
times within one document to add the same line items over and over again. Other account assignment models
can also be used in the same posting. In addition, more line items can be added manually and the preassigned fields can also be changed.
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When a document is being posted more than once with little or no change, the user can reference a previously
posted document.
6.1.12 Valuation of G/L Accounts in Foreign Currency

All the G/L accounts in foreign currency would be always revalued at month end according to month end
exchange rate. The difference would be posted to separate G/L Accounts for gains and losses.
The balance in local currency of the G/L Account revalue will be adjusted with the amount of gain / loss on
such revaluation. In the new month, the valuation at previous month end would be rolled back. The valuations
and the reversals will be posted using batch input sessions only.
6.1.13 Financial Statement Versions

The financial statement version forms the basis for creating a balance sheet and profit and loss statement. The
SAP standard Financial Statement analysis allows for the comparison of financial statements from two time
periods, and the determination of the differences in the individual financial statement items. Financial
statement can be carried out for the following time periods:
Year comparisons
Half-year comparisons
Quarterly comparisons
Monthly comparisons
In addition to financial statement, SAP provides a standard Balance Display report (Trial Balance). This report
facilitates the evaluation of transaction figures.
The following are the Financial Statement Versions for ABC:
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Sl. No.
Chart of Accounts
Financial Statement Version
1000 - ABC Chart of Accounts
1000 - Financial statement version ABC
6.1.14
Closing Operations
Objective
The following are the operations that are to be covered as a part of closing operations
The operations shall cover:
Monthly closings
Yearly closings
Monthly end Closing

Month-end closing comprises all activities involved in closing a posting/accounting period. Accounting period is
a division of a companys fiscal year. The number of periods and definition of period are to be determined
during configuration.
Each posting into the system must be associated with an accounting period. This is to ensure that each
transaction can be reported in the corresponding period. In the same token, periods must be controlled to
ensure validity of the reports.
The check list for month end process will be documented after the Realization Phase of this project.
The below proposed flow for month-end processing shall be used as a guideline for this blueprint as the
activities may not be finalized until Realization phase.
Process Overview Explanation
Step
1
Procedures
Run payroll postings to update FI.
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Step
SUPERSEDES:
Procedures
Execute the recurring entry program and post the entries
Execute Sample document program and account assignment model
Complete all the outstanding journal entries related to month end closing.
To prepare and post accrual journals.
To execute accrual reversal entries.
Execute depreciation run to
Execute GR/ IR clearing entries to clear the matched GR/IR clearing

transactions.
Run foreign currency valuation transactions
10
Close posting period to ensure no transaction can take place in that period
and open new posting period.
11
Generate monthly reports:
Trial Balance
Profit & Loss statement
Balance sheet etc.
compute and post depreciation.
Year end closing

Year-end closing comprises all activities involved in closing the financial year apart from Month-end closing
activities.
The check list for year-end process will be documented after the Realization Phase of this project.
The below proposed flow for year-end processing shall be used as a guideline for this blueprint as the activities
may not be finalized until Realization phase.
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Step
Procedures
Carry forwarding of GL Balances
Carry forwarding of Customer/Vendor Balances
AUC Tracking
Fixed Assets fiscal year change
Fixed Assets Year end closing
Open new fiscal year.
Generate yearly reports:
Trial Balance
Profit & Loss statement
Balance sheet etc.
6.1.15
GL Process Steps
Main process
1. General
2.
Parking
of the
document:
3. Sample Document
Description
Process of SAP
Transaction code
Creation of new account

Creating a New GL and Posting Posting an entry
Viewing a document
of documents
Viewing an Account
Parking of documents where Parking of the document
FS00
F-02
FB03
FS10
F-65
authorization is required before

posting.
When there is a
which
will
be
Releasing parked document

transaction
posted every
month whose date is fixed but

amount is not fixed,
this
Creation
of
sample
document
Posting with reference
FBV0
F-01
F-02
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Main process
Description
Process of SAP
Transaction code
technique will be utilized.

When there is a transaction
Creation
of
recurring
which will be posted every document
4. Recurring
month and whose date and
Document
amount
are
fixed,
5. Accrual / deferral deferral

documents
accrual /
documents,
later
F.15
Recurring document posting
F.14
Posting
of
accrual
deferral document
FBS1
SAP
provides a screen to make it

and
Recurring document display
this
technique will be used.

Whenever there is a provision
to be made for
FBD1
reverse
Reversing
the accrual /
the deferral document
F.81
transaction.
Individual reversal
Mass reversal
6. Reversal
Whenever there is an error
FB08
F.80
See
while posting SAP offers a
items and do
methodology to make a reverse
un clearing and
of posting. A reversal reason is Cleared item reversal
documents
configured
and
different
7. General
line items / balances of GL
(to see
cleared items),
Accrual / deferral document
reversal
Reversal of reversal
Ledger By using SAP we can see the GL Line Item Analysis
account analysis
it,
recently
reversal documents from FI as

per the requirement.
reverse
FBRA
number ranges were given for
cleared
F.81
F-02
FAGLL03
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Main process
Description
Process of SAP
Transaction code
accounts and also change the

layout of display by adding any
necessary
things
like
cost
GL Balance Analysis
FAGLB03
center etc.,
Open items in GL accounts ex.
Like outstanding expenses can
8. Account clearing
be cleared one by one and can

be arranged in ascending /
Without
Specification
of
Clearing Currency
F.13
descending order and can be

cleared.
In closing,
foreign
currency Creation of
loans or items related to foreign
and
GL accounts FS00
assignment
of
currency can be revaluated exchange rate to GL

using
the
transaction
and Posting of loan
FAGL_FC_VAL
9. Foreign
revaluation
currency represented
in
the
balance
sheet. Based on either loss or
Repayment
F-02
(outgoing F-07
payment)
profit different GL accounts can Revaluation
be mentioned and the values Transaction
of
FC FAGL_FC_VAL
can be automatically sent to

those GL accounts to maintain
the balances.
10. Regroup payables / Based on company code or
receivables
Vendor
document type wise payables / Regrouping

receivables can be regrouped
to represent in the company
code
balance
sheet
or
Customer F101
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Main process
SUPERSEDES:
Description
companywide
Process of SAP
Transaction code
consolidated
balance sheet.
Use F101 to
generate a batch input program

to
group
payables
receivables.
At the time of closing GR/IR
account has to be cleared from
SAP
transaction
F.19.
11. GR/IR Clearing and Revaluation of materials has to

material valuation
be done t o represent the new

values
(market
value
or
realization value whichever is

less) in the balance sheet.
GR/IR Clearing
MR11, F.19
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6.2
SUPERSEDES:
Accounts Receivable
Accounts Receivable is the sub-module in which the financial accounting transactions involving customers are
recorded and administered. All postings in Accounts Receivable are also recorded simultaneously in General
Ledger. The components of Accounts Receivable are closely integrated with components of Sales and
Distribution and Materials Management which will support an automated sales cycle.
Document type used for accounts receivables RV, DR, DA, DG, and DZ
6.2.1
Sales Invoices posting to Accounting
The billing document is a document which supports the creation of customer invoices, credit or debit memos,
and the recording of the financial impact of these transactions in the general ledger. In ABC, the Billing
Document or Sales Invoices created in Sales & Distribution Module will automatically create an Accounting
Document. The Accounts Department shall as part of the closing process verify that the policies in respect of
Revenue recognitions have been followed for the Sales Invoices. The Billing Document and the Delivery
Documents in respect of the Sales Invoices which do not meet the Revenue recognition criteria will be
cancelled / reversed.
As a result of the creation of a billing document, integration to the Financial Accounting module occurs with the
automatic creation of an accounting document containing the following accounting entries:
Debit to the customer account (sub-ledger) and the appropriate general ledger reconciliation account
assigned to it
Credit to the appropriate general ledger revenue account
The Payment Term maintained in the Sales Area segment of the Customer should be the same as in the
Accounting Document. Consequently no changes in the Payment Term will be allowed while creating the Sales
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Order or Billing Document. A change in the Payment Terms in the Sales Order would be considered as a
credit-sensitive field for the purpose of Credit Management. Consequently, any change in the Payment Term
would block the Sales Order for Delivery automatically.
6.2.2
Cash / Check Receipts from Customer
The receipt of payment from a customer is the final step in the integrated sales cycle. Hyderabad Chemicals
Ltd, will process customer payments by clearing open items in the Customer Account. Posting of an incoming
payment will create an accounting entry, which will debit the appropriate general ledger cash account and
credit the appropriate customer account. At the same time, a credit is posted to the general ledger
reconciliation account assigned to the Customer Account. A partial payment leaves the original invoice intact
and creates a credit in the customer account for the amount of the partial payment. No items will be cleared as
a result of a partial payment.
All incoming payments shall be routed through the Checks under Collection clearing account and the amount
shall be transferred to the main Bank Account upon the realization of the check. The Checks under Collection
G/L Account shall be open-item managed so that the details of checks in clearing can be seen from the openitem list.
In case of dishonor of check, the Customer Account shall be manually "Blocked for Delivery. This block shall
not restrict new Sales Orders from being created but all subsequent deliveries including deliveries in respect of
earlier created Sales Orders cannot be processed for that Customer.
The incoming payment document shall thereafter be reversed which will clear the item in the Checks under
Collection Account and the Customer Invoices shall again be open. Bank charges for such dishonor shall be
recoverable from the Customer for which Debit Notes shall be issued to the Customer.
If there is any difference in payment and if such differences are within the tolerance limits, such differences
arising out of under or over payment shall be posted to separate G/L Account. All the Customers shall have the
following tolerances for payment differences; the lower limit between them would be valid.
The realized exchange gain / loss will be calculated and posted automatically while clearing open items in
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foreign currency. Any Bank charges specified when settling payments will also be automatically posted to the
G/L Account for bank charges.
6.2.3 Post Dated Check from Customer
The receipt of Post Dated Checks (PDC) will be handled differently by Hyderabad Chemicals Ltd, since such
checks cannot be considered at the time of receipt of the check as a realized payment. Hyderabad Chemicals
Ltd, will keep all PDC received by it in the custody of the bank in a safety locker till the instrument date i.e. the
date of the check. Hyderabad Chemicals Ltd will be using Special G/L Indicator n for this purpose so that the
normal Accounts Receivable Reconciliation G/L Account Balances are not affected. Instead the alternate
Reconciliation G/L Accounts balances will be updated with the PDC amounts when the Customer Account is
credited with this Special G/L indicator. A separate G/L Account shall be used to represent the Checks in Hand
which shall be debited at the time of receiving such PDC.
When the check is deposited in the bank on the instrument date, the Check in Hand Account is cleared with the
posting to the Checks under Collection G/L Account. The amount shall be transferred to the main Bank
Account upon the realization of the check. The normal open item shall be cleared against the special item in
the Customer Account subsequently to reflect the correct receivable amounts.
In case of dishonor of check, the Customer Account shall be manually blocked for delivery and all the payment
documents reversed.
6.2.4 Bills of Exchange / Letters of Credit from Customers

Bills of exchange are handled as special G/L transactions by Hyderabad Chemicals Ltd. These transactions
are thus maintained independently of other transactions in the subsidiary ledger and are posted to a special
G/L account in the general ledger. This will facilitate an overview of bills of exchange receivable at any stage.
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Firstly, the payment by bill of exchange is posted using the Special G/L Indicators and used to clear the
receivable against the customer.
The two special G/L Indicators that will be used are:
W for certified and without recourse Bills of Exchange
A bill of exchange receivable is recorded on the customer account and the special G/L account. The bill of
exchange receivable is posted to the customer account and reduces the receivables from goods and services
on the reconciliation account. The bill of exchange receivable is also automatically posted to the special G/L
account for bills of exchange receivable in the general ledger. The existing bill of exchange receivable at any
time can be monitored via the customer account.
The special G/L account for bill of exchange receivables will show the total amount of bill of exchange
receivables that exist for the customers represented in this account. Bills of exchange receivable are not
canceled until they have been cleared.
6.2.5 Credit Memo Processing

Credit memo will be created when a customer is over-billed. It adjusts previous entries that were overstated.
Therefore, posting a credit memo always leads to a credit posting on the customer account.
A credit memo
will only be prepared if the corresponding invoice was created and sent out to the customer.
A credit memo
will not be created if the invoice has not been sent to the customer, as user is able to cancel the original
invoice, reversing the relevant G/ L entries and create a new invoice.
For credit memo with reference to AR invoice, the credit memo must be created with reference to the original
invoice in order to correctly reflect customer outstanding balance. This is done by updating "Invoice Reference"
field during the creation of the credit memo.
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6.2.6 Customer Down Payment

Some of the Customers will make the advance payment along with their orders. Advances are treated as Down
Payments in SAP System. Down payment is to be made with reference to Sales order in case of both export
sales and domestic sales. If the customer pays an amount in advance, a down payment is captured in a
separate GL account distinct from the normal reconciliation GL Account which is used for normal transaction.
This is a special GL Account. This account is used to record only transaction related to down payment. This
Advance can be adjusted against the invoice after goods are dispatched.
Customer account is linked with General Ledger Account by a reconciliation account. All transactions related to
customer are automatically posted to this reconciliation account. Special GL Account is the reconciliation
account used to record the down payment transaction to a separate account than the normal reconciliation
account.
The SAP Standard down payment process is different from that of process and reporting requirement of ABC
for Card Sales and a development / work around is envisaged in this regard.
6.2.7 Customer Incoming Payment

This function allows user to record receipts from customers in the system and adjust them against invoices and
debit memos. In the case of payments received against invoices, the invoices can be adjusted against the
payments. In case the payment is not with reference to specific Invoices, the receipt is recorded as an On
Account receipts, and linked to one or more invoices later or the oldest invoice is adjusted. Invoices, advances
and debit memos can be settled to the extent of the outstanding amount. Incoming payment can be booked
partially. Invoices, advances and debit memos can be partially settled.
In case the receipt currency is not the local currency, the same is converted into local currency for accounting
purposes. However, the receipt details are stored in the entered currency but can be viewed in local and foreign
currency as and when required.
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6.2.8
SUPERSEDES:
Usage of Bills of Exchange/ Letters of Credit from Customers
Bills of exchange are also discounted by Hyderabad Chemicals Ltd, at a bank in advance of its due date
(discounting) and bears cost in the form of interest (discount) and handling charge. If the bill of exchange is
used for refinancing and is passed on to a bank, then the bill of exchange usage is posted. In the general
ledger, the bill of exchange recourse liability is managed until it has expired in separate G/L accounts that
offset the entry in the bank account.
The bill of exchange liability will be automatically posted to the specified bank sub-accounts. These bank subaccounts which can be posted automatically only shall be managed with line item display and open item
management to enable Hyderabad Chemicals Limited to monitor the current bill of exchange liability. Any bank
charges borne for discounting shall be automatically debited to the G/L Account for Bank and Finance
Charges.
Once the due date has been reached and the protest period as per law has elapsed, the bill of exchange
liability will be manually reversed. This is done by clearing the Bill of Exchange Receivable in the Customer
Account whereby the Special G/L Account is offset against the Contingent Liability Account.
In case where the Bill of Exchange amount has to repaid to the bank due to dishonor by the Customer, the Bill
of Exchange liability and usage is cancelled and payment documents are reversed. The original Customer
Invoice shall once again be open.
6.2.9
Dunning Customers for overdue receivables
Hyderabad Chemicals Ltd will send Customers a payment reminder or a dunning notice to remind them of their
outstanding debts. The dunning program duns the open items from Customer Accounts in which the overdue
items create a debit balance. It will select the overdue open items, determines the dunning level of the account
in question, and creates a dunning notice. It then saves the dunning data created for the items and accounts
affected.
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SUPERSEDES:
The Dunning Procedure controls how dunning is carried out by the system. Hyderabad Chemicals Ltd, will use
Dunning Procedure 1000 Hyderabad Chemicals Ltd Dunning Procedure which has a dunning interval of 14
days and 4 dunning levels for dunning the customers.
The dunning levels will be calculated based on the number of days the open items are in arrears. The dunning
program determines the accounts and items which are to be dunned, the dunning level and all other details
necessary for dunning. The dunning program produces a dunning proposal list. The dunning proposal list can
be created as often as required since the dunning data for the item and in the account is not updated until the
dunning notices have been printed.
The dunning proposal list can be edited by raising or lowering the dunning level of some line items, blocking
some line items from being dunned, or removing dunning blocks. The print program prints the dunning notices.
It will update the fields Dunning level and Dunning date in each line item, and dunning date and level in the
master records.
The dunning texts will be different for each of the dunning levels. Only those Customer Accounts which contain
a dunning procedure in the master record will be included in the dunning run.
6.2.10
Credit Management
Hyderabad Chemicals Ltd will define Credit Limits for each Customer to minimize its Credit risks. Automatic
Credit check will be applied for each Customer at the point of creation of Sales Order. Only one risk category is
maintained for the customers for the purpose of setting Credit Limits and Credit Control.
In case a new Sales Order leads to the credit limit being exceeded for the Customer, a warning message will
be issued but the Sales Order will not be prevented from being created. However, the Sales Order will be
blocked for delivery.
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Also if the Payment Term in the Sales Order is different from the Payment Term maintained in the Sales Area
Customer Master Data, the Sales Order would be automatically blocked for delivery.
An authority is assigned to release all blocked outbound deliveries.
6.2.11
AR Closing Operations
Objective
Monthly closings
Yearly closings
Monthly end Closing

Once all parked documents are completely posted and payments for the month are completed, the posting
period for customers can be closed. This is to prevent the occurrence of back posting invoices to the previous
period after reports are generated.
Before posting period can be closed, other month end processing activities such as executing the recurring
program need to be performed if applicable.
Opening the new period and closing the previous period are two parts of the closing procedure.
Step
1
Procedures
Accounts posts /
deletes the
outstanding
parked documents
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SUPERSEDES:
Step
Procedures
through parked document program.
Execute recurring program, if applicable.
After completed all the additional postings. Run Currency Valuation

for valuating open items in foreign currency.
Post the valuation
differences. Close AR posting period and open the new period.

Generate month end reports:
AR Ageing
Customer Balances
Open Items, etc
Year end closing

At the end of the fiscal year, carry forward program is required to be executed to carry forward the customer
and customer account balances to the new fiscal year. After running the carry forward programs, when a
transaction is posted to the previous year, the account balances in the current year are immediately updated
automatically. Balance carry forward program is done after entries are completed.
In SAP year end closing is similar to the month end process with additional activity of carry forward of balances
to next year. The advantage of this is even after balances are carry forwarded to next year, any entries to
previous year will automatically update the opening balance of next year.
activities.
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SUPERSEDES:

Step
Procedures
Execute AR balance carry forward program to carry forward customer
balances to the new fiscal year.

Post additional
posting
applicable.
After completed all the additional postings. Close the posting period / fiscal
in special
period,
if
year and open the new period / Fiscal year. System allow for the current
year even though previous account is not closed yet.
Generate year end reports, e.g.:
6.2.12
AR Ageing
Customer balances
Open items, etc
AR Process Steps
Main process
Description
Process of SAP
Creation
Reconciliation GL
1. General
&
customer
master
will
be
created
Payment:
Advance When
customer
GL
accounts FS00
(sundry debtors, etc., )

Creation of customer master XD01,
(in sync with SD)
XD03
Customer invoice posting (in F-22
case of FI customers)
View the customer accounts
Incoming
2.
of
Transaction code
payment
FBL5N
and F-28
clearing the customer invoice

a Creation of Special GL FS00
paid accounts
for
advance
XD02,
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Main process
SUPERSEDES:
Description
any
payment
sending
Process of SAP
Transaction code
down payments
before
Link between sundry debtors OBXR
the
and advance payments

goods it will be Advance receipt
collected in a Invoice posting (in case of
F-29
F-22
GL FI customers)
Transfer
of advance from F-39
account by using
special GL to normal account
Special
GL
by clearing
indicator
and
Clearing of normal item
F-32
after goods are
special
received it will be
cleared.
Creation
In the cases of
payments by LC
(bills
3.
Bills
Exchange
accounts
of
for
Special
GL FS00
bills
of
exchanges
of
of exchange) it will
be recorded into Invoice posting
SAP system and Receipt of BOE
can be checked Discounting with the bank
Party wise due list
periodically.
Reverse Contingent liability
F-22
F-36
F-33
S_ALR_87012213
F-20
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Main process
SUPERSEDES:
Description
Process of SAP
Transaction code
Manual Incoming Payments
F-28
Customer line item analysis
FBL5N
any Customer balance analysis.

necessary things
FD10N
Any
payments
from
customer
can be checked
4.
Customer with
Payments
the
down
payments, bills of
exchange
and
pending invoices
and cleared.
By using SAP we
can see the line
items / balances
of Customers and
5.
Customer also change the
account analysis
layout of display
by
adding
like cost center

etc., into display
After the outgoing
payment
has
been posted all

6.
Clearing
Account
Customer
invoices can be Manual Clearing
cleared
either
age wise or one

by one.
F-32
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6.3
SUPERSEDES:
Accounts Payable
Accounts Payable is the sub-module in which the financial accounting transactions involving vendors and
employees are recorded and administered. All postings in Accounts Payable are recorded simultaneously in
General Ledger. The components of Accounts Payable will be closely integrated with components of Materials
Management to support an automated Procurement Cycle.
Document types used in Accounts payable are KR, RV, KA, KZ, KG
6.3.1
Vendor Invoice without Purchase Order (Direct exp. Booking)
Hyderabad Chemicals Ltd receives Vendor Invoices in respect of expenses for which Purchase Orders are not
created. These Invoices would be accounted for directly in the FI Module without any procurement process.
Since there are no preceding documents like Purchase Orders, Goods Receipt / Service Entry Sheet, the
Invoice would be physically verified and approved by the concerned Department Head responsible for incurring
the expense.
For posting a Vendor Invoice, the following minimum information will be required in the document header:
Vendor Code
Posting date: the date that the Vendor and G/L Account balances are updated. It determines the posting
period.
Document date: issue date of the original document (not necessarily the same as the posting date). For
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SUPERSEDES:
invoices it is called the invoice date.

Amount: the total amount of the Invoice
Document type
Currency
Reference and Document header text would be have to be entered mandatory
G/L Account number The G/L Account created for Hyderabad Chemicals Ltd, in the operating Chart of
Accounts 1000.
Amount All amounts shall be converted to the Company Code currency INR if the Document Currency is a
foreign currency.
Additional assignments including Cost Center would be required depending on the G/L Account used. The
Assignment field (alphanumeric, up to 18 characters) is updated automatically with the data from the field
referenced in the Sort Key field of the general ledger account. A value in the Assignment field can also be
manually entered.
All such Vendor Invoices would have to be initially parked and subsequently posted.
6.3.2
Goods Receipt based Vendor Invoice Verification
The main task of the Invoice Verification component is to complete the procedure of materials procurement by
posting the vendor invoice and to pass on information concerning the invoice to Financial Accounting and
subsequent applications. Invoices that originate in procurement of services can also be processed.
An Invoice against a Purchase Order will be processed with reference to the Purchase Order Number or the
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SUPERSEDES:
Delivery Note. An invoice for a service will refer to a service entry sheet. Goods-receipt-based Invoice
Verification must be defined in ALL purchase orders. Each invoice item can then be matched up uniquely with
the goods receipt item.
All deliveries or services provided by a vendor can be settled in a single invoice. On the item list all purchase
order items that match the reference allocation and that are ready to be invoiced will be suggested.
All invoice items in which the quantity expected to be invoiced is not zero will be selected by default. Only the
selected invoice items are copied to the document when you post the invoice. Any invoice items that has been
proposed and selected should be manually deselected if they do not appear in the Vendors invoice.
In the Quantity column, the quantity to be invoiced will be proposed. This quantity will be the difference
between the quantity delivered and that invoiced so far for each goods receipt.
In the Amount column, the product of the quantity proposed and the order price will be proposed. This amount
will not include taxes.
The following information will be mandatory entry during the Invoice Verification process.
Document Date i.e. date of invoice
Posting Date
Invoice Number
Invoice Amount
Purchase Order / Delivery Note or Service Entry Sheet number
The following information will be then copied from the Purchase Order:
Vendor, terms of payment (if defined there), currency
Invoice items
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SUPERSEDES:
The following information is derived from the Purchase Order history:
Quantity, amount
Tolerances limits shall be specified for different types of variances which are defined in the various Tolerance
Keys. When processing an Invoice, each item shall be checked for variances between the invoice and the
Purchase Order or Goods Receipt. Variances are allowed within predefined tolerance limits. If a variance
exceeds a tolerance limit, however, an informational message will be issued during Invoice Verification. If an
upper limit is exceeded, the invoice is blocked for payment when it is posted. The invoice would have to be
released subsequently by removing the Payment Block from the Accounting Document. However, the
informational message shall be changed to an Error Message when tolerances in respect of prices are
exceeded.
If in the master data for the material it has been defined that the Goods Receipt of the material is subject to
inspection and that an Invoice for the material should be blocked due to Quality Inspection, then an Invoice for
the material would be blocked if no usage decision has been made about the inspection lot for the goods
receipt concerned or if the inspection lot is rejected.
It will not be possible to post an invoice before the goods receipt. Also, the invoice quantity will not be greater
than the actual delivered quantity.
All Invoices will be initially parked before being posted. For each incoming invoice, Invoice Verification creates
an MM invoice document and an FI invoice document. Both these document numbers will be informed via the
system message when the document has been successfully processed. When the invoice is posted, the GR/IR
clearing account is debited and the vendor account is credited.
After the invoice has been posted, the document appears as an open item on the vendor account. It will also
update the purchase order history.
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6.3.3 GR based Vendor Invoice Verification for Imports
Purchase Orders in foreign currencies are created for imports of finished or semi-finished goods and capital
assets. In the case of Invoice Verification in respect of imports, the currency of the document is determined
from the Purchase Order currency. The exchange rate differences are calculated from the exchange rate at the
time of the goods receipt and the exchange rate at the time of the invoice receipt. The difference between them
will be automatically calculated and posted to separate G/L Account so that the amounts posted in Local
Currency to GR/IR Clearing Account are identical.
6.3.4
Invoice for Delivery Costs
Freight charges are sometimes planned in the purchase order. More often, they are not known in detail when
the purchase order is created and are entered only in Invoice Verification on the basis of information in the
invoice. Therefore, delivery costs can be divided into:
Planned delivery costs which are entered at item level in the Purchase Order
Unplanned delivery costs which are entered at invoice receipt.
For planned delivery costs, postings will be made to the GR/IR clearing account at goods receipt. These
postings are cleared when the invoice is posted. Any differences between the planned costs and actual will be
treated as Unplanned Delivery Costs and posted to separate expense accounts.
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6.3.5
SUPERSEDES:
Payments to Vendors
Hyderabad Chemicals Limited will be making manual payments from time to time to pay the outstanding
Vendor Invoices which are due for payment. If the outgoing payment involves a payment in foreign currency,
the defaulted local currency would have to be changed to the foreign currency being used for payment. The
exchange rate maintained as on the Posting Date which is defaulted can be changed if the buying rate is
different.
Separate bank sub-accounts for outgoing payment would be maintained for each House Bank and Account.
The bank sub-account from which payment is being made as well as the payment amount and the bank
charges, if any for the payment has to be determined in case of manual payment. The bank charges would
then be automatically posted to the appropriate G/L Account.
If the payment is being made through the printed check the following Header Data would be maintained first
i.
Payment method as C for check
ii.
the House Bank from which the check is being issued
iii.
the Check lot which is being used
iv.
the printer defined for printing the check
The bank sub-account would be determined automatically from the House Bank.
Both normal open line items and special G/L line items can be selected while making the payment. Additional
selections can be made based upon specific fields including Amounts, Document Number, Reference, etc.
Additional field of Net Due Date will be available in the display and for sorting so that the open items can be
sorted based on their due dates.
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SUPERSEDES:
Any under-payment or over-payments within the tolerance limits shall be accounted for in the specified G/L
Accounts. Similarly, in the case of payment in foreign currency any gain / loss between the exchange rate for
the payment and the original / revaluated open item will be posted to separate Gain and Loss on realized
foreign exchange G/L Accounts.
Hyderabad Chemicals Limited will be usually making full payments against invoices. Occasionally partial
payments will be done but Residual payment will never be done. In case of partial payments, the invoice and
the partial payment amount shall both appear as open items.
Once the payment document is posted, the items selected for the payment shall be marked as cleared items
and no longer appear in the open item list. The number and posting date of the payment document shall be
updated in the documents which were cleared against it. Additionally, in case of payment with print, the check
shall be printed immediately on posting the payment document and the check information created.
The Remittance Advise and Payment Voucher will be printed subsequently.
Payment to vendors through manual payment with cheque printing
Payment to vendors through manual payment without cheque printing
Automatic payment to the vendors
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SUPERSEDES:
6.3.6 Down Payment to Vendors
Hyderabad Chemicals Limited has to pay advance payments to vendors i.e. payments in advance of receiving
the invoice. These payments shall be posted to the Vendor Account with special G/L indicators so that their
balances can be updated in separate G/L Accounts instead of the normal reconciliation accounts for vendors.
Special G/L Transactions
Special G/L transactions are special transactions in accounts receivable and accounts payable that are
displayed separately in the general ledger and the sub ledger. This may be necessary for reporting or for
internal reasons.
For example, down payments may not be balanced with receivables and payables for goods and services.
Consequently, they are treated as special G/L transactions in the General Ledger, Accounts Payable and
Accounts Receivable.
This is achieved by posting to alternative reconciliation accounts, instead of posting to the normal reconciliation
accounts for receivables and payables.
The special G/L transactions which are available in SAP system are as follows:
Down payments and down payment requests
Bills of exchange receivable, bills of exchange payable and checks/bills of exchange
Bank bills
Payment requests
Guarantees
Reserves for bad debt
Security deposits
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SUPERSEDES:
These special procedures are displayed separately from other receivables and payables on the balance sheet
either for legal reasons, such as with down payments, or for control reasons, such as with guarantees
received. A separate special G/L account is created for each special G/L transaction as Bills of exchange,
Down Payment and etc. As a result, it is possible to display each transaction in the balance sheet without
having to carry out any transfer postings and to receive an overview via the account limited to this procedure
only.
The special G/L indicators and G/L Accounts to be used for Vendor Down Payments are:
A Down Payments, Current Assets
All down payments to Vendors shall be paid only with reference to Down Payment Request for the same.
These Down Payment Requests shall identify the Vendor to whom the payment is to be made, the special G/L
indicator, the amount and the requested date for payment. Additionally, the Down Payment Request can only
be made with reference to the Purchase Order Number and the Line Item identification against which the down
payment is to be made.
Down Payment Requests are only noted items and do not update any G/L Account balances. However, since
they can be managed as a line item in the account, line item display will be active for the special G/L Account
for Down Payment Requests.
Actual Down Payments shall be made only with reference to the earlier created Down Payment Requests. The
down payment shall automatically clear the line item in the Down Payment Request G/L Account and post a
document with the selected special G/L indicator.
The down payment can be cleared against the Invoice after the Invoice Verification is done. The down payment
can also be cleared while making an outgoing payment to the vendor. Down payments will also be updated in
the Purchase Order history.
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6.3.7 Tax Deducted at Source (TDS)

The TDS process in the SAP system can be divided into following steps:
Down Payment
Invoice Receipt
Down payment clearing
Provisions at period end
Challan updates
Bank challan update
Certificate print/reprint/cancel
Annual returns
The Income Tax Act, 1961 requires the tax be deducted at source at the time of payment or invoicing, which
ever is earlier. The following data is used to explain the various scenarios:
Down payment amount Rs. 1000
Invoice Amount
Rs. 3000
TDS 2%
Down Payment
At the time of down payment the vendor accounts gets debited by the total amount of payment inclusive of
TDS payable. A sample accounting entry follows:
Account Description
Dr / Cr
Amount
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SUPERSEDES:
(Rs.)
Vendor - Advance
Dr
1000
Bank
Cr
980
TDS Payable
Cr
20
Invoice Receipt
At the time of recording the invoice received from the vendor, the expense account is debited to the extent of
the entire invoice value. Liability in the vendor account is posted net of TDS liability. A sample entry follows:
Account Description
Dr / Cr
Amount
(Rs.)
Services
Dr
3000
Vendor
Cr
2940
TDS Payable
Cr
60
Down Payment Clearing

At the time of clearing the down payment against the vendor liability, TDS payable account is also reversed to
the extent of tax deducted at the time of making the down payment. A sample entry follows:
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Account Description
SUPERSEDES:
Dr / Cr
Amount
(Rs.)
Vendor
Dr
980
TDS Payable
Dr
20
Vendor - Advance
Cr
1000
Provision at period end

At the time of preparation of financial statements, if there are cases where vendors have provided services but
have not invoiced the same to ABC, the EWT component on these items can be provided for. These provisions
would also consider the impact of tax deducted on down payments, if any. Once the vendor sends an invoice,
the provision against the same would be reversed.
These two steps are carried out in SAP by way of executing transactions for the same.
Challan updates
At the time of remittance of TDS to the relevant tax authorities, the following entry would get passed:
Account Description
Dr / Cr
Amount
(Rs.)
TDS Payable
Dr
60
Bank
Cr
60
Bank challan update

When TDS is remitted to the permitted bank, such bank provides the remitter with a payment reference
number or a Challan number, which acts as proof of remittance. SAP provides the facility of recording this
Challan number. This reference is then printed in the TDS certificate issued as well as the TDS Annual Return.
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SUPERSEDES:
Certificate print/reprint/cancel
The Income Tax Act, 1961 requires that the vendor in respect of whom tax has been deducted and remitted
should be provided with a withholding tax certificate within 60 days of the business transaction. SAP provides
the following facilities with respect to withholding tax certificates:
Printing TDS certificates
Cancelling of TDS certificates
Re-printing of TDS certificates (duplicate copy)
The layouts of these forms as required by the relevant tax authorities will have to be developed in SAP.
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SUPERSEDES:
6.3.8 Valuation of Foreign Currency Open Items

Hyderabad Chemicals Limited has to value at the end of each month all the open line items in Vendor
Payables which have been recorded in foreign currencies. Each open item shall be revalue at the end of each
month. The exchange rate maintained for exchange rate type M - Standard translation at average rate shall be
used for the purpose of revaluing open items.
In the case of open items being revalue, the difference between the exchange rate for the document and the
month end exchange rate would be the unrealized gain / loss on revaluation. The revaluation will be reversed
on the 1st of the next month.
The gain on revaluation and loss on revaluations shall be posted to separate G/L Accounts. The Accounts
Payable adjustment during the foreign currency valuations will be posted to a separate G/L Account.
6.3.9 Loans / Advance to Employees

Hyderabad Chemicals Limited has various types of transaction excluding salary payments with its employees.
For the purpose of recording these transactions separately, the employees shall be created as Vendor
Accounts.
Since the majority of transactions with employees are in the form of advances related to their carrying out their
official duties, the normal reconciliation account for the Employee Vendor Accounts shall be Employee
Advances. Special G/L Transactions would be used for the purpose of summarizing the below in the Financial
Statements
1. Advances for travel
2. Personal advances / advances for expenses
3. Loans
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6.3.10
SUPERSEDES:
Closing Operations
Monthly closings
Yearly closings
Monthly end Closing

Once all parked documents are completely posted and payments for the month are completed, the posting
period for vendors can be closed. This is to prevent the occurrence of back posting invoices to the previous
period after reports are generated.
Before posting period can be closed, other month end processing activities such as executing the recurring
program need to be performed if applicable.
Opening the new period and closing the previous period are two parts of the closing procedure.
In SAP closing of activity is centralized and vendor posting can be blocked for all the location after
completing the vendor related transactions for that month. This will avoid delay in closing the month end and
results in streamlining of closing activity.
Month-end closing comprises all activities involved in closing a posting/accounting period. Accounting period is
a division of a companys fiscal year. The number of periods and definition of period are to be determined
during configuration.
Each posting into the system must be associated with an accounting period. This is to ensure that each
transaction can be reported in the corresponding period. In the same token, periods must be controlled to
ensure validity of the reports.
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SUPERSEDES:

Step
Procedures
Accounts posts /
deletes the
outstanding
through parked document program.

Execute recurring program, if applicable.
After completed all the additional postings. Run Currency Valuation

for valuating open items in foreign currency.
parked documents
Post the valuation
differences. Close AP posting period and open the new period.

Generate month end reports:
AP Ageing
Vendor Balances
Open Items, etc
Year end closing

At the end of the fiscal year, carry forward program is required to be executed to carry forward the vendor and
vendor account balances to the new fiscal year. After running the carry forward programs, when a
transaction is posted to the previous year, the account balances in the current year are immediately updated
automatically. Balance carry forward program is done after entries are completed.
In SAP year end closing is similar to the month end process with additional activity of carry forward of balances
to next year. The advantage of this is even after balances are carry forwarded to next year, any entries to
previous year will automatically update the opening balance of next year.
activities.
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SUPERSEDES:
Step
Procedures
Execute AP balance carry forward program to carry forward vendor
balances to the new fiscal year.

Post additional
posting
applicable.
After completed all the additional postings. Close the posting period / fiscal
in special
period,
if
year and open the new period / Fiscal year. System allow for the current
year even though previous account is not closed yet.
Generate year end reports, e.g.:
6.3.11
AP Ageing
Vendor balances
Open items, etc
AP Process Steps
Main process
Description
Reconciliation
1. General
code
Creation of GL accounts FS00
GL
&
Vendor master will be

Created
Transaction
Process of SAP
(for all sundry creditors,

inventories etc)
Creation
of
Vendor
master (in sync with MM)
XK01,
XK03
XK02,
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Main process
SUPERSEDES:
Description
Transaction
Process of SAP
If
Withholding
tax
code
is XK02
applicable to the vendor

Attach
withholding
codes
to
master
Invoice
the
tax
vendor
posting
(if
FI
F-43
vendors)
To See the party wise
account
Payment
When
2. Advance Payment
posting
and F-53
printing the checks

particular Creating the special GL FS00
vendor asked for any accounts

Down payment request
down payment before
Advance
Payment
sending the goods it will
posting
be collected in a special Invoice posting
GL account by using Clearing
advance
Special GL indicator payment by transferring
and after goods are to normal account
received it will be Clearing the normal item
3. Banks:
F-49
F-48
F-43
F-54
F-44
cleared.
Payment to Vendor by Creation of check lots
FCH1
Payment through bank
F-53
Check
Manual check updating or FCH5 or F110.
when automatic payment
program
is
configured
system takes the next

available check number
and prints it and matches
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Main process
SUPERSEDES:
Description
Transaction
Process of SAP
code
to the invoice.
Check register
To
enter
FCHN
check FCH6
encashment date
Un-issued
check FCH3
cancellations
Issued
check FCH8.
cancellations
By using SAP we can
see the line items /
Vendor line item analysis
FBL1N
adding any necessary Vendor balance analysis.

fields like cost center,
FK10N
balances
of
vendors
4. Vendor account and also change the

analysis
layout
of display by
etc., into display

After
the
outgoing
payment
5. Account Clearing
posted
has
all
been
vendor
invoices can be cleared

either age wise or one
by one.
Manual Clearing
F-44
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6.4
SUPERSEDES:
General Finance Process
6.4.1 Document Change

Errors discovered after a document has been posted can be corrected by changing the document. Document
change rules determine which document fields can be changed and under what circumstances. Fields directly
related to the accounting information in a document can never be changed (e.g., posting key, account number,
amount, currency and the dates in the document header). Changes to financial accounting data can only be
made by reversing the document and posting a new one.
6.4.2 Document reversal

The process of document reversal creates a new document containing line items that are the opposite of those
in the document being reversed. Since the original document remains intact, document reversal offers a better
audit trail than correcting errors through manual adjusting entries. Both the original document and the reversal
document appear as cleared documents when displaying account line items. If a posting date is not specified
for a reversing entry, the system enters the posting date of the original document.
A document can be reversed only if:
The document has no cleared line items
The document contains only customer, vendor, or general ledger account line items
The document was posted in FI
All values in the original document, such as cost centers are still valid
Hyderabad Chemicals Limited will use types of reversal, the true reversal and the traditional reversal. The
traditional reversal causes both the debit and credit columns in the account balance and subsequently in the
trial balance of an organizations books to increase by the amount of reversal. As a result, the transaction
figures are inflated. The true reversal is based on the negative posting principle according to which the
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negative line item amount is posted on the same side (debit or credit) as in the original document. As a result,
when a document is reversed, the account balances that were originally increased by an incorrect posting are
in turn reversed by the negative (reversal) posting. The true reversal document looks exactly the same as the
traditional reversal document, it contains postings with reversing posting keys, and it is not possible to
determine at first sight that the amounts are negative. However, in the More Details screen of a line item a
flag indicates that the negative postings took place. Neither the account balance nor the original transaction
reflects the reversal on either side (debit or credit), which is the key purpose of the true reversal.
Negative postings will be permitted on the company code level and also a special reason code for negative
postings will be used for ABC. The traditional reversal can still be used. The conditions for the true reversal are
the same as for the traditional reversal.
6.4.3 Open Item Clearing

Line items are considered open when they are posted to open item managed general ledger accounts and to
all customer or vendor accounts. Clearing is the process of matching open debit entries with open credit
entries within the same account. The system assigns a clearing number to the matched items. Only general
ledger accounts that are open item managed can be cleared. All customer and vendor accounts can be
cleared.
The additional selection section of the clearing transaction can be used to narrow the number of line items
viewed, especially when a large number of open items exist in the account. The viewed line items must be
selected for clearing. The net value of all selected line items must be zero or within the tolerance limits. A
document header is created even when no clearing entries are necessary to balance the items to zero. The
clearing number is derived from the document number of the clearing document. The clearing document has
its own number even if it is just a header.
Automatic clearing program will be used wherein line items with matching amounts and specified criteria will be
selected and cleared automatically. If the clearing date is not specified then the date on the clearing document
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will default to the most recent date of either the document date or posting date of the documents that contain
the line items selected for clearing. In order to clear accounts, a clearing tolerance will be specified in the
master record.
The clearing differences for clearing the various accounts will be posted to the various accounts.
6.4.4 Taxes
6.4.4.1
Tax on Sales and Purchases
For ABC on each taxable sale (i.e. non-exempt) and on each taxable purchase (i.e. non-exempt) made inside
the respective state, a value added tax (VAT) will be applied. The rate is determined by the kind of product,
service that is purchased. The taxes on the sales and purchase transactions are classified as exempt, zero tax
rate, or standard tax rate. It is possible for the VAT Tax on some purchases to be non refundable. For these
transactions the Vat amount will be added to the actual cost of the product.
A tax code will be set for every vendor and every material in the SAP system. This denotes that taxes are
calculated automatically. The code can be manually overwritten with a non-taxable code if taxes are not
applicable to a certain transaction when the transaction is entered. Tax codes are to be assigned to the
Vendors and Materials records.
Some of the tax codes maintained for ABC are:
Tax Indicator
Description
A0
Tax on sales VAT Exempt (0%)
A1
Tax on sales VAT 4% deductible
A4
Tax on sales VAT 8%
A5
Tax on sales VAT 12.5%
V0
Tax on Purchases Exempt (0%)
V1
Tax on Purchases VAT 4% deductible
V2
Tax on Purchases VAT 8% deductible
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V3
Tax on Purchases VAT12.5%deductable
V4
Tax on Purchases VAT 16%
V9
VAT on imports
6.4.4.2
Service Tax
Service tax is payable on the services obtained for the organization. Categories of services that attract service
tax is notified by the tax authorities. Service tax is tracked through separate tax codes and posted to separate
accounts. Service tax paid can be set off against the out put service tax, if any, else same can be set off
against the excise duty payable.
Some of the service tax codes maintained for ABC are:
Tax Code
Description
S0
Service Tax Exempt (0%)
S1
Service Tax 12.36% deductible
6.4.4.3
Extended Withholding Tax
TDS will be covered as:
TDS on salary of employees
TDS on others
TDS ON SALARY
TDs on Salary to employees will be covered in HR payroll and deduction will be done at the end of each
month. TDS on salary will be posted to a separate GL account as required. Payment to Government will be
made by Finance dept. every month on the due date.
Accounting entry on the payroll run:
Dr. Employee vendor a/c
Cr. TDS on Salary payable
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Deposit of TDS:
Dr TDS on Salary payable
Cr Bank account
Form 16 for tax deducted from salary of employees shall be generated from HR. Similarly Tax return for Salary
will also be generated from HR.
TDS on Others
TDS on Others will be categorized as per the following sections under Income Tax Act.
Official Withholding tax key:
The deduction of TDS takes place under various sections of the Income Tax Act. These sections are defined as
Withholding Tax keys in the system and mapped to the sections of the Income Tax Act under which TDS is to
be deducted. Based on the above the following official Withholding Tax codes shall be created in the system:
Section-193
Section-194
Section-194A
Section-194C
Section-194H
Section-194I
Section-194J
Section-195
TDS on Interest on Securities

TDS on Dividends
TDS on Interest other than Interest on securities
TDS on payment to Contractors and sub contractors
TDS on Commission and Brokerage
TDS on Rent
TDS for Professional and Technical services
TDS on payments for Foreign services
Any new section which attracts TDS can be configured as Official Withholding Tax Key
Recipient type:
The vendors from whom TDS is deducted need to be classified as Company and Others. Recipient
type enables categorization of the vendors. This categorization is required for creation of separate
challans and printing the TDS certificates
Withholding Tax types:
Withholding tax types are defined at client level to represent the various types of withholding taxes for
eg 194C, 194D etc. Withholding tax types are also used to determine whether the deduction of TDS will
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SUPERSEDES:
take place at the time of invoice verification or at the time of payment. These withholding tax types can
be used once these are linked to the Company codes. Withholding tax types shall be configured as per
ABC requirement.
For each withholding tax type minimum and maximum amounts shall be
maintained.
Withholding Tax Codes:
The various sections of the Income tax Act prescribe the rate at which the Tax is to be deducted.
Withholding tax codes are used to define the rate at which tax is to be deducted and the base amount
on which the tax is to be calculated. The rate will also include rate of surcharge and Education Cess if
any is applicable. Surcharge and Education cess rates shall be maintained separately in tables and
printed on the Vendor TDS certificate.
Vendor master:
WHT type /codes shall be maintained in the Vendor master as applicable to the vendor. Tax
computation will be done by the system based on the WHT type/code maintained in the vendor master
at the time of invoice entry and also advance payments. Withholding Tax Type and Withholding Tax
code are maintained at the Invoice Entry level and PAN# will be made as a part of Vendor Master
Only tax type is maintained at the Payment level. This will ensure tax will not be deducted both at the
time of invoice and payment.
In the case of Advance payment, tax type will be maintained and user
needs to select the tax code. If multiple TDS sections are applicable to a particular vendor, then all the
tax types and tax codes for invoices applicable for those TDS sections must be maintained in the
vendor master. However at the time of invoice entry the user has to select the correct tax type and code
and exclude those which are not applicable.
System should facilitate manually enter the taxable amount: base amount.
At the time of posting user shall amend the
Once the tax is calculated, it should be posted to the respective account Tax Payable A/c automatically is a
standard functionality. TDS Payable Account will be maintained section wise.
Exemptions rates will be maintained at the Vendor Master level for deducting tax to vendors.
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Accounting entry at the time of Invoice entry:

Dr Expense a/c
Cr Vendor
Cr TDS Payable
(Separate GL accounts shall be created section wise like TDS payable Contractors,
Professional fee. etc.)
TDS payable -
Accounting entry for advance payment to vendors:

Dr. Vendor Advance a/c
Cr. Bank a/c
Cr. TDS Payable
TDS remittance:
Remittance will be made through the system by standard T-code J1INCHLN. Challans will be updated
for each section wise, corporate and Non corporate separately. Due dates will be defined in the
configuration for each section wise.
Dr TDS Payable
Cr Bank a/c
Bank Challan updation:
Bank challan number will be updated in the system through standard T code J1INBANK. This will link
the remittance challans with the external bank scroll number. No accounting entry will be generated.
TDS certificate:
Certificates for the vendors can be generated by T Code- J1INCERT
Certificates cannot be generated more than once. However duplicate certificate can be issued.
Quarterly E-Returns:
E-Returns for TDS shall be generated from the system by T code J1INQEFILE. The return shall be
converted into required excel file and can be validated for filing.
TDS deducted by Customers:
A separate set of WT tax code & tax type shall have to be created for customers. Following accounting
entry shall be generated at the time of receiving the payment:
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Dr.
Bank a/c
Dr.
TDS deducted by customer a/c
Cr.
Customer a/c
SUPERSEDES:
The system will propose the TDS amount and the user can overwrite the amount, if required.
After receiving the TDS certificate from the customer, J1INCUST transaction shall be run and following
accounting entry shall be generated:
Dr. Advance Tax Paid A/c
Cr. TDS deducted by customer a/c
Standard report J1INMIS will give the details of TDS Section Wise & Vendor Wise
6.5
Fixed Asset Accounting
The Fixed Assets module serves as a subsidiary ledger to the Finance (FI) General Ledger and is used to
manage and track fixed assets. This module encompasses the entire lifecycle of the asset from purchase order
or the initial acquisition through its retirement. Depreciation is calculated and available through standard
reports. The Fixed Assets module also has special functionality for dealing with assets under construction.
The objective of asset accounting will be to track ABCs long-term assets with respect to valuation, useful life,
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depreciation, physical location, retirement, and transfer. Master records will be created for each of the longterm assets at the acquisition value. Depreciation rules will be established and calculated automatically at
period-end.
6.5.1 Chart of Depreciation

Chart of depreciation contains the various data needed to manage the Depreciation and valuation of Assets. All
valuation parameters and values necessary for this are maintained in an area called the Depreciation area.
The system allows the maintenance of multiple depreciation area. Depreciation areas are grouped together
into a Chart of Depreciation.
6.5.2 Calculation of Depreciation

The depreciation areas specify the different methods for calculating depreciation for the asset to which they are
assigned. Each asset of Hyderabad Chemicals Limited solution will have at least two depreciation areas which
are defined in the Chart of Depreciation
01. Book depreciation in local currency as per companies act.
For each asset the useful life of each asset is used as the basis in accordance with the information provided in
the depreciation areas to calculate the depreciation/expense and post it to the general ledger. The useful life in
years shall be maintained for each Asset Class. When an Asset Master is created, this useful life maintained in
the Asset Class shall be defaulted.
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Separate general ledger accounts will be established to collect the values for depreciation for different Asset
Classes.
The system determines the start or end of depreciation based on the asset value date of a transaction (of the
acquisition or retirement) using period controls. For ABC, depreciation will be calculated from the day of
acquisition or Ordinary Depreciation Start Date.
6.5.3 Depreciation Key

Depreciation keys contain the calculation methods for depreciation calculation
You can enter a separate depreciation key for each depreciation area in the asset master record.
Depreciation Key
Description
SL01
Straight Line Method - 1.63%
SL02
SL03
SL05
SL06
6.5.4 Cutoff value key

Calculation key used for controlling the calculation of the cutoff value for depreciation.
The cutoff percentage rate is determined on the basis of cutoff value key and is used by the system when
There is no absolute scrap value entered in the depreciation areas of the asset concerned (an absolute
scrap value takes precedence over a cutoff percentage rate)

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Negative book value is not allowed for the asset
6.5.5 Acquisition of Fixed Asset

Fixed Assets is integrated with other components / modules. Fixed assets is also integrated with the
procurement cycle and may be updated with detailed acquisition data such as, but not limited to Purchase
order number, Purchase price, Book value, Date acquired, Vendor, etc.
The normal asset procurement flow starts when the need to purchase an item is identified. When this need is
identified the requisitioner begins the purchase requisition but does not determine if the item is an asset. At the
time of converting the requisition into a Purchase Order the item is determined by the Purchase Department to
be an asset. The Purchasing Department contacts the Accounts Department and supplies information about
the asset. Once the Accountant has received the asset information he/she creates the asset master record and
notifies the Purchase Department so that the Purchase Order can be finalized.
The asset values will be automatically posted with the Goods Receipt posting. Once the invoice for an asset is
received, the value on the invoice is compared with the value of the asset on the asset master record.
6.5.6 Assets under Construction Accumulation and Capitalization
All capital expenditures while constructing a capital asset are accumulated in a separate Fixed Asset account
under the Asset Class "Assets under Construction". No depreciation will be calculated on these Fixed Assets.
Internal Orders of the Object Class Investment shall be used for the purpose of collecting the amounts to be
capitalized in respect of long-term projects. An Internal Order shall be created for each such project and all
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postings in respect of the project shall be made to this Internal Order using separate G/L Accounts. At the end
of every month, the Internal Order shall be settled to an Asset which represents the Asset under Construction.
Projects are depreciated after being capitalized in accordance with the Groups Depreciation policy. Each
quarter, the Asset under Construction Fixed Asset is reviewed to determine if there are completed assets that
should be capitalized. New Fixed Asset Master is created and the amount to be capitalized is transferred to
these Fixed Assets. The date of start of depreciation has to be determined.
6.5.7 Evaluation Groups

The evaluation groups are another option for classifying assets for reports. This acts as selection criteria for
Reporting. You can use five different evaluation groups (four with 4 characters, and one with 8
characters). You can store the characteristics for these groups in the asset master record. Evaluation groups
are majorly used for asset reporting purpose.
These are part of master record. So you can maintain master data information in this field to identify an asset
in asset accounting module.
Example: If we have certain asset lying with Employees and just want to track it as to what all assets
are lying with Employees then you can create on evaluation group saying Employees and wherever an asset is
lying with the employee then select evaluation group in that.
6.5.8 Asset Transfer Procedures

SAP has provided two Transfer Procedures
Transfer with in the Company Code

Using intracompany asset transfer, you transfer a fixed asset, or an asset component, to a different asset
master record. The target asset has to be in the same company code as the sending asset. Intracompany
transfer may be necessary for one of the following reasons:
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An asset was created in the wrong asset class. Since you cannot change the asset class in the asset
master data, you have to transfer the asset to a new master record.
You split up an asset or move part of an asset (transfer from asset to asset).
You settle an asset under construction and transfer it to a finished asset.
Inter Company Transfer of Assets: - These are again sub divided into
Automatic intercompany transfer (Acquisition and retirement in one step)
Manual intercompany transfer (Acquisition and retirement in two separate steps
6.5.9 Treatment of Low Value Asset

We specify the maximum amount for low-value assets (LVAs). The specifications of LVA are per company code
or per depreciation area. The system checks this maximum amount during every acquisition posting, providing
the corresponding LVA indicator is set in the asset class.
SAP supplies low-value asset maximum amounts for most countries.
The ABC asset classes include one asset class for low-value assets managed individually.
During a quantity check, the system determines if the value of the collective low-value asset divided by the
quantity entered in the asset exceeds the LVA maximum amount for the company code or depreciation area.
6.5.10
Insurance
Here we define the valuation and management of the assets in regard to insurance policies. For this, we
define various information in the asset master record for insurance policies and insurable values. It is also
possible to manage insurable values in their own depreciation area.
It is particularly useful to manage insurance data and insurable values in the master record in the following
instances:
You need certain insurance data for informational reasons (such as liability or collision insurance for
vehicles).
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The insurance types which you want to use (for example, fire insurance)
varied master record information for insurance specifications (such as, the insurance company)
6.5.11
Sale / Retirement / Scrapping of Fixed Asset
The asset retirement process is used when it is determined that an asset is no longer of value to ABC. When
you post an asset retirement, you can enter the revenue from the sale of the asset. The gain or loss (affecting
income) as the difference between this revenue and the book value of the asset being retired is automatically
determined. The gain or loss shall be posted to the corresponding profit and loss account. If it is determined
that the asset has no value or insignificant value and should be scrapped, the loss arising out of such
scrapping is determined and posted.
6.5.12
Posting of Depreciation
Depreciation shall be calculated and posted every month end as part of the monthly closing process. The
depreciation values will be posted to the corresponding expense and asset balance sheet accounts in the
General Ledger. The periodic posting will take place using a batch input session. Only summarized postings
will be made per G/L Account instead of individual documents.
6.5.13
Down Payment for Capital (tangible) Assets
Down payment to vendors for capital acquisitions are to be reported separately in the Balance Sheet under the
head Capital Work in Progress. Hence down payment for capital goods would be tracked through a separate
special general ledger indicator.
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The procedure to be followed is:

Definition of alternative reconciliation accounts for Accounts Payable for posting down payments
made for Capital assets
Clearing the down payment in Accounts Payable with the closing invoice.
A new G/L account shall be created for the special G/L transactions.
A) The accounting entry for making the down payment shall be:
Vendor Advance for Capital Goods Account
Debit
Bank A/c
Credit
B) When the invoice is booked the following entry is passed

Asset A/c
Debit
Vendor A/c
Credit
C) Clearing of Invoice against Down Payment

Vendor A/c
Debit
Vendor Advance for Capital Goods Account
Credit
6.5.14
Physical Inventory of Assets
The FI-AA component provides the following functions to support the physical inventory Inventory list
The system provides an inventory list to assist with physical inventory. You find this list in the standard
Information System for Asset Accounting. You adapt the structure and sorting of the list to meet your specific
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needs. You make these modifications using standard report. The list displays only those assets in which the
inventory indicator is set in the asset master record
6.5.15
Closing Operations
Objective
Monthly closings
Yearly closings
Monthly end Closing

Step
Procedures
Settlement of completed CWIP assets to main assets
Execute Depreciation Run
Year end closing

Fiscal Year Change
Fiscal Year change is the opening of a new fiscal year for a company code. At the fiscal year change, the asset
values from the previous fiscal year are carried forward cumulatively into the new fiscal year. Once the fiscal
year change takes place, user can post to assets using value dates in the new fiscal year. At the same time,
continue to post in the previous fiscal year.
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The fiscal year change can only be carried out (even in test mode) for the new fiscal year. The earliest that you
can carry out a fiscal year change is in the last month of the old fiscal year. You can choose any point in the
new fiscal year for carrying out the fiscal year change. Before you can change to fiscal year YYYY, you must
have already closed fiscal year YYYY.
Maximum of two successive fiscal years can be opened for posting at one time.
No business transactions can be posted in a new fiscal year before the fiscal year change. You can continue to
post in the old fiscal year, even after the fiscal year change. The system automatically corrects any values that
are affected by postings in the past. The fiscal year change has to be carried out as background processing
for performance reasons. The system carries out the fiscal year change for all assets, even if the assets have
errors. The system provides statistics per company code for the assets that have been changed. The system
writes assets with errors to an error log. In the case of program termination, you can repeat the fiscal year
change as often as required.
Year-End Closing
Before close a fiscal year in Financial Accounting from a bookkeeping perspective, carry out Year End Closing
activity in Asset Accounting to close the fiscal year for the company codes from an accounting perspective.
Once the fiscal year is closed, no longer post or change values within Asset Accounting (for example, by
recalculating depreciation). The fiscal year that is closed is always the year following the last closed fiscal year
and cannot close the current fiscal year. Perform the year-end closing as background processing for
performance reasons.
The system only closes a fiscal year in a company code if
The system found no errors during the calculation of depreciation (such as, incorrectly defined
depreciation keys).
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Planned depreciation from the automatic posting area has been completely posted to the general
ledger.
All assets acquired in the fiscal year have already been capitalized.
All incomplete assets (master records) have been completed.
The system lists any assets that do not meet the above requirements in the log of the year-end closing.
The log also shows the reason for the errors.

Step
Procedures
Execute the standard SAP inbuilt check which will validate the pre closing
activities.
Execute fiscal year change program which will validate and carry forward
asset balances to next fiscal year

Execute year-end closing program to close the fiscal year for one or more
company codes from an accounting perspective.
6.5.16
Main
process
Asset
Asset Accounting Process Steps
Description
In this step asset master record
Maintenance will be created, any changes
Process of SAP
Creation of master record
Transaction
code
AS01, AS11,
AM01
can be done and also asset Creation of group asset
AS21, AS24
retirement can be done. Group Asset mass change

asset can be identified based
OAAX
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Receipts
SUPERSEDES:
AS02, AS22,
on asset classes defined.

Asset shutdown
Once asset master record is Direct acquisition
with F-90
made, asset acquisition shall vendor

be posted depending on with
PO / without PO and with Acquisition
and
clearing ABZON,
vendor / without vendor. All with offsetting entry
F-
91
down payments to be taken

care
of
and
also
any
subsequent acquisition posted Down payments
F-48
as asset sub number.
Retirement with Revenue

All the asset retirements will be
Retirements
taken care of in this step and Asset
While
sale
without
customer
Asset
Retirement
any profits / losses posted.
Depreciation
with Customer
Scrapping
the Manual depreciation
calculating
by
F-92
ABAON
ABAVN
ABMA
depreciation first depreciation

planning can be done which will
be processed along with cost
centers and
if
run
ABAA
AFAB, ASKB
Depreciation Processing
AFAB
Depreciation posting
AFAB
overhead orders
any and then depreciation
posting
Unplanned depreciation
Depreciation Planning
will
be
made
periodically. This is a batch

input transaction that will be run
at the time of period closing.
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All the transactions relating to
Settlement of AUC
AIST
asset under construction will be

collected separately and after
finishing
transactions
capitalized. Post capitalization Reposting

value
after
will
Post Capitalization
Business
transactions
they
include
be
adding
capitalizing
AIAB, AIBU,
the Write ups.
ABNA (Post
cap)
ABUMN,
ABTIN
ABZU, ABZS
asset.
Physical asset inventory
The existing asset inventory Fiscal year change
AR01
AJRW
can be taken out by using the

Closing
report. Preparations for year end AJAB

Changes to the fiscal year will closing for assets.
operations
be carried out and
SAP
standard
the
previous year is closed. Before Mass change of assets

opening
AR01, OA02
the new period,
depreciation postings will be Depreciation postings
AFAB
made.
Specific
Separate depreciation area will Revaluation of Assets
ABAW
valuations
be defined to make revaluation
rev),
postings.
AFAR
(BS
AR29,
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CO Business Process
Controlling Area is an organizational unit within an Organization. Controlling Area is being used to represent a
closed system for cost accounting purposes. Controlling Area is used for internal reporting purposes. Multiple
Company Codes can be used same Controlling Area, to have a uniform Costing Systems in place. All the
company codes in the controlling area must use one Chart of Accounts and Fiscal Year Variant.
Controlling provides with the information for management decision-making. It facilitates coordination,
of production factors and the services provided by an organization.
Along with documenting Actual events, Planning can also be done in controlling module. This facilitates
determining variances between plan and actual data. These variance calculations enable to control business
flows.
Co - Master Data
Cost Elements
A Cost Element describes the nature and origin of costs.

Cost Elements are defined either as Primary or Secondary. Profit & Loss GL Accounts in Financial
Accounting are created as corresponding Primary Cost Elements in Controlling.
G/L accounts which are Primary Cost Elements would require a compulsory cost object whenever
these accounts are credited or debited in the Financial Accounting.
Secondary Cost Elements are used exclusively in Controlling for the purpose of carrying out
processes affecting Controlling like allocations, settlements (transfer of Costs from one object to
another), Work in Process calculations, Production Variance calculations, Activity Price Calculations
and Overhead Calculations.
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The data automatically flows to Controlling if a GL account is created as Cost Element in Controlling.
This is because of integration between Finance and Controlling modules.
Primary Cost Elements will be created with naming convention as that of GL accounts for revenues
and expenses. Without GL Account, it is not possible to create the Primary Cost Element.
Important fields in Cost Elements are as follows:
Cost Element Category determines the business transactions for which the Cost Element can be
used.
ABC will be using Cost Element Category 01 for all the Primary Cost Elements.
Cost Element Category 41 Overhead Rates for Overhead calculations
Cost Element Category 42 - Assessment for Secondary Cost Elements for the purpose of
Assessments between Cost Centers.
Cost element groups will be used to process several cost elements in one business transaction.
Multiple Cost Element Groups will be maintained for the purpose of executing the various Controlling
Reports effectively.
Cost Center Accounting
It is necessary to check the costs of individual areas in an organization so as to provide decision-making data
for management. This requires that all costs be assigned according to their source. Since, source-related
assignment is especially difficult for overhead costs; Cost Center Accounting lets you analyze the overhead
costs according to where they were incurred within the organization.
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The main activities in Cost Center Accounting include entering the plan figures at the beginning of a fiscal year
for the combination of Cost Center and various other Master Data. Thus it involves entering plan figures for
Costs, Activities, Prices or Statistical Key Figures for a particular Cost Center and a particular Planning Period.
The variances from these figures can then be determined by comparing these plan values with the actual. The
other objective of planning is for the calculation of product cost.
The period-end processes in Cost Center Accounting include periodic allocations between the various Cost
Centers through Distribution and Assessments and Variance Calculation to analyze the cause of them.
Hyderabad Chemicals Limited will be doing planning in all the three planning areas in Cost Center Planning:
Cost Center Category Each Cost Center is to be assigned to its category. The respective Cost
Center Categories for ABC are:
Sl. No.
Cost Center Category
Description
1.
Development
2.
Production
3.
Logistics
4.
Service cost center
5.
Management
6.
Material
7.
Social
8.
Sales
9.
Administration
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7.1
SUPERSEDES:
Cost Center Planning
Cost centre planning involves entering plan figures for costs, activities, or statistical key figures for a particular
cost centre and a particular planning period. You can then determine the variances from these figures when
you come to compare these plan values with the costs actually incurred.
7.1.1 Cost Elements / Activity input planning

Hyderabad Chemicals Limited will be doing Activity independent cost planning for primary costs without
referring to specific Activity Types. This involves entering the planned costs that arise from the consumption of
goods and services procured externally. The planned figures will be entered in the local currency INR using
the Version 0.
The Activity-independent primary costs are planned for the combination of Cost Centers and Cost Elements.
The costs will be initially planned for the whole fiscal year and equally distributed among the various periods.
Any changes in the plan costs during the fiscal year will be changed for the remaining periods of that year.
7.1.2 Cost Elements wise Activity dependent planning

Activity Dependent cost planning for primary costs will be made, based on the following combinations:
Cost Center
Activity Type
Primary Cost Elements
Some of the cost can be directly identifiable in the above combinations. This involves entering the planned
costs that arise from the consumption of goods, services procured externally, expenses incurred. The planned
figures will be entered in the local currency INR using the following versions.
Version
0
Description
Plan/actual version
Plan Version: Preliminary
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2
4
SUPERSEDES:
Plan Version: Change 2
Plan Version: Change 3
The Activity-independent primary costs are planned for the combination of Cost Centers and Cost Elements.
The costs will be initially planned for the whole fiscal year and equally distributed among the various periods or
based on the distribution key.
7.2
Activity output / prices
Activity Type planning involves the determination of the quantity based output of a Cost Center. Activity types
are used primarily to measure the activity quantities on the cost centers. This enables the measurement of the
operating rate or the rate of capacity utilization of a cost center. The activity price is determined per Cost
Center / Activity Type either manually or in automatic activity of price calculation.
The following Activity Types shall be used by ABC

a.
Setup Time
b.
Machine Hours
c.
Labour Hours
Hyderabad Chemicals Limited will be setting manual activity prices for the various Production Cost Center /
Activity Type combination. Gradually it shall do the automatic activity price calculation during which all primary
and secondary costs planned for the appropriate cost centers are included in the activity price. If several
activity types are planned on a cost center, the plan costs are broken down (split) onto these activity types for
activity price calculation. This will be accomplished by entering equivalence numbers along with each planned
activity type, or with plan cost splitting. The unit price for an activity type is calculated by dividing planned costs
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SUPERSEDES:
for an activity by the planned quantity of activity type units.
This Activity Price or rate is used in product cost planning / controlling to arrive at the planned cost of
production or standard cost estimate and actual production costs.
7.3
Activity Output Planning for a Cost Center
Part of Activity Type planning, it is required to determine quantity based output of a Cost Center. Activity types
are used primarily to measure the activity quantities in a cost centers. This enables the measurement of the
operating rate or the rate of capacity utilization of a cost center. The activity price is determined per Cost
Center / Activity Type either manually or in automatic activity of price calculation.
7.4
Statistical Key Figure planning
This process is required for entering cost centre wise planned SKF so that in distribution and assessment cycle
this can be used in tracing factor.
7.5
Cost Center Allocations
Costs collected in a Cost Center during a period are further allocated to other Cost Centers on the basis of
user-defined keys such as percentage rates, amounts, Statistical Key Figures, etc. Hyderabad Chemicals
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SUPERSEDES:
Limited will be using Assessments as a method of allocating both Primary and Secondary Costs. The original
Cost Elements are assigned cumulatively or in groups to Assessment (Secondary) Cost Elements.
7.5.1 Assessment
Assessment is a method of allocating the Costs in Cost Center Accounting. The following information is passed
on to the receivers:
The original cost elements are assigned cumulatively, or in groups, via secondary cost elements
(assessment cost element). The original cost elements are not recorded on the receivers.
Sender and receiver information
Allocation through assessment is useful when the composition of the costs is unimportant for the receiver.
7.5.2 Distribution
Distribution is used to allocate the primary costs of a cost center. The following information is passed on to the
receivers:
The Original Cost Element
Sender and receiver information
You can analyze the distribution results according to sender and receiver relationships.
To transfer the costs Assessment or Distribution cycles will be created in the system. The cycles are split into
various segments, if the distribution ratios are changed:
From the Sender Cost Center & Sender Cost Element will be transferred to receiving cost center based on a
tracing factor / percentage / identified ratio.
Costs collected in a Cost Center during a period are further allocated to other Cost Centers. ABC will be using
Assessments as a method of allocating both Primary and Secondary Costs. The original Cost Elements are
assigned cumulatively or in groups to Assessment (Secondary) Cost Elements.
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SUPERSEDES:
Sender-receiver relationships between the various Cost Centers will be defined in the various segments of the
Assessment Cycle. During assessment, the original cost elements will be summarized into the Assessment
Cost Element. Line items are posted for both the sender and receiver Cost Center while recording the
allocation using the Assessment Cost Element.
Statistical Key figures are used for Allocation of Electricity, Telephone, Cleaning, Gardening, Maintenance
expenses etc.
7.6
Automatic Account Assignments
Automatic Account Assignments means default account assignments. These are defined in the
system to post transactions to Controlling module from other modules like MM, SD etc through
automatic processing transactions like Goods receipt, Invoice verification etc.
ABC will be defining default account assignments for postings to primary cost elements. These
assignments will be defined for cost elements that need to be posted to a particular real Cost object
so that this assignment is automatically included for primary postings. These default postings can be
either to a Cost Center.
The default Cost Centers assignments will be made at the following levelsControlling Area, Company Code, Valuation Area and Cost Element This will be for the following
transactions
Material Consumptions for Sub-Contracting process
Subcontracting Charges of Vendors (Price mentioned in Sub contracting purchase orders is the
conversion charges to be paid to sub-contracting vendors)
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Changes in Stock which will hit when Goods are received from subcontractor. This is an
offsetting GL account and a Cost element for the subcontracting inventory (semi-finished goods)
inventory receipt.
The Gains or Losses which arise due to differences in quantity or prices between Goods
Receipts and Invoice verifications which are posted through manual clearings in GR/IR Clearing
Account based on business decisions.
Price differences arising due to differences in Prices between Goods Receipts and Invoice of a
material, in case sufficient inventory is not available at the time of invoice receipt. Price
difference arises to the extent of inventory consumed; rest of the amount is adjusted to
inventory.
Exchange rate differences arising due to differences between exchange rates between Goods
receipt and Invoice receipt, in case sufficient inventory is not available at the time of invoice
receipt. Exchange difference arises to the extent of inventory consumed; rest of the amount is
adjusted to inventory.
Unplanned delivery Costs in Vendor Invoices
The price differences arising because of return deliveries from Sales when the standard prices
changes (due to revaluation) between date of sales and date of return.
Controlling Area, Company Code and Cost Element. This will be for the following transactions
Gains or Losses on Foreign Currency revaluation and Realised Losses/ Gains on Vendors, Customers
and Inter Company accounts.
7.7
Actual Posting in Cost Center Accounting
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The actual values are posted online to monitor costs on an ongoing basis. These postings enable us to
recognize variances at an early stage, and to take the necessary counter measures.
Actual cost entry involves transferring primary costs from upstream components to the Controlling (CO)
application component. In the CO component, this transfer occurs real-time from the components Financial
Accounting, Asset Accounting, Materials Management, Production Planning and Payroll Accounting. This is
achieved by entering a cost accounting object (such as a cost centre or an internal order) during account
assignment.
Primary costs entered in other systems are allocated further using internal allocations and as true to source as
is possible. To enable this, costs are determined for each business transaction, based on the valued internal
activity. They are then posted real-time to the sender and receiver object(s) (debit and credit postings).
Errors are unavoidable and may result particularly during initial days of SAP live operations. Thus, there will be
occasions where postings are assigned to the wrong controlling object, and ABC should be able to rectify
posting errors related to erroneous assignment to controlling objects.
ABC can repost primary costs from one controlling object to another using transaction-based transfers; the
original cost element is always retained. This function is designed to correct posting errors. Posting errors
should preferably be corrected in the application component where they originate, so that external and internal
accounting (FI and CO) is always reconciled.
In ABC, the assignment of CO objects to the transactions in other modules like FI, SD etc. is taken care of
where ever possible, to post the entries automatically to the respective CO objects, in order to reduce the
chances of error occurrence.
Posting errors involving assignment to a controlling object (cost centre or internal order) can, however, is
corrected using a transaction-based reposting in CO. The reposting costs (or revenues) transaction is simple
transfer of cost (or revenue) from one controlling object to another.
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Alternatively, ABC can repost line items from CO documents.
SUPERSEDES:
To do this, the CO reposting document must
reference the original FI document that posted the costs to CO. This enables to track the movement of cost
with in CO, and still preserve the link with the originating FI document. In repost line items, facility is provide to
enter multiple receiver objects for a line item reposting, but the full amount of original line item must be
reposted.
7.8
Period End Closing Activities in Cost Center Accounting
Period-end closing in Overhead Cost Controlling is part of the work carried out at period-end throughout the
entire organization.
The tasks required at period-end, and the sequence in which they must be carried out, depend on what system
functions can be used and which cost accounting method. This topic describes the basic elements of periodend closing. The explanations assume that all the features available are being used.
ABC will allocate the Costs collected on a cost center during the planning / actual posting, during the accounting period to
receivers, based on user defined ratio. The Activity-independent primary costs which are planned / posted
in the
combination of Cost Centers and Cost Elements, need to be allocated to Production Cost Centers, by using the
Assessment and Distribution method.
7.9
Internal Order Accounting
Internal Orders will be used by Hyderabad Chemicals for the purpose of collecting costs related to Assets
under Construction, for capturing telephone expenses, vehicle related expenses These Internal Orders created
under a separate Internal Order Type would be of the Object Class Expenses orders
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The Internal Orders would be released before any assignments or postings can be made to them. The
Settlement Profile for these Internal Orders would allow the settlement of the balances on the Internal Orders to
be settled to Fixed Assets.
Postings would be made to the Internal Order using a separate range of G/L Accounts. As part of the monthly
closing processes, these Internal Orders would be settled to the Asset under Construction. An Asset Master of
the Asset Class Asset under Construction would be created for each such Investment Internal Order.
Settlement Rule will be created for such Internal Order through which the accumulated costs on the Order shall
be settled / posted to the Asset under Construction. The settlements would take place against the same G/L
Accounts used for posting to the Internal Orders.
7.9.1 Internal Order Master Maintenance
Internal Order Master Maintenance and planning

The following table describes the high-level process analysis of the Internal Order Master Maintenance
using SAP business practices framework:
Process
Process Requirements
Name
Internal
Order
Maintenance
Purpose
To create a new Internal Order for an overhead order released and to allocate a plan value
for the same. Some fields and attributes of Internal order like settlement rule can be
changed.
ABC Uses:
In ABC Internal Orders can be used for Overhead or CAPEX Cost Management. Internal
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Process
SUPERSEDES:
Process Requirements
Name
Order can be used to track the costs or non-operating revenues.
Process Steps:
Create a True/statistical internal order for a particular internal task.
Use the function of change and display whenever necessary.
Configuration Considerations:
Standard SAP functionality will cover all the business requirements for this process. Capital
Investment Order with settlement to G/L account will be used as the Asset Module of the
SAP R/3 is not planned for the first phase of the project.
Data Migration Consideration
All existing internal orders to be created manually and unspent budget to be entered
manually.
7.9.2 Budget Management for Internal Orders

The budget is the approved cost structure for an order and differs from the cost plan in that it is binding. Having
estimated the costs as accurately as possible using the different tools during the planning phase, we then
prescribe the funds available for the order in the form of a budget. The budget is the device by which
management approves the expected development of order costs over a given timeframe.
The following different budget types exist:
Original Budget
This is the budget originally assigned, before any updates were made.
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Budget Updates
Unforeseen events, additional requirements, for example, price rises for external activities, and so on.
This may mean you need to update the original budget, in the form of:
Supplements
Returns
Current Budget
This is derived from the budget types already mentioned:

Original budget
+
Supplements
Returns
Current budget
7.9.3 Availability Control for Internal Orders

Availability control enables to control costs actively by issuing warnings and error messages when costs are
incurred. As per availability control ABC is expecting the warning message issue once budget consumption
reaches 80%.Once the budget consumed fully (100%) system issues error message. These controls assigned
to the budget profile and as per this assignment, system will give warning message once budget consumption
reaches 80% and gives error message and stop posting to order once budget consumption reaches 100%.
7.9.4 Actual Posting to Internal Order

An actual posting to internal order enables up-to-date monitoring of the costs incurred by the organization. In
this way, the variances can be identified at an early stage and correct them.
The following table describes the high-level process flow for the Posting to Internal Order.
No
1.
Process
Data
flow
Accounting
from
Description
Financial All invoices and other entries related to the event
will be posted to true or statistical internal order for
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2.
Data
flow
Management
from
Materials
SUPERSEDES:
information and plan checking.
All internal goods issue and all service order and
service entry sheet related to particular task will be
posted to Internal Order.
Expenses Vouchers Derive the Internal Order
From Purchase Order if defined in purchase order
7.9.5 Internal order period end closing activities

Internal Order Settlement
An internal order is usually used as an interim collector of costs and an aid to the planning, monitoring, and
controlling processes needed. When the job has been completed, you settle the costs to one or more receivers
(cost center, fixed asset, profitability segment, and so on).
An internal order is used as an interim collector of costs and an aid to the planning, monitoring, and controlling
processes needed. At ABC, Internal orders are planned to be used for capturing costs of prospective orders
and for Assets under construction. In addition, a separate order type will be created for budgetary control over
Assets purchase, which will be statistical in nature.
When the job has been completed, user can settle the costs to one or more receivers. For example, in the
case of prospective orders if the order is firmed up, the accumulated costs will be settled to the job and if it
does not materialize, the costs will be settled to the marketing cost center.
Periodic settlement of these internal orders will always be to the cost center which incurred the costs
Settlement of orders would be based on the settlement rule for Internal Orders. This in turn is controlled by the
settlement profile for the order type. An Internal Order could be settled to a GL Account or Fixed Asset, where
as a capital Internal Order is always settled to Assets under Constructions. Once the Order is approved for
Capitalization, it would be settled to a Fixed Asset manually.
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Carry forward to next year

In case of job is carried forward to next year the budget for that order has to be carried forward.
7.10 Product Cost Controlling
7.10.1
Product Cost Planning
Planned cost of the product is calculated
Using the BOM and the master records of the materials in the BOM
Using the recipe, resource where the respective operations are carried out, the cost centers, and the
activity types.
When process order is released, the planned cost is calculated as follows:Cost Component
Material
Labour Cost
Quantity
Rate
Standard BOM
Price from Material Master
Standard activities Plan price as average of all
Machine Cost
in Recipe
fiscal year periods
Standard activities Plan price as average of all
Overhead
in Recipe
Costing Sheet
fiscal year periods

Based on the overhead rate
mentioned in the costing
sheet
7.10.2
Product Cost Controlling
The process order captures all the cost, which are incurred during the production process. The details of each
cost are as below.
Production Process:
Product costing is closely tied to production. The financial and costing entries automatically result from the
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daily production transactions entered into the system. The month-end processes are necessary to complete
the financial picture for product costing.
As all the materials including the finished and semi finished materials are using the moving average price as
price control indicator, the standard costing system cannot be suggested.
The following process to be adopted for Product Costing:
Creation of Process order:

For every batch of production a process order is raised in the production department. The process order
contains the details of BOM and recipe.
The Bill of Material (BOM) details the raw material and packing material in the required portions that are
required for production.
The recipe contains the details process of production activity including resource such as manufacturing
vessel, equipment. Each operation is assigned to its resource and each resource assigned to relevant
activities such as Labour, fuel, power etc. (maximum of six parameters for each resource). Each
resource is attached to a cost centre.
The recipe and BOM are copied to process order automatically when the order is created. The quantities
of materials and activities are determined at standard levels (Planned costs).
Process Order release

Reservation of material for an order will be done at the time of release of order. Material will be reserved batch
wise for the order. The reservation also serves as pick list for picking materials from stores. Any unplanned
issues will have to be added manually.
Creation of batch number:

A unique batch number has to be assigned to the order. Batch number can be internally generated / manually
as per the logic decided.
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Creation of Inspection lot:

Release of process order will result in generation of inspection lot. The inspection lot will be used to record
quality parameters for the order.
Issue of materials to order:

Issue of materials to an order can be done either before execution of the order or at the time of confirmation
(Back flushing)
Confirmation of order:
Confirmation of the order means declaration of production against the order. The order has to be confirmed
completely. Confirmation is possible for release order only. Confirmation will result in stock up of product,
reduction in stock of all raw materials.
At the time of confirmation standard activities (machine, labour) & quantities as per BOM are proposed.
Changes can be done at this stage. The actual cost is updated depending upon the actual quantities
confirmed. In case of back flush option is used then changes can be done for the goods issue quantity as well
during goods movement: Goods receipt quantity (Yield) is automatically transferred to storage location
specified.
Following data are confirmed at confirmation stage phase wise:
Quantities Confirmation of quantity processed in a phase.
Activity data Confirmation of activity used to carry out the phase, such as the duration of the processing
time.
Times and dates Confirmation of start and finish time of phase
Resource confirmation of the resource at which the phase was carried out
Posting date - A posting date is to be entered for every completion confirmation. The system
automatically proposes the current date as the posting date. One can, however, enter a different date.
Long text - Long text can be entered to describe the completion confirmation
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SUPERSEDES:
Technical Completion of Order:

It is the completion of a process order from the logistics point of view. This function is used to terminate
execution of an order prematurely, or if the order was not properly executed and we want to delete open
requirements of the order (for example, reservations, capacity requirements).
The following actions are carried out when the order is technically completed:
The order is not indicated as relevant to MRP anymore
The reservations are deleted
The capacity requirements are deleted
Purchase requisitions that may exist for externally processed operations are deleted
The system status Technically Completed (TECO) is set for the order and the operations
Order Settlement:
Order settlement will update the order material price in material master. This activity to be done before issuing
the goods to higher level order so as to capture the actual cost of the materials.
Revaluation of Process Orders

Initially cost planned in cost centre accounting against activity types are used for valuating the materials that
are produced. At the month end when actual cost are booked from financial accounting, revised activity price
calculation is carried in cost centre accounting and with this prices the Process Orders are revalued. The
revaluation is carried to the extent of difference between planned vs. actual activity prices. The revaluation
Process Orders will not be carried, as Process Orders will be settled immediately.
Order closing:
It is the final closure from production point of view. The Closed (CLSD) status is set in the Process Order. It has
the following characteristics:
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No more costs can be posted to the order, that is, confirmations and goods movements are no longer
permitted for the order.
The order can no longer be changed.
All actions relating to the status technically completed (TECO) are executed.
Suggested business process:

The actual cost of every batch is determined using above process. A report is generated to know the cost for
each batch.
Settlement of Process Orders
The goods receipt against Process Order is based on the planned cost of the Process Order.
During settlement the difference between actual cost incurred and goods receipt value are settled to material.
7.11 Product Costing

The Product Costing Components covers the following business processes:
a. Calculating the Standard Cost estimates based on Bill of Material and Routings for Process orders and
releasing it for Inventory valuation ( For Estimation)
b. Calculating the Batch Cost based on Bill of Material and Activity Hrs/Overheads for Process orders and
releasing it for Inventory valuation
c. Calculating the actual cost of production of intermediary and finished products
d. WIP Valuation at period end.
1.
Standard cost estimates:

The Standard Cost Estimates shall be used for the purpose of calculating the
standard cost of producing a Finished or Intermediate or Bulk products in a Plant.
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SUPERSEDES:
The Standard Cost Estimate shall be calculated using the following strategy and
process:
Standard Cost Estimates will be done at the beginning of the month for all the
materials produced in house - Finished Goods, Intermediates and Bulk products at
the Manufacturing Plant.
ABC will use the Costing Variant PP01 Std Cost Est (Mat.) for the purpose of
calculating the Standard Cost Estimate.
The Standard Cost of finished products, Intermediates and Bulk constitutes
Materials (Raw materials and Packaging materials) and Conversion cost.
The Standard cost for material component will be determined from the Bill of
Materials (BOM) and Raw material Prices. The Bill of Materials (BOM) contains the
standard material quantities for manufacturing finished product. Bill of Materials
(BOM) with usage 1 - Production will be used for the purpose of calculating the
quantities of the material. These Quantities from the Bill of Materials (BOM) and
the Moving Average Price maintained in material master will be used for
calculation of Standard Cost Estimate.
The Standard Conversion cost will be determined through the Master Recipe and
Planned Activity rate. The Master Recipe contains all resources required to produce
a material and the number of hours required for each activity performed by each
resource. The planned rate for each Activity and standard number of hours
maintained in Master Recipe will be used for calculating conversion cost for each
material. The conversion cost will include the following overheads of Operations
Cost Centers.
1.
Labor
2.
Machine
The conversion cost doesnt include Administrative, Sales and Marketing and other
general and administrative expenses.
Valuation Variant: The strategy for picking up various prices / costs of inputs for
estimating standard cost, based on the Valuation Variant maintained in the Cost
Variant. ABC will be using the following strategy:
a.
Material component the system will pick up prices of materials in Bill of

Materials (BOM) in the following order:
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SUPERSEDES:
1. Planned Price 1
2. Moving average price
3. Standard price
ABC will be maintaining Moving average prices for all raw materials,
packaging and semi-finished materials and finished materials. So SAP R/3 will
pick up the prices accordingly while estimating Standard Cost.
b.
Activity Prices system will pick up Most up-to-date Plan price
c.
Overheads from Cost Sheet
The Standard Cost Estimate is a three step process in SAP R/3:

1
Estimate Standard Cost. This is just calculation (estimation) step in SAP R/3
Mark the Standard Cost estimate. This will update the Future Price in the
material master.
Release the Standard Price. This will update the Standard Price in
the Material Master. This has impact on Financials due to revaluation of
Inventory.
It is recommended to analyze the Reports before releasing standard cost

to ensure that correct prices are updated in the material master.
In case of materials having more than one Bill of Materials (BOM)/ Master recipe
because of capacity differences Production department will create different
Production versions. For these materials the Production department should create
the most popular version as Version 1 so that the Standard Cost is updated with
Bill of Materials (BOM)/ Master recipe of the most popular version. This will reduce
variances due to capacity differences in actual production.
The Itemization report of Standard Cost for any material will show the Raw Material
/ Packaging/ Intermediate/ Semi-finished Material Code and the quantities for
materials costs and similarly the cost center/ activity type for activity costs.
The Cost Component report for the Standard Cost will show report as per Cost
Components
1 Raw Materials
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2 Packaging Materials
3 Outside Services
4 Manufacturing Costs
The report can show Fixed and Variable proportions separately for each Cost Component.
The Cost Components will be as follows:
Cost
Cost Elements
Component
1
Cost Component
Description
4001000 4001150
Raw Materials
4004000
4004050
656000
2
4002000
Packaging Material
4002150
3
4901100
Outside services
9101000 9102500
Manufacturing Costs
7.12 Batch Valuation

Valuation category The valuation category determines whether stocks of the material are valuated jointly or
separately. For All RM, SF & FG materials Valuation Category will always be X Batch Valuation.
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As Raw materials are valuated as Batch valuationX, during process order settlement the variances are
settled to the Batch Itself.
To ensure that the variances are totally settled to the process order it is mandatory to do the settlement
immediately after the GR is performed (Consumption and Technically confirmation)
The laxity in this (User not performing the Settlement immediately after GR can be controlled by proving an
enhancement (ABAP) so that the settlement is automated immediately after GR
Manufacturing Cost
The manufacturing cost will be determined through the Routing, the Work Centres at which the operations are
performed, the Cost Centres and the relevant Activity Types. Hyderabad Chemicals will calculate and maintain
for every period the Activity rate manually and update cost centre wise.
The Activity Price calculated and maintained for each combination of Cost Centre and Activity Type and the
standard hours maintained in the Routing will be used for the purpose of calculating the manufacturing costs.
In the case of Finished Goods manufactured through sub-contracting the Semi-finished materials and the
packaging material are supplied by Hyderabad Chemicals and the sub-contractor is paid a rate per unit as
manufacturing costs.
In the itemization for the cost estimate, the Raw Material / Packaging Material Code and the quantities are
displayed. Similarly the cost center/ activity type is displayed in the itemization. The Fixed and Variable Portion
of the cost estimate would be displayed separately using the following Cost Component Structure
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5.3.1
SUPERSEDES:
Costing of Process Orders
Separate Process Orders will be created/ generated for each stage of Finished and Intermediate Product.
When the production order is released, the planned cost is calculated as follows:-
Cost Component
Quantity
Rate
Material
Standard BOM
Price from Material Master
Manufacturing Cost
Standard activities in Routing
Plan price for the period
Actual Cost in Process Orders

The Material costs are calculated simultaneous with the consumption of Raw Material / Packaging Material
during the production activities. The actual Machine / Labor hours will be confirmed in all the Process Order.
The manufacturing cost based upon the actual hours and the Planned Activity Rate will be charged to Process
Order.
7.13
Work In Process Calculation
The WIP will be calculated each month end for those Process Orders where the entire manufacturing process
has still not been completed. The WIP Calculation will be executed and posted to the G/L Accounts using the
Result Analysis Version. When the Process Order activities are completed in a subsequent period the WIP
postings are reversed. The WIP Calculation and Reversal will be done in the following manner
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SUPERSEDES:
Process Order Status
Result Analysis Type
REL / PREL
DLV / TECO
WIP Calculation on Basis of Actual Costs

Cancel Data of WIP Calculation and Results Analysis
7.14
Variance Calculation
Variances are calculated each month end only on completion of the Process Order. The actual costs collected
in the Process Order and Standard Price of the Product will represent the Variance.
Settlement of Production orders

All the Production orders will be settled immediately after process order teco. The Variance will be transferred
and the calculated Variances will be transferred to Process order Settlement variance. The contra entry will
be shown in Gain/Loss production variances
Sample Accounting Entries
Process
Issue of Material to Production
Accounting Entry
Material Consumption A/c (P&L) Dr.
(to Process Order)

Realization of Work-in-process at period-end
To Material Inventory A/c

Work-in-process Stock (B/S) A/c Dr.
To Work-in-process stock change A/c (P&L)

Receipt of Finished Goods in Finished Finished Goods Stock A/c
Dr.
Goods Stores
Finished Goods Dispatched to Customer
To Cost of Goods Manufactured A/c

Cost of Goods Sold A/c
Dr.
To Finished Goods Stock A/c
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Sale of Finished Goods to Customer
SUPERSEDES:
Customer A/c
Dr.
To Sales A/c
7.15 Profit Center Accounting

The main aim of Profit Center Accounting is to determine profit for internal areas of responsibility. Profit Center
Accounting (EC-PCA) is a statistical accounting component. This means that it takes transaction data posted in
other components and represents it from a profit-center-oriented point of view. The postings in EC-PCA are
statistical postings, since the profit center is not itself an account assignment object in Controlling.
The integration of the R/3 system makes it possible to post profit-relevant data to Profit Center Accounting
automatically as soon as the transaction is posted. The system either transfers the relevant items from the
original postings or creates additional postings.
You assign Overhead Cost Controlling objects (cost centers, internal orders, and projects, business processes)
to profit centers in order to observe the flow of overhead costs from Financial Accounting and their allocation
through internal accounting from a profit center point of view.
7.15.1
Standard Hierarchy
The Profit Centre Standard Hierarchy is a tree structure which contains all profit centres and reflects the
organizational structure used in Profit Centre Accounting. The definition of the standard hierarchy is based on
the understanding of the internal organizational structure and planning, allocation & reporting requirements.
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The standard hierarchy consists of summarization nodes and end nodes. Summarization areas group together
profit center data at a higher level. Each node of the standard hierarchy, which is not an end node, is a
summarization area. You cannot assign profit centers directly to a summarization area; it merely groups
together the profit center areas and summarization areas that lie below it. The summarization nodes are used
in reporting and the profit centers are assigned to the end nodes.
To fulfill the requirements, the Profit Centers have to be set up in such a manner as to reflect the reporting
requirement of ABC. For ABC, Profits are classified as from Agro Chemicals and Formulation Products. The
Chemicals product segment is further sub-divided into self-manufactured products,
In the context of the above and its current operations, the Profit Center hierarchy for Hyderabad Chemicals is
as follows.
Hyderabad chemicals
HCL
HCPL
Balangar Plant
Jammu Plant
Neo Seeds
Pashamylaram
Plant
Humnabad Plant
Neo Seeds
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7.15.2
SUPERSEDES:
Profit Center Assignments
All account assignment / business objects including Cost Centers, Internal Orders, Materials, Assets, Sales
Orders, etc. are assigned to profit centers. The data flows automatically to profit center accounting due to the
assignment of these objects to the profit centers. The assignment of business objects to profit centers is
absolutely essential to ensure data consistency in reporting. The following business objects are to be assigned
to the profit centers in ABC:
Material master
Assignments of materials to profit centers provide the default values for assignment of sales orders and
manufacturing orders. With internal goods movements also (such as stock transfers or material withdrawals)
the profit center is derived from the material master, if no other account assignment has been made. The
assignment of materials also forms the basis for the transfer of material stocks to Profit Center Accounting.
Maintaining Profit centres in Material master would be as follows.
Nature of Material
Profit
Center
in
Material
master
Raw/
Packaging/
Intermediates
Balangar/ Jammu/Pashamylarm/Medchal
produced
Semi-finished/ Finished Goods
Spares / Others
Sales Orders
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SUPERSEDES:
It is necessary to assign SD Sales orders to profit centers in order to reflect sales revenues and sales
deductions. The profit center assignment is also passed on from the sales order through the logical chain i.e.
Sales Order -> Delivery Note -> Goods Issue -> Billing Document. This means that when the goods issue is
posted, the goods usage which corresponds to the revenues is also passed on to the profit center of the sales
order. Each order item can be assigned to a separate Profit center
Hyderabad Chemical Profit center updating in sales order is derived from the Profit Center maintained in the
Material Master.
Process orders
In Process orders system proposes the profit center from the master record of the material being produced. For
process orders, the profit center proposed is that of the main product in the order.
All the costs and internal cost allocations posted to the production order are passed on to the assigned profit
center, along with the credit posted when the production order is delivered or settled.
The assignment of production orders also transfers Work in Process for open orders to Profit Center
Accounting.
Cost centers
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SUPERSEDES:
The assignment of a cost center to Profit Center facilitates the postings made to the Cost Center to flow to the
Profit Center automatically. The Cost Centers of Hyderabad Chemicals will be assigned to the Profit Centers in
the following manner
Nature
of
Cost Profit center
center
Production Cost Centre
Cost Balangar/ Jammu/Pashamylarm/Medchal
department
Centers
service Cost Centre
Head office cost centers and department

wise cost centers
All
other
Sales
& Head office cost centers
Marketing
Cost Centers
Fixed Assets
By assigning Assets to profit centers, profits and losses due to the sale of assets as well as depreciation are
transferred to Profit Center Accounting. This assignment also makes it possible to transfer asset portfolios to
Profit Center Accounting. By entering the Cost Center in the Fixed Asset Master Data, the asset and
transactions related to it are assigned to the profit center of that Cost Center.
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7.15.3
SUPERSEDES:
Profit Center Planning
The main aim of profit center planning is to provide data and key figures for the purpose of planning for
responsibility areas. The costs shall first be planned at the various Cost Centres and this plan data shall be
subsequently transferred to the Profit Centers based on the Profit Centre maintained in the respective Cost
Centers. Other plan information (revenues, costs, changes in stock, and so on) shall be planned directly in
Profit Center Accounting.
The plan data in Profit Center Accounting is contained in different plan versions. These plan versions will be
used to store separate sets of plan data for the same profit center. Hyderabad Chemicals will have approved
budget before the beginning of the year, 1st forecast at the end of the 1st quarter, 2nd forecast at the mid of the
year, and 3rd forecast at the end of third quarter. ABC generates reports comparing the actual with Budget as
per the management requirement.
In view of the above following versions will be used for Hyderabad Chemicals
Version
Description
Remarks
Plan/actual version
Can be used for plan & actual purpose
7.15.4
Automatic derivation of profit center in actual transactions
The profit center can be maintained in the masters and while doing actual transactions the profit center is
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SUPERSEDES:
derived. The profit center derivation logic is explained in the following table.
Sl.
No.
1.
Particulars
Expenditure
Logic
Cost of goods sold: Each Material at plant level is
assigned to a Profit Center at the material master. At
the time of booking of sale the Profit Center will be
automatically derived from the Material master.
Price Difference: The same will be derived from the
Material master.
Internal consumption: At the time of booking of
consumption, Cost Center / order is a mandatory
field. This will in turn derive the Profit Center.
Inventory Shrinkage/Lost in transit: The same will
be booked to a Cost Center, which in turn will derive
the Profit Center.
Other Direct and Indirect Expenditure: At the time
of booking of expenditure Cost Center is to be given.
This will in turn derive the Profit Center.
The Cost Center field should be mandatory in case
of booking of any expenditure.
2.
Income
Sales of material / Scrap: Each material / Service at

plant level is assigned to a Profit Center at the
master level. At the time of booking of sale the Profit
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Center will be automatically derived from the material
master.
Other operating income: in case of manual FI entry,
Profit Center has to be manually entered at the time
3.
of entry. The same has to be a mandatory field.

At the time of booking of fixed asset, Profit Center
Fixed Assets
will be derived from the cost center assigned in the

asset master.
4.
Inventory
Each Material at plant level is assigned to a Profit

Center at the Material master.
5.
Debtors
and
related
special
other The Profit Center will be derived from the offsetting

GL line item. In case there are multiple offsetting line
transactions
(excluding
items, the system will break the debtors in the ratio of

advance the offsetting line item.
received)
6.
Advance
received Manual entry at the time of booking
from customers
7.
Creditors
related
and
special
other Same as Debtors

GL
transactions
(excluding
advance
given)
8.
Advance
given
to Manual entry at the time of booking
vendors
9.
Share Capital
Profit Center can be attached at the GL level
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10.
Secured
SUPERSEDES:
and Profit Center can be attached at the GL level
Unsecured Loans
7.15.5
Actual Posting in Profit Centre Accounting
All the postings in Financial Accounting, Materials Management, Asset Management and Sales and Distribution
and Controlling that affect profits are reflected in Profit Centre Accounting. Profit centers cannot receive direct
postings in the SAP ECC System. Instead, the data is posted to other objects and passed on from there to a
profit centre in Profit Centre Accounting. This makes it possible to display companys results by profit centre
based on the original postings and with no additional work.
7.15.6
Profit Centre Account Analysis
The information system lets one analyze all the Data in Profit Centre Accounting individually as well as in a
summarized form according to different criteria. The reports in the Profit Centre Accounting information system
can be classified into two groups:
Drilldown reports
Report Painter reports (and Report Writer reports)
7.16 Profitability Analysis (CO-PA)

CO-PA lets you analyze the profitability of segments of your market segments structured according to products,
customers, orders, and summarizations of these and other characteristics as well as organizational units such
as company code. The aim is to provide your sales, marketing, planning, and management organizations with
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decision-support from a market-oriented viewpoint.

The business purpose of Profitability Analysis is to provide profitability-oriented performance information on a
company's market segments or sales channels, in order to support corporate planning and decision-making,
especially in the areas of sales and marketing.
This sales-oriented approach in CO-PA means that no contribution to the organization's success is made until
a sales transaction has been completed. Consequently, the products sold are transferred to CO-PA in
accordance with the cost-of-sales accounting method and provide information on the sales revenue and sales
deductions.
This net revenue is then compared with the cost of sales. These costs consist of the cost of goods
manufactured of the products sold or services rendered plus any production variances known.
To round off the profitability data, we can also assign overhead costs to profitability segments in the course of
your period-end closing activities.
7.16.1
Operating Concern:
The operating concern is the highest reporting level within CO-PA; it defines the limit of sales and marketing
information, which can be reported together from this module. One or more controlling areas are assigned to
an operating concern when organizational structures are defined.
7.16.2
Data Structure
The data structure will organize the costs and revenues onto how it will be displayed or analysed.1000- ABC
operating concern will be used in order to determine the structure of profitability segments. The data structure
is defined by Characteristics and Value Fields as described in the subsequent narratives.
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7.16.3
SUPERSEDES:
Characteristics:
Characteristics are nothing but the profitability segments for which analysis has to be performed. For eg., a
customer, a region, a sales office etc can be defined as a characteristic.
7.16.4
Value Fields:
Value Fields are the detailed elements that form part of the analysis report. For eg., sales revenue, costs,
overheads can be defined as value fields that form part of the profitability analysis report for a particular
segment.
In ABC some of the individual characteristics will be grouped as below:
Characteristic Groups
Organizational units
Characteristics
Company code
Sales Organization
Distributional channel
Customer related
Customer
Account Assignment group
Country
Customer class
Customer group
Sales District
Sales group
Sales office
Product
Plant
Division
Material group
Billing type
Controlling Area
Sales Order
Sales Order item
Product related
Other Characteristics
In ABC some of the Value Fields will be defined as below:

Sales Quantity
Cash discounts
Cost of goods manufacturing
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SUPERSEDES:
Customer disct.
Freight
Inventory adjustment
Inventory price diff.
Manufacturing costs
Material revaluation
Other discounts
Outside services
Price reduction
Price variances
Prod. cost variances
Production variances
RPM
Revenue
Variable Mfg. Costs
Fixed Mfg. Costs
Condition types: The condition type is used for different functions. In pricing, for example, the condition type
helps in differentiating between different kinds of discount; in output determination.
The following design and configuration options for the setup of the CO-PA operating concern
Cost-based CO-PA is used to match the revenues and costs of products so that cost of sales and
contribution margin analyses can be carried out. Value fields are used to capture cost and revenue data.
Cost elements are mapped to value fields in configuration, but cost elements are not available in costbased CO-PA.
The cost of a product (cost of sales) is only posted to CO-PA when the revenue is posted or when the
invoice is passed to accounting.
Once the order is complete, the production order variances are posted to CO-PA during order settlement
for this Z1 (ABC Prod. PA Transfer Structure) is the PA transfer Structure assigned to process order
settlement profile ( ZPI01)
PA Transfer structure FI (Direct Acct Assign. from. FI/MM) is used for direct posting from FI and MM.
Currency will updated in both operating concern currency and Company code currency
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7.16.5
SUPERSEDES:
Flow of actual values into Profitability Segments:
Profitability Analysis can receive actual data from the following R/3 applications:
SD (customer agreements, sales orders, goods issues, billing documents)
CO-OM (assessment of cost center and process costs, activity and process allocation, order settlement)
CO-PC (valuation using material cost estimates, settlement of cost objects, production variances)
FI (general ledger postings)
Each CO-PA-relevant transaction in SAP (such as invoicing) triggers the creation of line items in COPA. The
data posted in CO-PA is determined through automatic and manual mappings, and through derivation and
valuation configuration.
7.16.6
Information System in CO-PA:
The CO-PA information system uses an online reporting tool - called "drilldown reporting" , which allows to
evaluate the data collected in Profitability Analysis. With this tool we can select the desired dataset according
to any of the characteristics in our CO-PA system.
It is possible to display several profitability segments for any key figure, or several key figures for any
profitability segment.
The CO-PA information system provides a number of different ways to analyze profitability data. We can define
and display profitability reports to analyze the characteristics that are contained in the segment level for an
operating concern.
When defining the profitability report, it is possible to specify the different analysis criteria mainly by selecting
characteristics and value fields.
All the MIS reports for Sales and Profitability Analysis of ABC would be generated through CO-PA.
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Integration
7.1
Chart of Accounts:
SUPERSEDES:
The operating chart of accounts is shared by Financial Accounting as well as Controlling. The accounts in a
chart of accounts can be both expense or revenue accounts in Financial Accounting and cost or revenue
elements in cost/revenue accounting.
7.2
General Ledger Account:
Automatic account determination / posting is one of the most powerful methods to determine the correct G/L
account to post to by considering the type of transactions and other factors. This feature provides a lot of
flexibility and eliminates the need to hard code the G/L account in the source code.
7.3
FI CO Integration:
The operating chart of accounts is shared by Financial Accounting as well as Controlling. The accounts in a
chart of accounts can be both expense or revenue accounts in Financial Accounting and cost or revenue
elements in cost/revenue accounting. All GL-P&L accounts are maintained as cost elements in Controlling.
Further these cost elements are linked to cost centers.
7.4
MM FI Integration:
MM and FI are integrated by way of automatic account assignments to GL accounts for material movements
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SUPERSEDES:
types, which have an impact on financial information. Also valuation classes are linked to FI for purpose of
providing inventory valuation.
MATERIAL MANAGEMENT
Accounting of Purchases:
Accounting of purchases would be configured using account determination in MM module of R/3
system. The determination may be made using following parameters:
Company Code
Valuation Class
Valuation Grouping code
The accounting document for accounting of purchases is a two step process. On posting of Goods
Receipt Note (GRN) in MM, stock account and GR/IR account is posted to. In second step, after invoice
verification, vendor is posted, while clearing GRIR account.
A) Accounting Entry for Goods receipt

Stock/Inventory account
Debit
GR/IR account
Credit
Freight clearing account
Credit
B) Accounting Entry on invoice verification of supplier

GR/IR
Debit
Vendor account
Credit
C) Accounting Entry on invoice verification of freight vendor
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SUPERSEDES:
Freight clearing account
Debit
Freight Vendor account
Credit
D) Accounting Entry Physical Inventory verification posting

Physical Inventory RM
Debit
Stock RM.
Credit
E) Revaluation of Materials
A) Accounting entry in the case of Price Increase
Stock (RM/FG/WIP) A/c
Debit
Revaluation gain / loss a/c
Credit
B) Accounting Entry in the case of Price decrease

Revaluation gain/loss RM A/c
Debit
Stock (RM/FG/WIP) A/c
Credit
F) Transfer of Materials from one plant to another plant

A) Price control in the Material master is Moving Average price
Receiving plant material stock A/c
Debit
Sending plant material stock A/c
Credit
Note: - If the price in the Material master is different in sending plant and receiving plant, system will
change the moving average price in the receiving plant material master.
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7.5
SUPERSEDES:
SD FI Integration:
SD account assignments depend on the condition tables & access sequences to determine the correct G/L
account. One can set up condition tables / types to use different characteristics such as:
Customer class
Plant
Material group
Account modifiers
Sales & Distribution

A) Delivery of Goods to Customer
COGS-Finished Goods A/c
Debit
Stock-Finished Goods A/c
Credit
NOTE: COGS Finished goods a/c is part of Increase/ Decrease in stock
Billing Accounting Entry:

Customer A/c
Debit
Sales Revenue Domestic A/c
Credit
Excise Duty A/c
Credit
Sales Tax A/c
Credit
Freight A/c
Credit
EXCISE ACCOUNTING ENTRIES
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SUPERSEDES:
A) On Updating Excise Part-II
1) Raw materials
CENVAT RG23A BED a/c
CENVAT RG23AECESSa/c
Debit
Debit
CENVAT Clearing a/c
Credit
2) Capital Goods, Tools, etc.

CENVAT RG23C BED a/c
Debit
CENVAT RG23CECESSa/c
Debit
Capital CENVAT RG23C hold
Debit
CENVAT Clearing a/c
Credit
B) At the time of Invoice verification CENVAT clearing a/c gets reversed.

GR / IR Account
A/c
Debit
CENVAT Clearing A/c
Debit
Vendor
A/c
Credit
C) PLA Payment and excise records updating
TR6 Challan Bank Payment

PLA Excise Hold Account
Bank a/c
Debit
Credit
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SUPERSEDES:
PLA Register updating

Excise PLA BED a/c
Excise PLA BEDEcess a/c
Debit
Debit
PLA Excise Hold Account
Credit
Note: at the time of TR6 Challana Bank payment document posting we have to debit the PLA Excise
Hold a/c. By this document posting, system will not update the excise records.
We have to give this document number to excise people. By using this document number they will
update the excise records. At the time of Updating of excise PLA records system will post the second
accounting entry
D) Excise Invoice Accounting Entry

Excise Duty A/c
Debit
Excise BED Payable A/c
Credit
Excise BED EcessPayable A/c
Credit
E) Excise Duty Utilization Accounting Entry

Excise Duty BED Payable A/c
Debit
Excise Duty BEDEcess Payable A/c Debit
RG23A BED Account
Credit
RG23A Ecess Account

RG23C BED Account
Credit
Credit
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SUPERSEDES:
RG23C Ecess Account
Credit
Excise PLA (BED) Account
Credit
Excise PLA (Ecess) Account
Credit
F) Excise entry for sales returns (if we take modvat credit back)
RG23 A BED A/C
Debit
RG23 A Ecess A/C
Debit
Excise duty a/c (Expenses)
Credit
The following are the Standard Reports which are available in SAP:
T.Code
J1IH
J2IUN
J1I5,J2I5
J2I9
J2I8
J2IER1
7.6
Description
TR6 Challan Payment / Excise JV
Utilization of CENVAT / PLA against BED Payable
RG23A / RG23C Part II, PLA
CENVAT Report generation
Capital Goods Transfer Credit
ER1 Monthly Returns
Production planning
A) On consumption of Materials
Consumption RM A/c
Debit
Stock RM A/c
Credit
B) Confirmation of Production order (Finished goods Production)

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SUPERSEDES:
Stock finished goods a/c
Debit
Order settlement a/c
Credit
NOTE: Order settlement a/c is a part increase and decrease in stock. This one is profit & loss a/c
7.7
HR FI Integration:
The SAP HR Payroll India component integrates with other SAP HR components such as Personnel
Administration and Personnel Management. There are interfaces to Financial Accounting and Controlling.
The following payroll functions are being addressed part of the pay roll;
Basic Increments
Dearness Allowance
House Rent Allowance
Conveyance Allowance
Claims
Bonus
Income Tax
Section 80
Third Party Deductions
Tax on Arrears
Exemptions
Exemption on Leave Travel Allowance
Exemption on Medical Reimbursements
Exemption on Medical Insurance
Exemption on Child Education Allowance
Exemption on Child Hostel Allowance
Exemption on Other Allowances and Reimbursements
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SUPERSEDES:
Exemption on Leave Encashment

Exemption on Voluntary Retirement Scheme
Interest on Housing Loan
Previous Employment Tax Details
Professional Tax
Provident Fund
Employee State Insurance
Labour Welfare Fund
Loan deductions
Termination Work Bench
Gratuity
Form 16
Account number and Bank Details
SAP HR Payroll India supports retroactive accounting. This function automatically recalculates payroll in the
event of changes to master data and time data in periods for which payroll has already been completed.
Employee master is being assigned with a cost center, to identify the costs. The summary of payroll is being
posted to the Financial Accounting expenses head wise and to clearing accounts. The deductions are being
identified as clearing accounts, where the amounts need to be payable to the third party. If any posting
required to be posted to the Employee account, the same will be posted from clearing account to the Employee
account.
Based on the payment method assigned in the employee master, the bank transfer advice will be generated from the
system.
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SUPERSEDES:
* Requirement Priority Defined

M = This is a critical requirement and the system MUST perform it
W = This is a critical requirement and we can use a WORKAROUND
N = This requirement is NICE to have
F = This requirement is planned for a future Implementation Wave
Scripts & Reports Requirements and Workarounds
9.1
Reports Requirements
S No
Report Name
RE_FICO_01
Bank Book
Reporting
Process
Area
FICO
Reporting
categories/
Data
Date, Amount,
Account
RE_FICO_02
Batch wise Costing Report
FICO
Qty unit Rate

Value
RE_FICO_03
FICO
Qty unit Rate

Value
RE_FICO_04
Batch wise Costing Report

finished products and Semi
finished products
BRS Reports
RE_FICO_05
Cash Book
FICO
Date, Amount,
Account
RE_FICO_06
Cash flow & projections actual

receipts and payments for the
previous month projections for
the current month
Cash Voucher Printing
FICO
Inflow, Outflow
current assets
FICO
Date, Amount,
Account
RE_FICO_07
FICO
Config/Custom/Manual
This requirement
Meet by ABAP
Development
This requirement
Meet by ABAP
Development
This requirement
Meet by ABAP
Development
This requirement
Meet by ABAP
Development
This requirement
Meet by ABAP
Development
This requirement
Meet by ABAP
Development
will be
will be
will be
will be
will be
will be
This requirement will be

Meet by ABAP
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SUPERSEDES:
Development
RE_FICO_08
Creditors Weighted Average

Report
Customer Ledger
FICO
FICO
Date, Amount,
Document No
RE_FICO_10
Creditors Sub Ledger Trail

Balance
FICO
Vendor name
Invoice amout
RE_FICO_11
Debtors Weighted Average

Report
Debtors and Creditors Advance
Reports
FICO
FICO
Date, Amount,
Account
FICO
Sale qty Value

Net qty
RE_FICO_14
Finished goods sales statement

(NR Based)product wise area
wise and pack wise
Freight Outward analysis
FICO
Depo wise
plant wise
RE_FICO_15
Journal Voucher Register
FICO
Date, Amount,
Account
RE_FICO_16
Monthly Advances Report
FICO
Customer,
Amount
RE_FICO_17
Monthly Bank charges Analysis
FICO
Period,
RE_FICO_18
Monthly cash Flow - actual

receipts and payments
FICO
Inflow, Outflow
current assets
RE_FICO_19
Monthly creditors advance

issued bills to be received
FICO
Vendor amount
RE_FICO_20
Monthly Jammu expenditure

analysis- expenditure month
wise
Monthly product wise
contribution-product wise
analysis
Monthly Profit and loss account
cash flow current assets Ratio
analysis
FICO
Profit Centre,
FICO
Sale qty rmc

cost
FICO
Inflow, Outflow
current assets
RE_FICO_09
RE_FICO_12
RE_FICO_13
RE_FICO_21
RE_FICO_22

Meet by ABAP
Development
Meet by ABAP
Development
This requirement
Meet by ABAP
Development
This requirement
Meet by ABAP
Development
This requirement
Meet by ABAP
Development
This requirement
Meet by ABAP
Development
This requirement
Meet by ABAP
Development
This requirement
Meet by ABAP
Development
This requirement
Meet by ABAP
Development
This requirement
Meet by ABAP
Development
This requirement
Meet by ABAP
Development
This requirement
Meet by ABAP
Development
This requirement
Meet by ABAP
Development
will be
will be
will be
will be
will be
will be
will be
will be
will be
will be
will be
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SUPERSEDES:
RE_FICO_23
Party wise Sales Report
FICO
Product sale
qty
RE_FICO_24
Productwise Excise duty inputs

period wise for Jammu plant
FICO
Item, Value
Duty, MRP
RE_FICO_25
Purchase Register with item

wise summarized
FICO
Vendor, date
amount
RE_FICO_26
Quarterly Analysis -Dist wise

traveling other Exp
FICO
State wise
depo wise
RE_FICO_27
Quarterly Incentive analysis

provisions ,actual ,district wise,
party wise
Quarterly Marketing Expenses
Analysis -state wise traveling
other Exp
Quarterly Weighted average
analysis
FICO
State wise
product wise
FICO
Depo wise
state wise
FICO
Recipts, W.Avg
days
RE_FICO_30
Quarterly pending claims Insurance
FICO
RE_FICO_31
Sales Return Register
FICO
Customer
Date amount
RE_FICO_32
Statutory Forms Tracking Report
FICO
Customer,
Document no
RE_FICO_33
FICO
RE_FICO_34
Stock age wise stock holding

qty and value
Stock Transfer Register
Qty Date
Value
Depot wise
RE_FICO_35
Vendor Ledger
FICO
Vendor, date
Amount
RE_FICO_36
Vendor Sub Ledger Trail Balance
FICO
Vendor, date
Amount
RE_FICO_37
Weekly Collection Report
FICO
Customer
depot
bank
RE_FICO_28
RE_FICO_29
FICO

Meet by ABAP
Development
Meet by ABAP
Development
Meet by ABAP
Development
Meet by ABAP
Development
Meet by ABAP
Development
Meet by ABAP
Development
Meet by ABAP
Development
Meet by ABAP
Development
Meet by ABAP
Development
Meet by ABAP
Development
This requirement is meet
by Standard SAP
This requirement is meet
by Standard SAP( T Code
MB51)
Meet by ABAP
Development
Meet by ABAP
Development
Meet by ABAP
Development
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SUPERSEDES:
RE_FICO_38
Weekly Creditors report
FICO
Vendor amount
Date
RE_FICO_39
Weekly Debtors collection

Outstanding breakup for
overdue
Wind Power Generation Report
Machine wise
FICO
Depo wise
state wise
FICO
KWH, Hours
RE_FICO_41
Wind Power Generation Report

state wise and Month wise
FICO
KWH, Hours
RE_FICO_42
Monthly Bank charges Analysis
FICO
Date, Amount
RE_FICO_43
Monthly Profit and loss account

cash flow current assets Ratio
analysis
Stock age wise stock holding
qty and value
Monthly Jammu expenditure
analysis- expenditure month
wise
FICO
Sales, Expenses
Depot
FICO
Sales, Expenses
unit
RE_FICO_40
RE_FICO_44
This requirement
Meet by ABAP
Development
This requirement
Meet by ABAP
Development
This requirement
Meet by ABAP
Development
This requirement
Meet by ABAP
Development
This requirement
Meet by ABAP
Development
This requirement
Meet by ABAP
Development
will be
will be
will be
will be
will be
will be

Meet by ABAP
Development
9.2 Script Requirements

S No
Reporting
Process
Area
Reporting
categories/
Data
FICO
Script
SC_FICO_01
Report Name
Balance Confirmation
Letter
SC_FICO_02
Bank Book Printing
FICO
Script
SC_FICO_03
Bank Voucher Printing
FICO
Script
SC_FICO_04
Cash Book Printing
FICO
Script
SC_FICO_05
Cash Voucher Printing

Check Printing with
payment advice and
without payment advice
FICO
Script
SC_FICO_06
FICO
Script
Config/Custom/Manual
This requirement will

ABAP Development
ABAP Development
ABAP Development
ABAP Development
ABAP Development
ABAP Development
be Meet by
be Meet by
be Meet by
be Meet by
be Meet by
be Meet by
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SC_FICO_07
SUPERSEDES:
FICO
Script
SC_FICO_08
Cheque Printing
Debit/Credit Not
Voucher printing
FICO
Script
SC_FICO_09
General Ledger Printing
FICO
Script
SC_FICO_10
Journal Voucher Printing
FICO
Script
SC_FICO_11
Pay in Slip
FICO
Script
SC_FICO_12
Vouchers Printing
FICO
Script

ABAP Development
ABAP Development
ABAP Development
ABAP Development
ABAP Development
ABAP Development
be Meet by
be Meet by
be Meet by
be Meet by
be Meet by
be Meet by
10. Functional Requirements and Workarounds

Functional Design Requirements:
Enter a unique
number for the
requirement
FICO_01
FICO_02
FICO_03
FICO_04
FICO_05
Requirement
Implications of Not Meeting this

Business Requirement
Ability to create GL accounts

centrally
Ability to Block GL accounts from
Posting
Ability to maintain GL accounts in
COA
Ability to maintain GL accounts in
Company Code
Ability to Open and Close Posting
Periods.
Ability to maintain standard
hierarchies (groupings) of cost
objects
NA - Met with standard SAP
N/A this requirement is met by

standard SAP
Req. Priority*
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FICO_06
FICO_09
The ability to create Cost Center

Master Data
Ability to Settlement of Process
Order
Ability to Change Price on Activity
Types
Ability to maintain Activity Types
FICO_10
Ability to maintain Internal Orders
FICO_11
Ability to perform Cost Center

Reposting
Ability to perform CO Period Lock
FICO_07
FICO_08
FICO_12
FICO_13
FICO_14
FICO_15
FICO_16
FICO_17
FICO_18
FICO_19
FICO_20
FICO_21
FICO_22
FICO_23
FICO_24
FICO_25
Ability to create Profit Center

Master Data
Ability to create/maintain bank
records on system
Ability to associate a GL account to
each bank account
The ability to process invoices in
foreign currencies
The ability to calculate use taxes
on purchases
The ability to create an invoice
document for validating duplicate
invoice checking to vendor without
a purchase order
The ability to manually block
invoices from payment
The ability to process a down
payment that does not reference a
purchase order.
The ability to post vendor recurring
documents over multiple periods
The ability to review report to
identify open and cleared down
payments.
Ability to clear checks manually
received from Bank
Ability to record payments (i.e.
check books) made externally (of
R/3 System) using FI-AP
Ability to create payments by check
in INR and print on pre-numbered
check form
SUPERSEDES:
standard SAP
standard SAP
standard SAP
standard SAP
standard SAP
standard SAP
standard SAP
Standard SAP
standard SAP
standard SAP
N/A Met with Standard SAP
M
M
M
M
M
M
M
M
M
M
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FICO_26
FICO_36
The ability to enter manual invoice

or credit memo directly within
Accounts Receivable.
The ability to validate the manual
invoices, debit memos, and credit
memos applied to customer
accounts
The ability to create credit memo
requests for miscellaneous sales
The ability to post partial
payment or residual items or
receipt on account
The ability to Reset Customer
Clear Items
The ability to Match the Open
Items accurately and offsetting the
items using the Manual Clearing
Process.
The ability to transfer the Items
that are incorrectly applied to
customer accounts.
The ability to print an Aged
Balance Report to list all the
overdue open items
The ability to show line item report
showing Gross receivable Paid =
Net
The ability to create the legal end
of month reports
The
ability
to
know
days
outstanding from customers
Create purchase order for asset
FICO_37
Create asset master record
FICO_38
Ability to execute asset transfer

between plants / company code
Ability to calculate and post
unplanned depreciation
FICO_26
FICO_27
FICO_28
FICO_29
FICO_30
FICO_31
FICO_32
FICO_33
FICO_34
FICO_35
FICO_39
FICO_40
FICO_41
Ability to dispose of assets via

sales transaction and appropriately
calculate gain / loss on asset sale
Ability to dispose of assets by
scrapping
SUPERSEDES:
N/A Met with Standard SAP.

standard SAP
standard SAP
standard SAP
standard SAP

standard SAP

standard SAP
M
M
M
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SUPERSEDES:
FICO_42
Ability to dispose of asset without

customer

standard SAP
FICO_43
Ability to settle values from Capital

Internal Order to AUC at period end
and to final asset when
construction is complete.
Ability to calculate and post
depreciation values based upon
immediate depreciation (i.e. daily
depreciation based upon purchase
date)
Ability to compare fixed asset detail
data to general ledger account
totals
Ability to display asset balances by
company code, asset class, cost
center
Ability to post journal entry to
general ledger and cost center
Ability to create journal entry with
reference to a prior entry.
Ability to park a journal entry before
completing and posting
Ability to execute mass reversals of
posted documents
Ability to clear GL accounts
Ability to post and clear GL
accounts.
This system must have the ability
to calculate standard costs for
internally manufactured product
The system to have Mark and
Release cost estimate.
The system must have ability to
compare the cost estimates

standard SAP

standard SAP

standard SAP

standard SAP
N/A Met with standard SAP

M
M

standard SAP

standard SAP
standard SAP
This system must have the ability

to analyze the variances between
costing runs by company code,
plant, and material type
This system to have ability to
execute cost estimate for a
material.

standard SAP

standard SAP
Ability to plan costs by cost center
N/A This requirement is met by
FICO_44
FICO_45
FICO_46
FICO_47
FICO_48
FICO_49
FICO_50
FICO_51
FICO_52
FICO_53
FICO_54
FICO_55
FICO_56
FICO_57
FICO_58
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FICO_59
FICO_60
FICO_61
FICO_62
FICO_63
FICO_64
FICO_65
FICO_66
FICO_67
FICO_68
FICO_69
FICO_70
FICO_71
FICO_72
FICO_73
FICO_74
and cost element (by period)

The system must provide the ability
to analyze production variance and
to settle these over/under
absorptions at month end
Ability to execute WIP calculation
per process order based upon
actual costs charged to order
Ability to execute WIP calculation
program collectively
Ability to execute Process order
variance calculation based upon
target versus actual costs
Ability to execute Process order
variance calculation program
collectively
Ability to execute Process Order
Settlement program individually
The ability to settle process orders
collectively.
The ability to generate summary
balance sheets by company code
The ability to generate detail
balance sheets by company code
Ability to automatically clear GR/IR
account(s)
Ability to perform balance carryforward for GL accounts
Ability to perform balance carry-fwd
for sub-ledger accounts
Tree type sub ledger is required.
exchange range should be clarify in
FBL1N
After completion of technical order,
settlement for costing should be
clarify
In Segmental accounting add
another segment as Fertilizers and
Trading sales .As this fertilizers is a
distant product from chemicals this
is to be shone as separate
segment and trading sales is a
different activity
All the depot should be numbered
in serial considering the sate as the
base. ( Ex. Sirsa and Hissar are in
SUPERSEDES:
standard SAP
standard SAP

standard SAP

standard SAP
standard SAP

standard SAP.

standard SAP
Inefficiencies built into this business
process
standard SAP
standard SAP
standard SAP
standard SAP
standard SAP

standard SAP

standard SAP

standard SAP
M
M
M
M
M
M
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FICO_75
FICO_76
FICO_77
FICO_78
FICO_79
FICO_80
FICO_81
FICO_82
FICO_83
FICO_84
Haryana state but depot numbers

are not in serial.
For central warehouse in depot a
separate storage location is to be
given to identify the central stocks
and depot stocks separately
In Finance module the a separate
schedule is to be provided for
incentives
These incentives should be
tracked by individual customers so
sub ledger is to be provided for
this.
The expenses like telephone
traveling etc. are to be identify
employee wise. District wise, depot
wise.
In invoice process the Debit note
and credit not to be implemented
for the difference of invoice and the
purchase order.
At the time of entry of GRN the
excise is to be calculated based on
the vendor invoice price only there
should not be any manual change
in excise amount other than
imports.
In the GRN actual fright amount
should be entered my modifying
the fright field if not the alternative
option is to be provide. In invoice
process fright modification should
not the done because the material
value will not update and the
valuation of the material will be
under valued.
The job work material received
should not carry any value to the
books of accounts
The material purchased for the
production of non excise materials.
The value of the excise value
should charged to material value
The basic price of billing should
not exceed MRP less abatement
value. If the price is exceeded than
excise amount is to be paid on the
SUPERSEDES:

standard SAP

standard SAP

standard SAP

standard SAP

standard SAP

standard SAP

standard SAP

standard SAP

standard SAP
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FICO_85
FICO_86
FICO_87
FICO_88
FICO_89
FICO_90
FICO_91
difference amount.
There should be a working sheet
for valuation of maximum retail
price. This is used to know the how
valuation of MRP is done.
Allocation of overheads needed to
be clarify.
SUPERSEDES:

standard SAP
Fright and clearing charges Lading

on costing rates
we required Vender outstanding
report before Invoice booking
based on provision figure
Who can we track the price
variation account for costing on
each material etc?
Parties ledger account and
General ledger account must be in
tree view

standard SAP

standard SAP
How can we track the stock

transfer value for sales tax purpose
and who can the depot people can
give the form "F" to head office. If
not showing value in invoice

standard SAP
11. Authorization Consideration

Needs to be discussed with BPOs before finalizing
12. Master Data Consideration

No.
Master data
Consideration
Remark
1.
Customer Master
Reconciliation account is mandatory

Dunning Procedure to be mandatory
To ensure dunning and

recon accounts for all
Customers
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2.
Vendor Master
Reconciliation account is mandatory

Bank Statement to be mandatory
3.
Fixed Asset Master
General Ledger
Accounts
Capitalization date, depreciation key

for Asset to be mandatory
P&L item and balance sheet
Line item display
Cost Centers
As per requirement by user/ctm
SUPERSEDES:
To
ensure
monthly
statements
are
generated
To enable mapping with
legacy data
To ensure to mark p&l or
B/s items and line item
display for all items
Profit centers to attach
each cost center.
Business Blue Print

PAGE:
199 of 207

SUPERSEDES:
History of Change
05.02.2010
22.02.2010
Version Number
Section
Reason for Revision
V 1.0
V 2.0
All
All
Initial Document
Modified Document

BBP - Fico - V 2.0

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ABC PHARMA LTD

Business Blue Print

TITLE: Business Blue Print

FINANCIAL ACCOUNTING KEY COMPONENTS

Revision Date: Tuesday, December 22, 2015

Business Blue Print

TITLE: Business Blue Print

GENERAL LEDGER ACCOUNTING

Revision Date: Tuesday, December 22, 2015

Business Blue Print

TITLE: Business Blue Print

DOWN PAYMENT TO VENDORS

Revision Date: Tuesday, December 22, 2015

Business Blue Print

TITLE: Business Blue Print

PRODUCT COST PLANNING

SCRIPTS & REPORTS REQUIREMENTS AND WORKAROUNDS

10. FUNCTIONAL REQUIREMENTS AND WORKAROUNDS

11. AUTHORIZATION CONSIDERATION

12. MASTER DATA CONSIDERATION

Revision Date: Tuesday, December 22, 2015

Business Blue Print

TITLE: Business Blue Print

Enterprise organizational structures

The proposed integrated business processes

Associated function definitions

Business requirements in term of reports/script and functionality

Revision Date: Tuesday, December 22, 2015

Business Blue Print

TITLE: Business Blue Print

2. Financial Accounting Key Components

Financial Accounting having the following sub-modules

Business Blue Print

TITLE: Business Blue Print

Cost Center Accounting

Business Blue Print

TITLE: Business Blue Print

Profitability Analysis (CO-PA)

Revision Date: Tuesday, December 22, 2015

Business Blue Print

TITLE: Business Blue Print

Hyderabad Chemicals Limited

Hyderabad Chemical Products Limited

Neo Seeds India Limited

Company Code name

Revision Date: Tuesday, December 22, 2015

Business Blue Print

TITLE: Business Blue Print

Company Code Description

Hyderabad Chemicals Limited

Hyderabad Chemical Products Limited

Neo Seeds India Limited

Revision Date: Tuesday, December 22, 2015

Business Blue Print

TITLE: Business Blue Print

Fiscal Year Variant

Company Code Description and Country

Apr to March , 4 Special Periods

Apr to March , 4 Special Periods

Posting Period Variant

Business Blue Print