How Does the System Determine the Correct GL a/c for a Posting?

Imagine that you are posting a goods movement.

􀂃 Since the goods movement is from a plant, and the plant is assigned to a Company

Code, the goods movement identifies the relevant Company Code.

􀂃 As the Company Code has already been assigned to the Chart of Accounts, the

system is able to identify the GL accounts.

􀂃 The plant also determines the valuation area (and the optional valuation grouping

code).

􀂃 Since each movement type is assigned to a value string which in turn is identified with a transaction key, the goods movement determines the correct transaction key.

􀂃 Since each of the transaction keys is associated with the relevant GL accounts,

through the value string, the movement type now identifies the relevant GL Account, and the transaction is posted

Explain the Transaction Keys in MM?

Also known as process keys, the Transaction Keys are pre-defined in the system to enable transaction postings in Inventory Management and Accounting (Invoice Verification). For each of the movement types in MM, there is a value string that stores these possible transactions.

The pre-defined transaction keys are:

􀂃 BSX (used in Inventory Postings)

􀂃 WRX (used in GR/IR Clearing Postings)

􀂃 PRD (used to post Cost/Price differences)

􀂃 UMB (used to post Revenue/Expenses from revaluation)

􀂃 GBB (used in offsetting entries in Stock postings)

BSX, WRX, and PRD are examples of transaction keys that are relevant for a GR with reference to a purchase order for a material with standard price control. The transaction key UMB is used when the standard price has changed and the movement is posted to a previous period. Likewise, GBB is used to identify the GL account to post to as the offsetting entry to the stock account (when not referencing a purchase order) such as miscellaneous goods receipts, goods issues for sales orders with no account assignment, and scrapping.

Explain Automatic Account Assignment Configuration in MM?

There are four steps required to complete the Automatic Account Assignment configuration settings for MM:

1. Finalize the valuation level.

2. Activate the valuation grouping code option. (For this you need to group valuation

areas using valuation grouping codes.)

3. Maintain valuation classes and account category references and their linkage to

material types.

4. Maintain the GL accounts for each combination of Chart of accounts, valuation

grouping code, valuation class, and transaction key.

You may use the automatic account determination wizard to complete the configuration

settings, as the wizard guides you step-by-step.

How Does Automatic Account Assignment Work in MM?

1. GL accounts are assigned to Transaction Keys (BSX, WRX, PRD, UMG, GBB, etc.).

2. Transaction Keys identify which GL Accounts are to be debited or credited.

3. Transaction Keys are assigned to Value Strings (for example, WA01).

4. Movement Types (for example, 901) are associated with a Value String.

Outline Stock Valuation Methods for Material Revaluation?

There are three methods with which you can revaluate your stock for Balance Sheet purposes. Irrespective of the method you select, you will be able to evaluate your stock either at the Company Code level or at the Valuation Area level:

1. LIFO (Last-In-First-Out): This method is based on the assumption that the materials

received last were the ones issued/consumed first. The valuation is based on the initial

receipt.

2. FIFO (First-In-First-Out): Here the assumption is that the materials received first are the ones consumed/issued first. So, the valuation is based on the most recent receipt. The FIFO method can also be used in conjunction with the lowest value method. By this you can determine whether the system should make a comparison between the FIFO

determined price and the lowest value price. You can also determine whether the FIFO

price should be updated in the material master record.

3. Lowest Value Method: Here, the stocks are valued at their original price or the current

market price whichever is lower. This method is suitable when the inventory needs to be

valued to take into account material obsolescence, physical deterioration, or changes in

price levels.

Explain the Basic Steps in configuring Split Valuation?

The five basic steps for Configuring Split Valuation are:

1. Activate Split Valuation

2. Define Global Valuation Types

For each Valuation type you need to specify:

(a) whether external purchase orders are allowed,

(b) whether production orders are allowed

(c) the account category reference.

3. Define Global Valuation Categories

For each valuation category specify:

(a) default valuation type to be used when purchase orders are created and whether this default can be changed,

(b) default valuation type to be used when production orders are created and whether this default can be changed

(c) whether a valuation record should be created automatically when a GR is posted

for a valuation type for which no record yet exists.

4. Allocate Valuation Types to the Valuation Categories

5. Define which of the Global Categories/Types apply to which Valuation Areas

Explain Split Valuation. Why is it Necessary?

Split Valuation allows sub stocks of the same material to be managed in different stock

accounts. This allows sub stocks to be valuated separately, and every transaction is carried out at the sub stock level. So, when processing a transaction, it is necessary to mention the sub stock.

The split valuation is necessary if the material has:

􀂃 Different Origins

􀂃 Various Levels of Quality

􀂃 Various Statuses

It is also required in situations where you need to make a distinction between in-house produced materials and materials procured externally, or if there is a distinction between different deliveries.

What is a Material Ledger?

A Material Ledger is nothing but a tool for inventory accounting that provides new methods for price control for material valuation (you can store the material inventory values in more than one currency). It makes it possible to keep the material price constant over a period of time (say, over the life of a production order). The moving average price field is used to store a periodic price. This periodic price stays constant and is the price used for valuation until you close the material ledger. At closing, the periodic price is updated based on the actual value of invoice receipts received for that material during the period.

Explain Return Delivery?

You will use Return Delivery when you return goods to the supplier (vendor) for reasons such as damaged packaging, etc. Note that the reason for return is mandatory as this will help you, later on, to analyze problems with a vendor. The system uses the Movement Type 122, and will create a return delivery slip, which will accompany the goods being returned. If the return is from a GR-blocked stock, you need to use a different Movement Type: 104.

34. What are All the Various Types of Physical Inventory?

The following are the different types of Physical Inventory in SAP MM:

􀂃 Periodic inventory (All the stocks are physically counted on a key date (balance sheet date), and all the stock movements are blocked during physical counting)

􀂃 Cycle counting (Physical counting is done at periodical intervals)

􀂃 Sampling (Randomly selected stocks are counted physically, and the system uses this information to estimate stock value on a given date)

􀂃 Continuous (Stocks are tracked continuously throughout the fiscal year, with physical

stock taking once a year, at least!)

What is a Stock Type?

Used in the determination of available stock of a material, the Stock Type is the sub-division of inventory at a storage location based on the use of that inventory. In SAP, there are many kinds of stock types:

􀂃 Unrestricted (use) stock (the physical stock that is always available at a plant/storage

location)

􀂃 Restricted (use) stock

􀂃 Quality inspection stock (not counted for unrestricted use and may be made available

for MRP)

􀂃 Stock-in transfer

􀂃 Blocked stock (not to be counted as unrestricted stock and is not available for MRP)

Besides all of the above, which are all known as valuated stocks, you will also come across one more type called GR blocked stock, which is a non-valuated stock. The GR-blocked stock denotes all the stock accepted conditionally from the vendors. This stock is not considered available for unrestricted use. You will use the Movement Type 103 for the GR-blocked stock and Movement Type 101 is used for a normal GR.

Explain Stock Transfers?

The physical movement of stock between locations is called a Stock Transfer, which can be within a plant or between plants. Stock transfers can be carried out either in a single step or in two steps.

The stock transfer may be from:

􀂃 Company to Company

􀂃 Plant to Plant

􀂃 Storage Location to Storage Location

If there is a logical change in the stock type/status, then this kind of transfer is called a

transfer posting. The transfer posting may be from:

􀂃 Product to Product

􀂃 Quality Inspection to Unrestricted Use

􀂃 Consignment Store to Storage Location

What Happens During a Goods Issue?

The Goods Issue (GI) results in a reduction in the stock quantity/value. The GI can be Planned (via sales order, production order, return delivery, delivery for internal, use etc.) or Unplanned (drawing a stock for a sample, scrapping, etc.).

The GI results in:

􀂃 Creation of a Material/Accounting document

􀂃 Update of Reservation for the issue (if any)

􀂃 Update of GL accounts

􀂃 Update of points of consumption if applicable (cost center, project, etc.)

􀂃 Update of Stock quantity

Explain the Accounting Side of GR?

When you post a GR with reference to a purchase order:

􀂃 GR before Invoice Receipt:

o A posting will be made to the stock account (stock value increases)

o An offsetting entry is made to the GR/IR clearing account

􀁸 Once the invoice is received, the GR/IR clearing account is cleared

􀁸 A posting is made to the A/P account for the vendor (payables increase)

􀂃 Invoice Receipt (IR) before the GR

o A posting is made to the A/P account for the vendor (payables increase)

o A posting is made to the GR/IR clearing account

􀁸 Once the goods are received, the GR/IR clearing account is cleared

􀁸 A posting will be made to the stock account (stock value increases)

When the GR is for a consumable material, the initial posting will go to the consumption account (expense account) instead of a stock account. However, the offsetting entry will still go to the GR/IR clearing account. The value of the posting to the stock account will depend on which type of price control is being used.

What is a Goods Receipt?

A Goods Receipt (GR) results in an increase in the quantity/value of the stock in a

plant/warehouse. A GR may be with/without reference to a Purchase Order. A GR leads to:

􀂃 A Material document

􀂃 An Accounting document (not always)

􀂃 GR Slip printing

􀂃 GL Account update

o Consumption Account

o Stock Account

􀂃 Quantity updating

o Stock quantity

o Consumption statistics

o Vendor Evaluation

􀂃 Other updates (if applicable)

o Cost Center

o Project

􀂃 A Stock Transfer Order

􀂃 Purchase Order History updates

What is Goods Movement?

Goods Movement represents an event causing a change in the stock, with the change being value or status, stock type, or quantity. It also represents the physical movement of stock from one location to another.

Goods movement is classified into:

􀂃 Receipt of goods/services

􀂃 Issue of materials

􀂃 Stock transfers

Explain the Inventory Management Sub module?

The Inventory Management sub module deals with the GR/GI of materials from/into the

inventory. It also manages the transfer of materials from one storage location to another. As an important element of MM, this module is integrated with SD, PP, QM, and PM modules.

Explain the Re-Order Point Procedure?

The Re-Order Point is the level of inventory that triggers material procurement. Once the inventory falls below this level, you need to create the order proposal either manually or automatically by the system. In the case of the manual re-order point procedure, you will define the reorder point and the safety stock in the material master. On the other hand, in the automatic re-order point procedure, the system will calculate the re-order point and the safety stock based on the next periods consumption pattern.

What is an MRP List?

An MRP List displays the results of the last planning run. Using a collective display format, you will be able to display planning details for a number of materials for a given set of selection parameters.

What is an MRP Area?

An MRP Area is not an organizational structure, but a unit for which you can carry out

Consumption-based MRP. The MRP area is used to carry out MRP for the components

provided to a sub-contractor. There are three types of MRP areas that you will come across:

􀂃 MRP Area for Storage Locations

􀂃 MRP Area for Subcontracting Vendor Stock

􀂃 MRP Area for the Plant

What are the prerequisites for an MRP Run?

The following are the prerequisites for an MRP Run:

􀂃 MRP activated

􀂃 Valid MRP data for the material

􀂃 Valid MRP type

􀂃 Valid material status

What are the Possible Values for Procurement Types?

The possible values for Procurement Types are:

􀂃 No procurement

􀂃 External procurement

􀂃 In-house production

􀂃 Both procurement types

What is a Batch in the Context of Batch Management?

Representing a quantity of material with a homogenous set of properties/characteristics produced during a particular cycle of manufacturing, a Batch is a subset of inventory quantity, which cannot be reproduced again with the same properties. A batch is linked to the classification system, and you can use it only when the classification system has been set up properly for batch management.

A batch is unique for a single material, and is unique at the Client level as well. That is, you will be able to use a batch number only once in the Client regardless of the plant and material. The batch will be known only in the plant where it was created. The batch numbers can either be manually assigned or system generated.

What are some of the Partner Functions of a Vendor?

Through the definition of Partner Functions in the Vendor Master, SAP helps to designate vendors for different roles. The partner role is designated by a 2-digit code.

􀂃 VN Vendor

􀂃 PI Invoice Presented by

􀂃 OA Ordering Address

􀂃 GS Goods Supplier

􀂃 AZ Payment Recipient

A partner schema (also known as a partner procedure) is assigned to a vendor account

group. The procedure specifies which partner roles are allowed/mandatory/can be changed for a vendor master with that account group. You may assign three different partner schemas to an account group, one for each level of purchasing data, i.e., one at the purchase organization level, one at the VSR level, and one at the plant level. This enables maintaining different partners at different organizational levels.

What is the EAN?

The EAN (International Article Number), equivalent to the UPC (Universal Product Code) of the United States, is an international standard number for identifying a material, which SAP allows you to assign (done in the Eng./Design or Units of Measure screen) to the materials. The EAN is normally assigned to the manufacturer of a material. Made up of a prefix (to identify the country or company from where the material originates), article number, and a check digit (ensures correctness of an EAN number so that no incorrect entries are scanned or entered into the system).

What is the Material Status?

The Material Status is a 2-digit code enabling you to control the usability of material for various MM and PP applications. This status key also controls warehouse management, transfers order instructions, quality inspection instructions, decides how the system behaves when a product cost estimate is created, and so on.

The material status can be maintained as

(1) Plant-specific material status,

(2) Cross-plant material status,

(3) Distribution material status.

Explain Prices Maintenance for Materials Transferred from Legacy to SAP?

Before you transfer the initial inventory from a legacy system to SAP, you need to create the relevant master data for the materials. If you are planning to maintain a standard price for the materials, then you will create the material masters with S as the price control indictor in SAP. With this control, when you enter the material inventory, the system valuates this stock with the standard price defined. In this case, you enter a new price and the system posts the price difference (between the standard price and the new price you entered) to a price difference account.

Similarly, if you are planning to maintain a moving average price for materials, then you will create the material masters with V as the Price Control Indictor in SAP. With this control, when you enter the material inventory, the system valuates this stock with the moving average price defined. In this case, you enter a new price and the system adjusts the moving average price accordingly. If you enter only the quantity, and not any new price, the system continues to evaluate the stock at the original moving average price, and the price of the material does not change.

Explain the Price Control Indicator?

The Price Control Indicator is used by SAP to determine how a material will be valuated, by default.

The indicator can be set to:

􀂃 Standard Price (S) or

􀂃 Moving Average Price (V)

When you set the indicator to S, the system carries out all the inventory postings at the

Standard price. The variances due to a different price of a material in goods movement or invoice receipts if any, are all posted to price difference accounts. As a result, the standard price remains the same, unless it is changed intentionally by manual processing. This will be necessary only when the difference between the standard and moving average prices becomes very large. (While updating the price difference accounts, however, the system also updates the moving average price with these variances, so that you get a chance to adjust the standard price should the difference between the standard and moving average prices becomes very substantial.)

Example:

􀂃 1st April 2007

o Initial Stock : 1000 units

o (Standard) Price/unit (A) : $5

o Initial Stock Value (B) : $5,000

􀂃 20th May 2007

o Goods Receipt : 1000 units

o GR Price/unit (A1) : $6

o Stock A/c (Dr.) (C) : $5,000 (=1000 X $5)

o Price Difference A/c (Dr.) : $1,000 (=1000 X $1)

The amount of $1,000 posted to the price difference A/c represents the variance

reflecting the difference between the new price (A1) and the standard price (A).

o GR/IR A/c (Cr.) : $6,000 (=1000 X $6)

o Stock Value, now (B1) : $10,000 (=B+C) (i.e., 2000 units @ $5)

􀂃 29th May 2007

o Goods Issue : 100 units

o Price/unit (same as that of A) : $5

On the other hand, when you set the indicator to V then all the goods receipts (GR) will be at the GR value. The system will then adjust the price in the material master by the GR price. However, if there is a difference between the moving average price of the material and the goods movement/invoice receipt, then the price difference is moved to the stock account, and the price of the material in the material master is adjusted accordingly.

Example:

􀂃 1st April 2007

o Initial Stock : 1000 units

o (Moving Average) Price/unit (A) : $5

o Initial Stock Value (B) : $5,000

􀂃 20th May 2007

o Goods Receipt : 1000 units

o GR Price/unit (A1) : $6

o Stock A/c (Dr.) (C) : $6,000 (=1000 X $6)

o GR/IR A/c (Cr.) : $6,000 (=1000 X $6)

o Stock Value, now (B1) : $11,000 (=B+C) (=2000 units @ $5.50)

At this point, the price on the material master is adjusted upward from $5 (A) to $5.5

(A2) by the system automatically, to reflect the new stock value.

o New Moving Average Price (A2) : $5.50 (=B1/2000)

􀂃 29th May 2007

o Goods Issue : 100 units

o Price/unit (A2) : $5.50

Why do You Need Material Types in MM?

One way to group materials is by Material Type (the other being by Industry Sector). This grouping helps determine what information or data is to be made available at the material master level for a particular material.

The material type (for example, FERT, HAWA, HALB, ROH, and so on) is used to control:

􀂃 Which Views can be maintained on the master record

􀂃 Which Fields are mandatory, optional, or for display only in the material master

􀂃 What kind of Procurement is allowed for that material (internal or external or both)

􀂃 How to Number (Internal/External) and what Number Range is allowed

􀂃 Whether Quantity and/or Value updating should be done in a particular Valuation Area

􀂃 Which GL Accounts will be posted to (via the Valuation Class) during goods movement

􀂃 The default Item Category Group (S&D)

􀂃 The default Price Control Indicator (S or V) and

􀂃 Whether the default Price Control Indicator is changeable during material master

maintenance

What Information is Available in the Accounting View of a Material Master?

The most important information maintained in the Accounting View of a material master is the valuation class, which needs to be assigned to individual materials. The valuation class, in turn, helps in determining the relevant GL accounts for posting valuation-relevant transactions such as GR, GI, etc. You will maintain the price control indicator in the accounting view, which enables determining how the stock of a material is to be valued (at Standard price (S) or Moving average price (V)).

Explain why a Material Master is divided into views?

Since the information in a material master needs to be maintained by a number of users across several modules, SAP has structured the master into a number of Views for facilitating easier access and updating of data.

The views include:

􀂃 Basic Data

􀂃 Classification

􀂃 Sales

􀂃 Purchasing

􀂃 Purchase Order text

􀂃 Accounting

􀂃 Foreign Trade

􀂃 Work Scheduling

􀂃 Forecasting

􀂃 Storage

􀂃 Costing

􀂃 Plant/Storage Location stock

􀂃 MRP

Outline the Functions Supported by Material Master?

The Material Master is the central master record catering to various business functions in Logistics. The data stored in this master support a variety of business functions and operations such as:

􀂃 Production Planning

􀂃 MRP

􀂃 Procurement

􀂃 Invoice Verification

􀂃 Inventory Management

􀂃 Product Costing

􀂃 Sales and Distribution

􀂃 Quality Management

The data is stored, within a material master, at different organizational levels. The general data is valid for all the Company Codes at the Client level. The purchasing information is valid at the plant level. The sales information is valid at the sales organization/distribution channel. Lastly, when Warehouse Management is activated, the data is maintained at the warehouse number/storage type level.

Explain How SD and MM are connected in SAP?

The goods/services from a plant can be sold by one or more sales organizations. It is also possible that single sales organizations sells goods/services for several plants. When the sales organizations sells for more than one plant belonging to one or more Company Codes, then this is called inter-company sales, and will require you to make some special configurations in the system. A sales organization, attached to a Company Code, is further divided into distribution channels and divisions in SD. A division typically represents a product line, and is assigned to a material in the material master.

What is a Factory Calendar?

A Factory Calendar is a calendar that is country-specific with a list of public holidays

(maintained via the Holiday Calendar) and working days, which are Client-independent. The factory calendar helps in controlling goods issues/receipts. Each plant is assigned a factory calendar, and the calendar must be activated (through CTS functionality) before using it.

Explain the Valuation Area Concept in MM?

The valuation of a material is done at the Valuation Area, which can either be at the Company Code level or the Plant level. The level at which the valuation needs to happen is defined in the customizing. Note that once it is defined, you will not be able to change it later! When the valuation is at the Company Code level, then the valuation of a material is uniform across the plants attached to that Company Code. On the other hand, if the valuation is at the plant level, then the value of the material is plant specific and will vary from one plant to another. If you are using PP (Production Planning)/MRP in your company, then the valuation has to be at the plant level.

Explain the Purchasing Group Concept in MM?

The Purchasing Group carries out the actual activities of purchasing, and is assigned to a material in the material master. The activities of several purchasing organizations can be done by one purchasing group.

Explain the Purchasing Organization in SAP?

This refers to the organizational structure in SAP that is responsible for procurement of materials. The Purchasing Organization is the top-most organizational element in MM, and this can take any one of three forms such as

(1) Cross-plant purchasing organizations (catering to more than one plant but within the same Company Code),

(2) Plant-specific purchasing organizations (with a 1:1 relationship with the plant), and (3) Cross-company code purchasing organizations (catering to more than one Company Code). Entrusted with the activity of negotiating the price, delivery conditions, etc., of materials from vendors, the Purchasing Organization can further be subdivided into purchasing groups.

Explain the Storage Location in SAP?

A sub-division of a plant, the Storage Location, defines a location for materials that can be a warehouse, bin, or a storage area of raw materials/WIP/finished product. You will manage the physical inventory, material movement, picking, cycle counting, etc., at the storage-location level. In Warehouse Management, the storage location is further subdivided.

Define Plant in SAP?

Plant in SAP can denote a manufacturing location, distribution center, or a warehouse. With unique numbers identifying each of the plants, though these are all not all necessarily financial entities, they can still be linked to a Business Area. The Plant is the place where you normally valuate the inventory in SAP. The system, however, checks for the inventory either at the Plant or Plant/Storage Location during an Order entry.

Explain the Basic Organizational Structure in MM?

The major Organizational Elements of MM include:

􀂃 Purchasing Organization

􀂃 Plant

􀂃 Storage Location

The Purchasing Organization is typically attached to one Company Code. But a single

Company Code can have one or more purchasing organizations. One or more Plants are attached to a purchasing organization. One or more Storage Locations are attached to a plant. One or more plants are assigned to a Company Code, but one plant is attached to only one Company Code. Depending on how the purchasing organization has been structured, you may come across three types of structures as detailed below:

􀂃 Cross-plant purchasing organization

The purchasing organization caters to more than one plant of the same Company Code.

􀂃 Plant-specific purchasing organization

Each Plant has it is own purchasing organization.

􀂃 Cross-company code purchasing organization

A single purchasing organization is responsible for the procurement activities of more than one Company Code. The plants attached to this purchasing organization are also cross Company Code. In this case, the purchasing organization is not attached to any of the Company Codes; instead, the various plants are attached to the purchasing organization. This kind of purchasing organization is known as a central purchasing organization. This kind of organizational structure is essential in the case of centralized procurement in an enterprise.

What is MRP?

MRP (Material Requirements Planning) is nothing but the determination of which materials are required, when and in what quantities, based on current information and forecasts.

What Functions are supported in the SAP Material Management (MM)?

The MM module of SAP supports the following functions:

􀂃 MRP (Material Requirements Planning)

􀂃 Procurement

􀂃 Inventory Management

􀂃 Inventory Valuation

􀂃 Invoice Verification

Differentiate Manual Check Deposit from Electronic check deposit?

The Manual Check Deposit function enables you to enter all checks received by posting the entries in two steps: in GL and in sub ledger accounts. It also helps to clear customer invoices. You may also make use of additional functions for additional processing of checks thus entered.

The Electronic Check Deposit, in contrast to the manual check deposit function, enables you to process data even from an external data entry system provided the data is delivered in the SAP defined format. You will be able to enter check deposit details electronically so that you may complete and post individual data later with manual check deposit processing.

What are the Configurations for Bank Statement processing?

Before you make use of the Bank Statement Processing functionality in SAP, you need to have the following defined or configured in your system:

􀂃 Start Variant

􀂃 Search ID

􀂃 Processing Type

􀂃 Internal Bank Determination

zExplain Bank Statement in Cash Management?

Bank Statement (manual or electronic) functionality runs on the same principle as Check Deposit Processing. Note that it is not necessary for Cash Management to be active for bank statement processing. During processing, customer payments (except checks) are first posted to the bank clearing account; then customer open items are cleared when balancing the bank clearing account. Similarly, vendor payments are posted to a bank clearing account for outgoing payments where the balancing is done from the entries made from the payment program. Other payments such as bank charges, bank interest, etc., are posted to the respective GL accounts, and they will not go through the bank clearing accounts. In the case of unidentified payment transactions, you will post them first to the bank clearing accounts and then clear them when you have the appropriate information.

How do you set up Cash Management in SAP?

Under customizing, you need to define the Cash Management Groups and assign these

groups to planning levels. In customer/vendor master records, you need to enter the cash management groups to enable the system to transfer data between customer/vendor accounts and the liquidity forecast. The cash management groups help to differentiate customers/vendors based on certain characteristics such as behavior (whether the customer takes a cash discount), risk (credit rating), etc.

. Explain Liquidity forecast?

The Liquidity Forecast helps to reproduce the activities in sub ledger accounts by

(a) linking to all the system resident data such as customer open items in a customer account,

(b) receipts and disbursements form FI/SD/MM, and (c) maintaining items such as reversal, document change, open item clearing, etc., automatically.

The liquidity forecast helps to identify the liquidity trends in the sub ledger accounts based on the information on expected payment flows. The incoming and outgoing payments per open item, from FI-AR and FI-AP, form the basis of the liquidity forecast. You will be able to branch to FI-AR or AP information systems from the liquidity forecast.

Explain Groupings and levels?

Groupings determine how to summarize the data, with various groups and levels defined. A Group adds up various bank accounts and contains a number of levels. A Level, thus, denotes the sources of data or account transactions. Below the levels are the line items, which are displayed using a list display.

What is the Cash (Management) position?

The Cash Management Position helps to reproduce the activities of bank accounts. With input controls for preventing data duplication, parallel management of foreign currencies, and with the required documentation for revision of all planning activities, you will be able to view up-to-date activities in bank accounts and forecast cash position or daily liquidity. The cash management position is set up using groupings, which determine the levels and accounts to be displayed.

The data required for this activity is supplied from

(a) FI postings in cash management relevant GL accounts,

(b) payment advices entered manually, and

(c) cash-flow transactions transferred from the Treasury Management module.

The data can be displayed using any of the following formats:

􀂃 Aggregated, either as account balance (K) or as individual values of inflow/outf low(D)

􀂃 For any data in the past, present, or future

􀂃 In increments (days, weeks, etc.)

Explain Cash Management in SAP?

The Cash Management sub module takes care of the following by integrating bank-related accounting with the respective sub ledger accounting:

􀂃 Check Deposit

􀂃 Cash Position

􀂃 Cash Concentration

􀂃 Bank Statement

􀂃 Liquidity Forecast

􀂃 Cash Concentration

􀂃 Money Market

Why doesn’t the System allow you to Change the Tax Category in a GL A/C Master?

You will be able to change the Company Code related fields such as tax category, currency, etc., provided that there has not been any posting to these accounts. Pay attention to the following:

1. If you need to denote an existing GL account to later be managed on an open item basis or vice versa, then make sure that the account balance is zero in either case.

2. If you are trying to change an existing reconciliation account (to a regular GL), then

make sure that the account has not been posted to.

3. If you are attempting to denote an existing ordinary GL account into a reconciliation

account, ensure that the account has a zero balance.

Is it Possible to Change an Existing B/S GL A/C to the P&L Type?

Technically, you will be able to change all the fields, except the account number, of a GL account in the Chart of Accounts area. However, in this particular instance when you change the GL account type from B/S to P&L, make sure that you again run the balance carry-forward program after saving the changes so that the system corrects the account balances suitably.

What is Individual Processing of GL Accounts?

In contrast to the collective processing of GL accounts where you edit a number of accounts in a single step, Individual Processing helps to edit or create GL account master records one at a time. Here you can edit (including display, change, block, unblock, and delete) or create a new

GL account in three different ways:

1. Centrally: You will be editing or creating a GL account master record in both the Chart of Accounts area and Company Code area in one step. This is also known as one-Step GL creation.

2. In the Chart of Accounts area: you first edit or create the record here before doing it in the Company Code area.

3. In the Company Code area: you edit or create the record here after it has been done in the Chart of Accounts area. Put together, steps 2 and 3 relate to the step-by-step creation of GL account master records.

What is Collective Processing of GL Accounts?

Collective Processing helps you to make systematic changes to a number of GL accounts in a single step. For example, you have used the creating with reference method to create GL accounts in a new Company Code and you want to change the account names as well as the GL account type (P&L or B/S). Then you will use the mass processing method. You can make changes to:

1. Chart of accounts data

2. Company Code data

Use Menu Path: Accounting>Financial accounting>General ledger accounting>Master

records>Collective processing. This can be achieved in IMG through: Financial

Accounting>General Ledger Accounting>GL Accounts> Master Data>GL Account

Creation>Change GL Accounts Collectively.

Remember that the collective processing helps only to edit and you cannot use this method if you need to create new master records.

How do You Create GL Account Master Data?

GL Account Master Data can be created using any one of the following methods:

1. Manually

2. Creating with reference

3. Through Data Transfer Workbench

4. Copying from existing GL accounts

The Manual Creation of GL account master records is both laborious and time consuming. You will resort to this only when you can’t create master records using any of the other methods listed above. You will follow the second method, Creating With Reference, when you are already in SAP and have an existing Company Code (Reference Company Code) from which you can copy these records to a new Company Code (Target Company Code).

You will be able to do this by accessing the Menu:

General Ledger Accounting>GL Accounts>Master Data>GL Account Creation> Create GL Accounts with Reference.

While doing this, you can copy the account assignments as well ensuring that the integration of GL with other applications is intact. SAP facilitates so that you can

(i)            limit the number of GL records thus copied to the target Company Code,

(ii)          create new records if necessary, and (iii) change the account number/name.

When your GL accounts are in a non-SAP system and you feel that these accounts will meet your requirements you will then use the Data Transfer Workbench of SAP to transfer these records into SAP, and change them to suit the SAP environment. Since this will not have Account Assignment logic as defined in SAP, you need to be careful when defining these assignments.

You will resort to the last option of Copying from Existing GL Accounts only when you feel that there is a Chart of Accounts in the system that meets your requirements 100%. Otherwise, follow the second method described above.

What is Fast Entry?

Instead of the regular document entry screens, SAP provides Fast Entry screens for facilitating a quick way of entering repetitive line items in a transaction. For achieving this, you need to define a Fast Entry Screen Layout, which will specify what fields you will require for data entry, and in what order. You may configure these fast entry screen layouts for GL account line items, credit memos, and customer/vendor invoices. Each of these fast entry screen layouts will be denoted by a 5-character screen variant in the system. Fast entry screens are used in complex (general) postings.

SAPs enjoy postings are also meant for similar data entry screens, but the difference is that in the case of fast entry you will start from scratch when identifying the fields, positioning them in the line item, etc., whereas in enjoy postings, the system comes with all the fields activated and you will select the fields that you do not want to be made available for data entry.

Explain Reversal of Documents in SAP?

If you need to change some of the accounting information relating to an already posted document, you can only achieve this by reversing the original document and posting a new one with the correct information. However, reversal is possible only when:

􀂃 The origin of the document is in FI (not through SD or MM, etc.)

􀂃 The information such as business area, cost center, etc., is still valid (that you have not deleted these business objects)

􀂃 The original document has no cleared items

􀂃 The document relates only to the line items of customer/vendor/GL

While reversing, the system automatically selects the appropriate document type for the reversal, and defaults the relevant posting keys. (Remember that the document type for the reversal document would have already been configured when the document type was defined in the configuration.) Also note that if you do not specify the posting date for the reversal document, the system defaults to the posting date of the original document.

What is clearing?

Clearing in SAP refers to squaring-off open debit entries with that of open credit entries.

Clearing is allowed in GL accounts maintained on an open item basis and in all customer/vendor accounts. The clearing can either be manual or automatic. In the case of manual clearing, you will view the open items and select the matching items for clearing. In the case of automatic clearing, a program determines what items need to be cleared based on certain pre-determined open item selection criteria and proposes assignments before clearing these assigned items.

Whatever the type of clearing, the system creates a clearing document with the details and enters the clearing number against each of the cleared open items. The clearing number is derived from the document number of the clearing document. You will also be able to do a partial clearing when you are unable to match open items exactly;

In this case, the balance amount not cleared is posted as a new open item. You may also configure clearing tolerance and also define rules on how to tackle the situation where the net amount after clearing is not zero (such as, writing off, posting the difference to a separate clearing difference account, etc.).

In the case of customers who are also vendors, you will be able to clear between these two provided it is duly configured in the relevant master data (by entering the customer number in the vendor master record and the vendor number in the customer master record).