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.