Analyzing Material Valuation

When you post a goods movement (goods receipts, goods issues, or transfer postings) in the SAP system, a material document is created. This material document is generated as proof of a process that has caused a change in stock.

If the goods movement is relevant to valuation, the system creates at least one accounting document in addition to the material document.

Goods movements are relevant to valuation if the Financial Accounting is affected by them. For example, the posting of a goods receipt to stock for a raw material usually results in an increase in the stock value of your current assets. If the raw material instead is only transferred within one plant, no postings are made in Financial Accounting.

The material document consists of a document header and at least one item. The header information includes the posting date and the name of the creator. The information at item level includes, among other things, the material number, the posted quantity, the movement type, and the plant and storage location. As soon as a goods movement is posted, you cannot change these values in the document. To correct errors, you must first cancel the incorrect document items and then post them again with the correct values.

The accounting document records the effects of material movements on the accounts. The document header contains generally applicable data, such as the document date, posting date, posting period, and document currency. The G/L account numbers and the associated amount posted are recorded at item level.

The material document and accounting document are separate but linked documents. You can identify the material document by the material document number and the material document year. The accounting document can be uniquely identified by the company code, the accounting document number, and the fiscal year. The company code in which the accounting document is posted is automatically taken from the plant in which the goods movement takes place.

The MM invoice document consists of a document header and at least one item. The header data includes the vendor (invoicing party), the posting date, and the name of the person who created the document. The item data indicates which amount is charged for which quantity of a material.

The accounting document shows the bookkeeping effects of the entry of the invoice. The document header contains generally applicable data, such as the document date, the posting date, the posting period, and the document currency. The G/L account numbers and the associated amounts posted are recorded at item level.

The invoice document and accounting document are separate but linked documents. You can identify the invoice document by the document number and the document year. The accounting document can be uniquely identified by the company code, the accounting document number, and the fiscal year.

The opening balance for stock quantity and total value are displayed in the first row.

The following steps are:

• Goods receipt (GR) for a purchase order of 100 pieces at 2.40 (second line)

• Invoice receipt (IR) of 100 pieces at 2.20 (third line)

At goods receipt, the stock quantity and stock value are updated in the material master record. The stock account, and thus the stock value, are updated by the amount "goods receipt quantity x standard price." To the GR/IR clearing account, the "goods receipt quantity x purchase order price" amount is posted. The difference between the purchase order price and the standard price is posted to the price difference account.

The opening balance for stock quantity and total value are displayed in the first row.

The following steps are:

• Goods receipt (GR) for a purchase order of 100 PC at 2.40 (second line)

• Invoice receipt (IR) of 100 PC at 2.20 (third line)

During goods receipt the system updates the stock value, stock account, and GR/IR clearing account at the purchase order price. The moving average price is recalculated based on the new stock value as follows: moving average price (for each base unit of measure) = total value / total stock.