Ledgers and Ledger Approach in General Ledger Accounting
In the preceding figure, the leading ledger 0L is part of the standard SAP system, meaning it is delivered by SAP. In addition to the leading ledger, you can also define other non-leading ledgers for local regulations. This approach is known as the ledger approach in G/L accounting.
Each client can have only one leading ledger. The client can also have additional ledgers, which are known as non-leading ledgers. All company codes are assigned to a leading ledger for each client. This ledger contains the group valuation view and comes with the application by default. Furthermore, you cannot ‘deactivate’ the leading ledger because all company codes are automatically assigned to it. Only values from the leading ledger are posted to Controlling (CO) in the standard system.
The non-leading ledgers are parallel to the leading ledger and are manually activated per company code. For example, one of the non-leading ledgers may be used to present local accounting principles. The fiscal year variant of the non-leading ledgers does not have to be the same as that of the leading ledger.
A posted FI-document (normally) is shown in the leading ledger and the non-leading ledgers (assigned to the posted company code). To allow you to make standardizing entries and post adjustments in one or selected ledgers only (in the case of parallel accounting, for example), you can use the Ledger Groups.
Note the following information about Ledger Groups:
You can combine any number of ledgers in a ledger group.
When a new ledger is created, the system automatically generates a ledger group with the same name.
You only have to create those ledger groups in which you want to combine several ledgers for joint processing in a function.
You do not need to create a ledger group for all ledgers because the system automatically posts to all ledgers when you do not enter a ledger group in a function.
Note
A non-leading ledger can be used for each local accounting principle.
The leading ledger reflects the accounting principles used to draw up consolidated financial statements. It is integrated with all sub-ledgers and is updated in all company codes.
The leading ledger and the non-leading ledgers are called standard ledgers. A standard ledger contains a full set of journal entries for all business transactions.
In addition, extension ledgers can be added. Extension ledgers are based on an existing underlying ledger. The underlying ledger has to be a standard ledger.
An extension ledger is assigned to a standard ledger and inherits all journal entries of the standard ledger for reporting. Postings made explicitly to an extension ledger are visible in that extension ledger but not in the underlying standard ledger.
An extension ledger stores delta values and points to another ledger — thus providing a flexible mechanism for adjustments and reporting. An important use case is for management views on top of legal data (IFRS or Local Generally Accepted Accounting Principles [GAAP]). Besides creating a master record, extension ledgers do not need additional configuration. Reporting on the extension ledger always includes the data of the underlying ledger.
With extension ledgers you can "staple" ledgers on top of each other, providing the different views you need. This minimizes the data footprint and provides new flexibility for easily creating additional views.
Only manual postings to the extension ledger are allowed.
In addition to the ledger approach, there is also the accounts approach. In this approach, different valuation approaches and valuations are posted to different accounts. When financial statements are prepared, the system determines which accounts are relevant and need to be evaluated as defined in the ‘financial statement version’.
Accounts Approach versus Ledger Approach
The differences between the accounts approach and the ledger approach are listed in the following table:
Accounts Approach versus Ledger Approach
| Accounts Approach | Ledger Approach |
|---|---|
| Specific accounts for each GAAP -> complex chart of accounts structure | No specific accounts area -> no change to chart of accounts |
| A minimum of one retained earnings account for each GAAP | A minimum of one retained earnings account for all GAAPs |
| Complex Balance Sheet/Income Statement versions | Standard Balance Sheet/Income Statement definition |
| Relevance of postings for local or international GAAP specified at the account level | Relevance of postings for local or international GAAP specified at the document level |
| All valuation approaches can be posted to Controlling | Only the leading valuation can be posted to Controlling |
Ledger solution is strongly recommended for new systems (Greenfield Approach).