Managing General Ledger Accounting

Objectives

After completing this lesson, you will be able to:

  • Describe the master data in General Ledger Accounting.
  • Outline the basic posting and reporting function in General Ledger Accounting.
  • Explain the integration between profit and loss accounts and cost elements.
  • Describe the initial integration of Financial Accounting and Management Accounting.

Introduction

We will now focus on the first business process step within Record-to-Report processing: Manage G/L Accounting.  

Please have a look at the interaction below, to learn more about the current process step:

As part of the first integration test during the SAP implementation project, you have a look at the most important master data in Financial Accounting. The first manual postings are then made in General Ledger Accounting. We will also test the first reporting options in the General Ledger. Finally, we will learn about the first integrative value flow in Management Accounting. 

Current Process Step

Current Process Step

For better orientation, Ivan tried to visualize how the current process step fits into the general overview of relevant scope items.

The current process step is highlighted in the overview:

Chart of Accounts and G/L Accounts

Chart of Accounts

The General Ledger (G/L) is the core of Financial Accounting. All accounting-relevant business transactions are posted to G/L accounts.

G/L accounts are managed using a chart of accounts. The chart of accounts serves as a framework to ensure the G/L accounts are created uniformly in Financial Accounting.

The Bike Company has decided to use the standard chart of accounts YCOA delivered with SAP S/4HANA in each company code for their operational postings.

Advantages:

  • Uniform structure of individual general ledger accounting

  • Prerequisite for cross-company code controlling

The YCOA chart of accounts is assigned to each company code in configuration and is referred to as its Operating Chart of Accounts.

G/L Accounts

The G/L accounts in the YCOA chart of accounts are grouped according to business aspects using their eight-digit G/L account number as follows.

Please select the plus-icons to see more details:

The account number enables the account department to select, post, and analyze documents quickly and reliably. 

In addition to the account number and description, a G/L account master record also contains information about how business transactions are posted to G/L accounts and how the posting data is processed.  

Example: A specific profit and loss account always needs to be posted in relation to sales tax, or a G/L Account can only be posted using certain currency (for example, a foreign currency account that is managed in USD (US Dollars) at the bank). 

Hint

If you run several systems in parallel, you can look for possibilities to help keep master data consistent for all systems. Master data in different systems can be managed in parallel by using SAP Master Data Integration and SAP Master Data Governance, which run on SAP Business Technology Platform (SAP BTP).

Financial Statement Version

General Ledger Accounting provides the information needed to create a balance sheet and a profit and loss (P&L) statement. These reports must meet country-specific requirements.

Andy has prepared some examples for you, to see what different financial statements could look like, based on different standards.

Select the headings to get insights into different financial statements:

The structure of a balance sheet and P&L statement is determined in SAP by the Financial Statement Version.

The required G/L accounts are assigned to the individual balance sheet and income statement sub-items. The aggregated values of the assigned G/L accounts are then displayed at the level of the corresponding balance sheet or P&L items and sub-items. 

How to Display the Chart of Accounts

In the following test, we will display the Operating Chart of Accounts used by the Bike Company. Later, we will analyze the structure of G/L accounts that you will use for G/L account test postings. Finally, we will check whether selected accounts have been assigned in the financial statement version.

How to Display the Financial Statement Version

Current Process Step

We are now moving on to the Record-to-Report process step: Reporting.

The current process step is highlighted in the overview below:

General Journal Entry

Introduction

In the integrated, Intelligent Enterprise SAP Solution, most accounting-relevant transactions are posted automatically to the general ledger (for example, a goods issue in Sales automatically leads to a G/L account posting in the general ledger). However, there are also operational general ledger postings that are entered manually in General Ledger Accounting. 

Posting General Journal Entries

A general journal entry in SAP consists of the following two areas:

Document Header:

The document header contains general information about the document that is valid for all document items.

Document Items:

The information of a document item includes the amount, account number, assignment of debit or credit, as well as other information about the specific business transaction.

Please select the hotspots on the user interface to learn more about the particular fields. You can close the pop-ups by selecting X:

Manual Postings

In addition to the large number of automatic G/L account postings in General Ledger Accounting, manual postings also must be entered.

At the Bike Company you sometimes make cash payments. A donation of EUR 500 was made in cash and must now be entered as a G/L account posting in General Ledger Accounting. This business scenario of manual postings is a good way to test the settings and the configuration of the General Ledger Accounting. Watch the following demo to see how to post this accounting document in the general ledger.

How to Post a General Journal Entry

Reporting: Analyzing General Journal Entries

General journal entries can be accessed and analyzed in several ways in the system.

You can review the entries in detail from the total values in the balance sheet and profit and loss statement, through an item display to the document level. Or you call up specific documents using an account or document display to change or reverse them if necessary.

The original document (for example, an invoice or credit memo) can also be attached to the Journal Entry document.

New Message

How to Create a Balance Sheet and P&L Statement

Integration Aspects of Financial Accounting and Management Accounting

Account Type and Cost Element

In accounting with SAP S/4HANA, the data from Financial Accounting (FI) and Management Accounting (CO) is processed in a uniform data environment. This applies to both transaction data and accounting master data.

While Financial Accounting considers inventory values, expense, and income, only costs and revenues are processed in Controlling.

Not all expenses or income in FI are equal to costs or revenues in CO. For example, transactions that are posted as expenses in FI will probably not be considered in CO when they are not directly related to the goods and services of the Bike Company.

Select each business transaction in the Bike Company to see whether it is relevant for FI and / or CO:

Account Type

The distinction of whether a transaction is relevant for Financial Accounting (FI) and/or Management Accounting (CO) is made by the G/L Account Type in the G/L Account Master Record.

Please select the tabs in the menu below, for more information:

How to Display the G/L Account Type

Let’s check two G/L accounts master data to see whether the correct G/L account type is assigned and to review additional controlling information.

New Message

Keisha has sent you a text message, let’s see what she has to say.

How to Post and Analyze Journal Entries Integrated with Controlling

Check out how to  upload and analyze general journal entries with a cost center entered:

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