Franco is currently working in the General Ledger Accounting department of the company and need to understand additional concepts required for period-end closing preparations. The company is required to report under multiple accounting principles and uses the Ledger Approach for parallel accounting.
Since the company is required to produce financial statements for their major Lines of Business and use these reports to evaluate the financial health, the company also reviews the type of costs required to produce its products to understand which functional areas of the company are spending money. He will learn general accounting procedures and have basic experience with General Ledger master data and documents.
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Why does Parallel Accounting use multiple ledgers?
Follow Franco and Renita as they discuss the need for Parallel Accounting.
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In using Parallel Accounting, we’ve decided to utilize three general ledgers that comply with the reporting requirements in this scenario.
The three ledger groups in this scenario are as follows:
- 0L Leading Ledger (IFRS): The main accounting principle the company must report.
- 2L Non-Leading Ledger (Local GAAP): An additional accounting principle that the company is required to report locally.
- TX Non-Leading Ledger (Local Tax): An additional ledger that the company chooses to maintain.
Account Principle IFRS Overview
The Account Principle IFRS Overview provides a comprehensive understanding of the International Financial Reporting Standards, a globally recognized set of accounting principles used to regulate financial statements for businesses and organizations around the world.
The Leading Ledger 0L Overview offers an in-depth exploration of SAP's primary bookkeeping entity, discussing its function, configuration, and role in providing a structured and standardized approach to financial accounting.
The Non-Leading Ledger 2L Overview provides a detailed analysis of this supplementary ledger in SAP system, focusing on its operation, management, and vital role in recording parallel accounting data for companies.
The Non-Leading Ledger TX Overview provides an essential understanding of the TX Ledger's role as a non-leading ledger in the SAP system, highlighting its critical functions, configuration processes, and benefits for maintaining parallel accounting.
All international companies have to prepare financial statements based on different accounting principles This leads to the question of why it’s required to file financial statements with different accounting principles? Watch the video below to learn more about parallel ledger direct document entry.
Caution
Especially in SAP S/4HANA Public Cloud, before you decide which ledger combination to use, you should consider the available options carefully and analyze thoroughly which option suits your business needs because the selection you make cannot be reversed after the initial scoping is complete.
Therefore, you should be aware of the following:
You cannot add standard ledgers after the initial scoping is finalized.
You cannot remove activated ledgers at a later point in time.
Note
By default the leading ledger 0L is assigned to support the local accounting principle. It is recommended if you are using more than one ledger, to change this default assignment (making for example ledger 2L the local ledger and changing 0L for the IFRS standards). You can change the default assignment of accounting principles to ledgers but you must do this before the first posting is made in the system.Parallel Ledgers – Secondary Processes
Parallel ledgers also support parallel valuation processes, which are often performed at period end.
When configuring for parallel valuation, accounting principles are defined and subsequently assigned to both the following:
- Parallel ledgers
- Valuation areas
Watch the video below to learn more.
