Setting Up the General Ledger to Display Accruals and Deferrals


After completing this lesson, you will be able to:

  • Explain the concept of accruals and deferrals

Accruals and Deferrals


Greg needs an introduction as to what accruals and deferrals are from an accounting perspective as he's not familiar with this concept.

Secondly, as part of the close process he needs guidance on posting journal entries to record accruals or by using recurring entries. He needs to learn what Apps are used in the SAP system to record these transactions.

Accrual and Deferral Postings

During the close, the accounting department needs to identify, in line with accounting practices, any accruals or deferral (prepayments) that need to be recorded in the general ledger, in accordance with GAAP (Generally Accepted Accounting Practices).

Manual Accrual


Now that Greg has an insight into accruals and deferrals, he wants to see how they can be recorded in the SAP system.

Post and Reverse a Manual Accrual

Greg can also use a recurring entry if there is a need to enter accruals and deferrals often.

Let’s go to the next topic and see how we can also use recurring entries to record accruals/deferrals.

Recurring Entries for Posting Accruals with the Same Account and Amount


Greg will learn about using a recurring entry to set up an accrual posting in the SAP system.

Recurring Journal Entry

The recurring entry program is suitable for posting accruals since the exact same amount is posted to the same accounts in each accounting period.

The header or Recurrence Rule (see above) is where you specify the Start and End date, how often (monthly, quarterly etc.) and which day of the month the posting will take place. In each period, the posting record is Debit Expense and Credit Other Payables (or Provisions).

The booking of an accrual as an expense is posted to the account in the following way:

  • Other Payables: If you are certain about the reason and amount of the accrual
  • Provisions: If you are uncertain about the amount and/or reason of the accrual and can only estimate it

Create a Journal Entry with Auto-Reverse

Practice yourself using the interactive simulation to post and reverse a journal entry at the month-end by using the SAP Fiori apps Post Journal Entries, Schedule General Ledger Jobs and Manage Journal Entries.

Create a Recurring Charge

Practice yourself using the interactive simulation to create and post a recurring charge by using the SAP Fiori apps Manage Recurring Entries, Schedule General Ledger Jobs and Manage Journal Entries.

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