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Introducing Financial Accounting

Objectives

After completing this lesson, you will be able to:

Explain the purpose of Financial Accounting
List the components of Financial Accounting

Introduction to Financial Accounting

Before you have a closer look at the structure of financial accounting later on in this course, the following video answers the question "What are main tasks of Financial Accounting?"

Financial Accounting Components

General Ledger Accounting

Financial Accounting is divided into different areas. We will now discover the general ledger and its various subledgers in a little more detail.

The main purpose of general ledger accounting is to fully represent external accounting and the accounts involved in it. Recording all business transactions in SAP S/4HANA (that is fully integrated with all the other operational areas of a company) ensures that the accounting data is always complete and accurate.

Select the highlighted tabs on the top of the figure to read examples of how General Ledger Accounting collects business transactions through integration with other SAP components.

Accounts Payable Subledger

The Accounts Payable subledger records and administers accounting data for all vendors (for example, incoming invoices and outgoing payments). Postings in Accounts Payable are also managed in the general ledger in real time using the reconciliation account technique. It is also an integral part of Sourcing & Purchasing, where deliveries and invoices are managed according to vendors. The system automatically makes postings in response to the operative transactions. In the same way, SAP S/4HANA supplies the Cash Management application component with figures from invoices in order to optimize liquidity planning.

Select the highlighted tabs on the top of the figure to read examples of how Accounts Payable Accounting collects business transactions through integration with other SAP components.

Account Payable Subledger

Accounts Receivable Subledger

The Accounts Receivable subledger is used to monitor and clear a company's customer receivables. Postings in Accounts Receivable are also managed in the general ledger using the reconciliation account technique. It is fully integrated in the sales process. Incoming payments can be posted automatically using Bank Statement Processing in Cash Management. The integration with liquidity planning, controlling, and credit management for example, always gives you fully reconciled information about your customers.

Select the highlighted tabs on the top of the figure to read examples of how Accounts Receivable Accounting collects business transactions through integration with other SAP components.

Asset Accounting

Asset Accounting in SAP S/4HANA is used to map the complete life cycle of an asset on a value basis (for example, machines, computers, and truck). In Financial Accounting, it serves as a subledger to the general ledger, providing detailed information on transactions involving fixed assets.Typical transactions in Asset Accounting are, for example, posting asset acquisitions and retirements, transfers, and deprecations.

Select the highlighted tabs on the top of the figure to read examples of how Asset Accounting collects business transactions through integration with other SAP components.

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