Maintaining General Ledger Master Data

In this lesson we will discuss how account master data are structured in the general ledger. First we examine the purpose of chart of accounts. Afterwards we will have a closer look, how a G/L master record is structured. We will also describe the function of the G/L account type in the G/L master record. Finally we will also take a look at object like profit centers and segments.

In your company, various business transactions are being posted on a daily basis and your board members would like to have clarity about where your assets come from and where they are being used. All this information is stored in your general ledger. Here you can see, for example, how much money you have earned through your receivables and what are the liabilities you have against your business partners. All this information needs to be presented in a structured way that you and the company stakeholders can understand, this is achieved with the help of chart of accounts.

The General Ledger (G/L) is the core of Financial Accounting (FI). It contains the recording of all accounting-relevant business transactions onto G/L accounts from a business point of view.

Therefore, the G/L account is the most important master data in General Ledger Accounting. G/L accounts are managed using a chart of accounts. The chart of accounts serves as a framework in which the G/L accounts are created in a uniform structure.

For each company code, you must specify one chart of accounts for the general ledger. This chart of accounts is assigned to the company code in configuration and is referred to as its Operating Chart of Accounts.

The accounts of the Operating Chart of Accounts are the ones that the accountants use when posting documents.

The use of the Operating Chart of Accounts is mandatory in the SAP System.

Besides the mandatory Operating Chart of Accounts, the following two chart of accounts types exist in SAP, but their use is optional - Group Chart of Accounts and Country Chart of Accounts.

Your company has created a concept for its chart of accounts. Now it's time to create the accounts themselves (the account master records) to cover the complete business scope. It is important to understand how the G/L account master data is structured and what are key fields and settings for each type of account.

The definition of a G/L account in Financial Accounting is broken down into the following sections:

• Chart of Account Settings
• Company Code specific Settings

This section of the G/L account contains master data information that is identical for all company codes. This data is managed at client level and needs to be defined first.

Typical General Ledger Master Data fields on Chart of Accounts level are:

• Account Number
• Account Name (short and long text)
• Account Name translations
• Account Type (Balance Sheet Account, Primary Cost or Revenue, Secondary Cost, Nonoperating Expense, or Income or Cash Account)

To be able to use an account in the General Ledger of a company code, however, an additional view is required: The Company Code specific settings. 

At this level, master data information that is country- or company code-specific is maintained.

Typical General Ledger master data fields on Company Code level are:

• Reconciliation Account: Characterizes the account as a reconciliation account for a specific subledger.
• Tax Category: Examples: Only output tax allowed, not tax relevant.
• Open Items Management.

In accounting with SAP S/4HANA, the data from Financial Accounting and Controlling 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 revenue, only costs and revenues are processed in Controlling.

Not all expenses or income in FI are equal to costs or revenues in CO.

The distinction of whether a transaction is relevant for Financial Accounting and/or Controlling is made by the G/L Account Type in the Chart of Accounts section of the G/L Account Master Record.

The balances of these accounts are reported in the Balance Sheet only. The transaction figures are not relevant in CO.

This G/L Account type is only relevant for the Balance Sheet reporting in FI. It offers the option to manage Bank Accounts using a single Reconciliation Account in FI.

This is an income statement account that records expenses or gains from activities that are not part of the main purpose of the company, such as the donation example from the previous figure.

This is an income statement account that functions as a cost element for primary costs or revenue. Primary costs reflect operating expenses such as payroll, selling expenses, or the goods issue posting from the previous figure.

Secondary costs result from value flows within the organization, such as internal activity cost allocations, overhead allocations, and settlement transactions.

Running a multilayer company with many departments means you need to be able to analyze and report on the performance of each separate business unit. For your manufacturing company balance sheets and income statements need to be issued on the level of individual operating segments. In order to do this you utilize profit centers.

Profit Center Accounting (PCA) supports the division of an enterprise into areas of responsibility for profits. You can divide your enterprise into areas of responsibility based on the following organizational aspects, for example:

• Geographical structure (for example, locations and regions)
• Product-related structure (for example, divisions and product lines)
• Functional structure (for example, production, sales, and research)

Mixed forms of these structures are also possible.

The standard hierarchy is a tree structure that contains all profit centers in a controlling area and reflects the organizational structure used in Profit Center Accounting.

You maintain the important master data, such as name and description of the profit center, person responsible, and department on the basic screen.

The Standard Hierarchy Node field defines the assignment to a node in the standard hierarchy.

By default, a profit center is assigned to all company codes that belong to the respective controlling area. You can manage the assignment between a profit center and specific company codes in the profit center master record.

In order to comply with certain legal accounting standards, such as IFRS, your manufacturing company uses segments which allow you to divide the whole business into discreet functions such a logistics consulting services and forklift production.

Many accounting principles (for example, IFRS or US-GAAP) require a segment reporting as part of periodic reporting.

In general terms, this means that companies must also provide their financial figures separately according to their business fields (= segments).

For this purpose, SAP S/4HANA offers the Segment dimension in Financial Accounting.

However, the segment is only available in accounting as a field for manual document entry.

How does automatic account assignment now take place for integrative business processes?

SAP S/4HANA enables you to save a segment in the master data of a profit center. The profit center is available as an integrated account assignment object in SAP. The segment is posted automatically when a posting is made to the profit center.

The standard method that SAP recommends is to derive the segment from the profit center master record.

• Chart of Accounts
• G/L Account Master Data
• Standard Hierarchy
• Profit Center Master Data
• Segment