Performing Daily Processes in General Ledger Accounting

In this lesson we will learn about day-to-day processes that run in our Universal Journal, for example different kinds of postings and transactions. We will also take a look at ledgers, which are objects that contain postings based on particular legal requirements. Finally we will learn how to report and analyze our accounting data and gather meaningful insights about it.

Our manufacturing company wants to have all financial and management accounting transactions in one place. This is possible with the Universal Journal, which is a standard part of SAP S/4HANA. It is important that all areas of accounting have the same single source of truth so that you can rely on the numbers and can always trace back to the source documents.

Business transactions are documented by journal entries in Financial Accounting and Management Accounting.

The general term Journal Entry for FI and CO transactions can be derived from the data structure in SAP S/4HANA.

In SAP S/4HANA, the so-called universal journal (table ACDOCA) forms the basis of an integrated accounting system in which the actual financial accounting and controlling data is recorded in a common item table.

If, for example, an incoming invoice is entered in Financial Accounting in connection with a cost center account assignment of the expenses, a central document is created in SAP S/4HANA: a Journal Entry for Financial Accounting as well as Controlling*.

What are the benefits of the Universal Journal in SAP S/4HANA?

• Data is saved only once. This eliminates the need for time-consuming reconciliation activities between FI and CO.
• Flexible and fast, multidimensional reporting without the need to replicate data for BI (discontinuation of OLAP systems). If an OLAP system is still required, the data only needs to be provided from one data source.
• Avoiding redundancies reduces the memory footprint.

You needs to generate financial reports based on multiple legal accounting principles. For this, your company needs to have parallel accounting configured in the SAP S/4HANA system. To cover the requirement you use different ledgers that map to the accounting principles your company complies with. Some transactions such as monthly accruals and asset depreciation postings might be valuated differently in different accounting principles, which means that they need to be entered separately to individual ledgers.

The ledger is a central collection of posting data in accounting. A general ledger (that is, the accounting data according to a specific accounting principle) within General Ledger Accounting is always managed at ledger level.

The ledger forms the basis for accounting and financial reporting.

SAP provides the 0L ledger as the leading ledger in the standard delivery.

Important characteristics of the leading ledger:

• It is mandatory.
• It is automatically linked to all company codes.
• It is fully integrated with Controlling and forms the basis for CO actual data.

If parallel accounting is to be used, it may be necessary to manage several valuation approaches for a business transaction in General Ledger Accounting.

Example:

You create your consolidated financial statements in accordance with the IFRS accounting principle. The individual company codes also create financial statements according to local commercial and tax accounting principles.

You can perform parallel accounting in General Ledger by managing multiple parallel ledgers (= general ledgers) for the required accounting principles:

• Ledger 0L (leading ledger) that is managed according to the group accounting principle IFRS
• Ledger L1 (non-leading ledger) that you use in all company codes that report according to local commercial law
• Ledger L2 (non-leading ledger) that you use in all company codes that report according to local tax law

Because there can only be one leading ledger (usually the 0L ledger) in SAP S/4HANA, the other ledgers are managed in the system as so-called non-leading ledgers.

The required non-leading ledgers have to be defined in the SAP S/4HANA system. They are not part of the standard delivery.

The leading ledger and the non-leading ledgers are defined as standard ledgers in Customizing as part of integrated parallel accounting.

When posting documents, you can post to all ledgers, to several ledgers, or to a single ledger.

This is controlled in the application using the account assignment information Ledger Group.

Without entering a ledger group in the document, all standard ledgers are updated.

To make it easier to work in General Ledger Accounting, you can combine any number of standard ledgers to a ledger group. This means that a posting can be entered for several ledgers at the same time.

For example, a valuation approach is identical for ledgers L1 and L2. Both ledgers were assigned to a ledger group LO (= LOcal law) in Customizing. By entering the ledger group LO in the posting document, both ledgers are updated at the same time.

A ledger group with the same name automatically exists for each ledger to enable postings to individual ledgers.

In addition to being defined as a standard ledger, non-leading ledgers can also be defined in the form of an extension ledger. Extension ledgers provide a flexible mechanism within General Ledger Accounting to provide further views in addition to the legal views of the standard ledgers.

Some extension ledger application examples are:

• storage of simulation data
• predictive accounting
• manual adjustment postings for management accounting

Parallel accounting with SAP S/4HANA can also be mapped using additional parallel G/L accounts (accounts approach). Only one leading ledger is required for this.

However, SAP recommends that you use the ledger approach as part of a new implementation of SAP S/4HANA and is thus reserved as a use case for customers converting an existing SAP ERP system to SAP S/4HANA.

A general journal entry in SAP S/4HANA consists of the following two areas:

1. Document Header: The document header contains general information about the document that is valid for all document items. Typical document header fields are: Posting date, document date, document type, original document reference information, ledger group, and currency.
2. Document Items:The information of a line item includes in particular: amount, account number, assignment of debit or credit, and other additional information that depends on the business transaction (for example, account assignments relevant to cost accounting for a primary cost account).

Ledger

Extension Ledger

Parallel Accounting

Universal Journal

Ledger Group

The accounting department of your manufacturing company would like to be able to analyze and review any posted business transactions at any point inf time to ensure the correct accounting of the company's business. SAP S/4HANA offers the accounting department multiple possibilities embedded directly in the system.

Journal entries can be accessed and analyzed in different ways in the system. Whether you want to see in detail from the totals values in the balance sheet and profit and loss statement, through an item display to the document level, or call up specific documents using an account or document display to change or reverse them if necessary (Insight to Action approach of SAP Fiori).

Typically, a journal entry in SAP S/4HANA has two views in accounting*:

• Data Entry View (or Entry View)
• General Ledger View

The entry view of a document shows the document that was originally entered in the system (for example, without a ledger group) or by another component (for example, Materials Management or Sales). It reflects the underlying business transaction 1:1.

The general ledger view, on the other hand, displays so-called ledger parts and split parts of a journal entry. The term 'split part' refers to the optional function of document splitting.

Document splitting enables you to create complete balance sheets and profit and loss statements for dimensions below the company code (for example, for segments or profit centers). These reporting requirements arise, for example, from international accounting principles such as IFRS.

As a result, for example, a payable item of the entry view is split into several items (for example, according to different profit centers or segments in the expense items) in the general ledger view.

For more information about document splitting, see Further Reading.

Document Display

Document Splitting