SAP Financial Closing Process

SAP Financial Closing Process and the closing of a period is carried out in three units of steps: pre-closing, managerial closing, and financial closing.Pre-Shut activities ensure that all essential entries have been posted in the Basic Ledger (G/L),including entries from feeder programs/subledgers and accruals and recurring entries posted on to the G/L. Pre-close activities happen in each the old and new months.Managerial Shut activities involve the re-project of costs all through the whole organization,utilizing the allocation and settlement functionality provided within Controlling (CO).Financial Shut actions embrace last changes to valuations and balances previous to the ultimate close and preparation of reports. Adjustments from the fee flows recorded within the managerial closing activities are updated to FI via the reconciliation ledger posting.The first emphasis of this course is “external” closing, that is, closing actions related to “exterior accounting” of FI. “Inner” closing is synonymous with managerial closing. Therefore, although the course does embrace an overview of internal or managerial shut activities, the main focus will be on pre-shut and financial shut activities.

At the beginning of a new year, yr-finish specific closing actions are required in addition to the traditional month-to-month closing activities.For pre-shut actions, sure revaluations of materials and belongings may be performed by an enterprise on an annual basis. Stability confirmations are sent to clients and distributors to confirm that account balances are correct. Technical steps, such because the fiscal yr change in Asset Accounting (AA) and the steadiness carry forward in FI, put together the start balances for the new fiscal year.Additional financial close steps for the new year embrace analyzing and regrouping account data for clearer presentation of the monetary statements, reconciliation between the previous and new years, and any vital adjustment postings. Yr-finish reporting might embody further lists,such as the Amassed Stability Audit path, to offer supporting element for the financial statements.

Financial Statement

The R/3 System consists of an ordinary stability sheet/revenue and loss report (RFBILA00). You may produce totally different outputs from this report program by specifying totally different monetary assertion versions .Financial assertion versions are additionally used in the construction stability checklist, drilldown reporting, planning,and transferring knowledge to consolidations.You'll have the option to outline as many monetary assertion versions as that you must prepare stories based on numerous standards, for instance, for tax authorities, for other external customers, and for inside users.The monetary assertion version lets you configure the report format, together with:
  1. Which items are to be included and the sequence and hierarchy of this stuff
  2. Text describing the items
  3. Which charts of accounts and which individual accounts which would possibly be related to the report
  4. Totals to be offered in the statements
The choice parameters for the RFBILA00 program permit you make additional specs, such as whether the to report at the enterprise space degree, company code degree, and so on.The standard system is delivered with sample financial assertion versions. You may copy these and modify them to create your individual versions.

Financial Statement Versions

You outline a monetary statement version in two steps:
. Entry in the directory of financial assertion variations
. Outline hierarchy levels and assign accounts

Each version will must have the next “particular items”:
  1. Belongings
  2. Liabilities
  3. Stability sheet profit/loss
  4. Revenue and loss results
  5. not allocable.
The steadiness sheet profit/loss is calculated by the ABAP/four program RFBILA00 from the assets and liabilities totals and positioned within the “Steadiness sheet results profit/loss” item. The Revenue and Loss outcomes are decided from all accounts not assigned to both assets or liabilities, and are placed within the correct position.A financial assertion version consists of a most of ten hierarchy levels.
  1. You allocate gadgets to each level. The system forms a complete/subtotal for each merchandise which is then displayed when the program is run.
  2. Allocate texts to each item.
  3. Allocate the accounts whose balance and account identify are to be listed within the lowest ranges of the items.
You'll give you the chance to write additional texts for each item in a financial statement. You presumably can write as much as four strains of text originally and/or the tip of an item.A graduated total is tallied along with the management stage processing. It can be called up from any level within the financial assertion structure. You output the profit and loss a part of the structure within the normal system using the graduated total functionality. RFBILA00 can print the balance sheet and P&L on a SAPSCRIPT form.

Drill Down Reporting

Drill down reporting is a device that permits you to analyze G/L account transaction figures and steadiness sheet structures. You might as well carry out variance analyses comparable to plan/actual comparisons, fiscal yr comparisons, and so on. With Release 4.6, you'll give you the option to combine a graphical display with the traditional drilldown views.This instrument supplies easy navigation by your knowledge, allowing you to maneuver to different levels of element or from one object to another for evaluation and to modify between a drilldown view and a element view. It also offers features for processing the list including sorting, establishing conditions (thresholds), ranking lists and so on. In addition, you probably can access the SAP Graphics, SAPmail, and Excel Record Viewer from your report.

The menus and capabilities immediately out there on the drilldown report make it straightforward to make use of the information system.Traits and key figures type the idea of the drilldown report presentation. Traits outline how your information will be categorized or present a time reference. Key figures include saved values/quantities and calculations based on these values/quantities. In G/L drilldown experiences:
  1. Traits can include firm, company code, enterprise area, chart of accounts, financial statement item, foreign money, fiscal 12 months, period, and so forth
  2. Key figures can embody whole credit score steadiness, total debit stability, steadiness sheet worth, gathered steadiness, stability carry ahead, and so on.
Each report consists of quite a few lists (relying on what number of characteristics you select and the variety of values for these characteristics), that are divided in accordance with their content material into two classes: drilldown lists and detail lists.A drilldown record shows a collection of key figures together with at the very least one characteristic (for example, stability sheet worth for a fiscal yr, the variance calculation) for a lot of drilldown characteristics (akin to Property/Enterprise Space 0001, Property/Business Area 8000, Belongings/Business Area 9900). The essential thing figures appear in the columns of a drilldown list. The bottom degree of the drilldown traits seem within the rows of this listing, while all different levels, and their selected values, appear on the top of the report. In this instance, we selected the worth “Property” for the attribute financial statement merchandise after which selected the characteristic enterprise area, giving us a view of the whole assets for every enterprise area.A element listing at all times exhibits all the vital thing figure/attribute combinations for a single combination of drilldown characteristic values. The key figures appear in the rows of a detail list. All chosen drilldown characteristics, together with their chosen values, appear on the top of the report within the order chosen.

Costs of Sales

Two accounting strategies used for generating profitability statements are the related fee-of-gross sales methodology and the interval accounting method. Applying both technique to a given set of business transactions beneath a given set of legal guidelines yields the same bottom-line consequence (revenue) in concept. The difference is in how the overall profit and loss picture is presented.Firms should choose to make use of one among these methods for generating their legal monetary statements.The selection is commonly decided by country-specific legal requirements. However, the methods facilitate two various kinds of analyses, each of which a company may want to conduct, so internally there could additionally be efforts to track information in each manners.

Price-of-sales accounting

The emphasis is on matching the revenues for items and/or companies provided (the value that a company gains as a consequence of gross sales) in opposition to the associated bills for these gadgets (the worth that is lost when products are transferred out of the corporate). Subsequently, this accounting technique displays profit and loss information in a manner optimized for conducting margin analyses, and as such it's optimal for the sales, marketing, and product administration areas.

Period accounting

The emphasis is on summarizing the activity and situational change over a period of time, for a given organizational unit. Subsequently, this accounting technique presents the revenues and first bills that have been incurred dur ing a given period of time and the changes in stock value ranges, work-in process, and capitalized activities. As such, it's optimal for the manufacturing and revenue middle areas.The interval accounting view of profit and loss is the presentation provided by the usual financial statement program (RFBILA00). This view is simple to achieve within the R/three System, as it represents a simple display of a G/L account or group of accounts for a report line.The price-of-gross sales accounting view requires the utilization of organizational models referred to as useful areas to divide costs posted to the same expense account to separate report lines. As illustrated above, this lets you current the same type of expense in several sections of your report (e.g., personnel expenses associated with manufacturing are included in “Gross outcomes” while personnel costs incurred for other purposes could be included within the “Complete overhead expenses” section). By grouping bills by operate (production, sales, administration), price-of-gross sales accounting additionally fines which business transaction underlies every individual expense in the company and classifies the expense into varied varieties according to function.

Practical areas are usually assigned routinely to a transaction by way of a substitution rule and are derived from the controlling object to which the expense is posted. For instance, a posting to a price center with a price middle category of “Administration” could be assigned to the “Administration” purposeful area whereas the order sort on a posting to an inside order might direct the costs to the “Research & Development” practical area.

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