Financial Accounting

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SAP(Set-1)
SAP is a multinational software development and consulting corporation, which provides enterprise software applications (ERP) and support to businesses of all sizes globally. The name SAP is an acronym for Systems, Applications and Products in Data Processing. SAP software runs on programming language called Advance Business Application Programming (ABAP). The company's best known product is its SAP Enterprise Resource Planning (SAP ERP) software. SAP ERP software is a product capable of integrating multiple business applications, with each application representing a specific business area. These applications update and process transactions in real time. It is highly configurable to meets the needs of the business. SAP software is categorized into 4 core functional areas: Financials, Human Capital Management, Operations and Corporate Services

SAP’s Business Strategy:
Account Control- “The Safe Choice” Customer Lifecycle Management “SAP Delivers Value” Services, Maintenance, & Add-ons New Markets and Channels

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SAP Business Strategy: “Extended Range of Services”
New Maintenance Offerings Architecture Planning Custom Development Consulting System Integration Operations Planning & Optimization Hosting

Current Application Strategy:
The Ever Expanding mySAP.com Scalability : Business One and All-in-One The xApps (Cross-Applications) Framework SAP Portals R/3 Enterprise

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SAP Business Strategy: Become Your “Trusted Partner”

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FICO
Financial Accounting (FI) and Managerial Accounting(controlling)(CO)FICO Overview : Financial Accounting (FI) and Managerial Accounting(controlling)(CO)FICO Overview Financial Accounting (FI) Goals and objectives Target Audience Components Managerial Accounting(controlling) (CO) -- Goals and Objectives -- Target Audience -- Components Comparisons and Relationships Financial Accounting (FI)Goals and Objective : Financial Accounting (FI)Goals and Objective Financial accounting is designed to collect all of the data needed to support the preparation of financial statements for external users Target Audience : Target Audience Internal Executives Senior Management Accounts Administration Staff Employees External Legal Authorities Banks Auditors Shareholders Insurance Taxing Authorities Media Financial Analysts Components of Financial Accounting : Components of Financial Accounting Managerial Accounting (Controlling (co))Goals and Objectives : Managerial Accounting (Controlling (co))Goals and Objectives Managerial accounting is designed to collect data for the preparation and analysis of reports for use by internal users Target Audience : Target Audience Executives Senior Management Department Managers Controllers Cost Accountants Components of Managerial Accounting(controlling)(CO) : Components of Managerial Accounting(controlling)(CO) FI overview cont… : FI overview cont… General Ledger Balance Sheet Assets Liabilities Equity Income Statement Revenues Expenses

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General Ledger :
General Ledger The General Ledger provides a complete record of all “acceptable” business transactions from the viewpoint of an accountant An acceptable business transaction has the following traits Affects the financial position of the entity Measurable in a currency Affects at least two accounts Assets = Liabilities + Equity Debits = Credits

Balance Sheet :
Balance Sheet A statement containing Assets and Liabilities of a company prepared at the end of a financial year to show the financial position of the company Assets: Things of value that a company owns or controls that accountants have agreed to measure in monetary terms. Examples of Accounts in Assets Cash Accounts Receivables Plant and Equipment Inventory

Balance Sheet cont… :
Balance Sheet cont… Things that a company owes or must provide services in order to settle that accountants have agreed to measure in monetary terms Examples of accounts include in Liability Accounts payable Notes payable Bonds payable Unearned revenue

Balance Sheet cont… :
Balance Sheet cont… Equity is simply the mathematical difference between assets and liabilities Includes the monetary amounts collected with respect to all preferred and common stock transactions, the aggregate net income reported since organization of the company, and a reduction for dividends that have been paid to stockholders.

Income Statement :
Income Statement Statement prepared at the end of the financial year providing the expenses occurred and income received for the entire financial year Revenues (income): The monetary amounts collected from customers in settlement for goods purchased from our company or services rendered by our firm to them during the current fiscal year. Expenses: The monetary amounts paid to vendors in settlement for goods purchased by our company or services rendered to our firm by other companies during the current fiscal year.

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Organizational Structure :
Organizational Structure Organizational Data A hierarchy in which the organizational units in an enterprise are arranged according to tasks and functions Are static data and are rarely changed The definition of organization units is a fundamental step, it is a critical factor in how the company will be structured Organizational Structure Client Company code Chart of accounts Fiscal Year Varient Integration with other module

Client :
Client Highest hierarchical level in an SAP environment A complete database containing all the tables necessary for creating a fully integrated information system Master records are created at the client level

Company Code :
Company Code A legally independent entity The smallest organizational unit for which accounting can be carried out Business transactions are processed at this level Accounts are managed at this level Legal financial statements, such as the balance sheet and the income statement, are generated at this level using the General Ledger balances.

Chart of Accounts cont… :
Chart of Accounts cont… There are five types of accounts contained in a chart of accounts Assets Liabilities Equity Revenues Expenses There are two primary accounting reports prepared from the General Ledger Chart of Accounts Balance Sheet Income Statement

Chart of Accounts :
Chart of Accounts The foundation for the General Ledger is the Chart of Accounts A Chart of Accounts contains a complete list of all of the accounts utilized in the General Ledger for a given company Financial accounting reports are prepared from the balances contained in the General Ledger’s chart of accounts

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Chart of Accounts :
Chart of Accounts A listing of the accounts (assets, liabilities, equity, revenues, and expenses) that are contained in the General Ledger. A chart of accounts must be assigned to every company code in order to create the General Ledger for that company Several Company codes can use the same chart of accounts.

Fiscal Year Variant :
Fiscal Year Variant Specifies the accounting fiscal year for reporting purposes Special periods are created to aid in the quarterly or year-end adjusting process completed prior to preparing financial statements A single fiscal year variant is assigned to each company code.

Integration :
Integration Integration through A/R and A/P Reconciliation accounts

Compare FI and CO
FI: Legal or external reporting Reports by accounts Balance Sheet Income Statement CO: Internal management reporting Reports by cost centers and cost elements Cost Center Reports
For Example Tata is a company TCS,Tata Power,Tata Steel, is a company code under a company TATA Under Company code you have business area associated with it where the business areas may be scattered in different parts of the world where you can have reporting done for different business area or you can also call it as Profit Centre.

8 A company is the Group of company and company code is the all the companies for which u want seperate books of accounts. Company codes are assigned to company for consolidation purpose. example :- reliance is the company and RIL,Reliance infocomm,Reliance Petrochem etc are the company codes. All these co.codes are assigned to reliance company for consolidation purpose.

Explain your Organization Structure and Business Process e.g. P2P, O2C etc. Your interview obviously was for a FICO position. If you are implementing FI and CO you need the following key organization structures: - The Company code (FI). - The Controlling area (CO). In addition and for the purpose of integration with other modules you will need other organization structures such as Plant (MM), sales area (sales organization, distribution channel, division-SD, purchasing organization. Concerning business processes: 1) P2P or Procure to Pay refers to the process of procuring goods or services with the following steps: - Business needs for goods or sevices are identified and the department issues a purchase requisition. -The purchase requisition is taken over by the purchasing organization which tries to identify possible suppliers of the goods or services. In this process a request for quotations RFQ is issued and forwarded to the potential suppliers. The responses received are analyzed and a supplier is selected based on price quoted, delivery date or product availability and quality.

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- Once a supplier is selected the Purchase Requisition is converted into Purchase order that is forwarded to the selected supplier. - Upon receipt of the goods, goods receipt GR is posted and goods are entered in the inventory. - Upon receipt of the invoice and following verification with PO and GR, Invoice receipt IR is posted and at the same time the liability to the supplier of goods is entered in FI in the form of a payable in the vendor's account. - Depending on the payment terms agreed upon, the invoice is paid and the payable is cleared ending the procurment process. 2) O2C or Order to Cash refers to the process of selling goods or services with the following steps: - Presales activities involving quoting a price to the customer. - Confirmation of an order from the customer leading to the creation of a Sales order specifying among other things items, quantities, delivery dates. - Delivey / shipping. - Goods issue (goods removed from inventory in MM). - Billing (invoice is created and sent to the customer and at the same time the billing document is transferred to FI to record the Receivable in the customer account) - The receivable in the customer account is converted to cash either by a cash payment, a check received from the customer directly or via the lockbox, a bank transfer, drafting or direct collection from the customer's bank account. The cash received clears the receivable and ends the OTC process.

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FI/CO Organizational Structures
• Client • Company • • • • • Chart of Accounts Company Code Business Area Credit Control Area Controlling Area

CLIENT COMPANY CHART OF ACCOUNTS CONTROLLING AREA COMPANY CODE COMPANY CODE COMPANY CHART OF ACCOUNTS CONTROLLING AREA COMPANY CODE

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Client:
Highest hierarchical level in an SAP system • A complete database containing all the tables necessary for creating a fully integrated system • Master records are created at the client level


Company:
• Consolidated financial statements are created at the company level • A company can include one or more company codes – All company codes must use the same chart of accounts and fiscal year

Chart of accounts:
• A listing of the accounts • A chart of accounts must be assigned to every company code • Several company codes can use the same chart of accounts – A different chart of accounts can be used if a different grouping of the chart of accounts is required

Company codes:
• A required structure • A legally independent entity • The smallest organizational unit for which accounting can be carried out

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• The level where business transactions are processed • The level where accounts are managed • The level where legal individual financial statements, such as the balance sheet and the profit and loss statement, are created

Credit control area:
• An organizational unit or area of responsibility created to control customer credit limits • A company code is assigned to one and only one credit control area • Multiple company codes can be assigned to one credit control area

• Controlling Area:
• An organizational unit defining the company's cost/ managerial accounting operations • A company code is assigned to one and only one controlling area • A controlling area can have multiple company codes assigned to it – This allows cross company cost allocations and reporting –

Fiscal Year Variant:
• Determines the fiscal year • Calendar year or non-calendar year

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• Allows the use of special periods to aid year-end closing • Is assigned to a company code

Course:
1. SAP INTRODUCTION, SAP R/3 ARCITECTURE, ASAP AND SDM METHODOLOGY, VANTIVE PROCESS 2. BASIC SETTINGS: CREATION OF COMPANY, COMPANY CODE, ASSISGN COMPANY CODE TO COMPANY, BUSIESS AREA, FISCAL YEAR VARIANT, ASSISGN FISCAL YEAR VARAINT TO COMPANY CODE, CHART OF ACCOUNTS, ACCOUNT GROUPS, RETAINED EARNING ACCOUNT, POSTING PERIOD VARIANT, DOCUMENT TYPE AND NO.RANGES, FIELD STATUS VARIANT, TOLERANCE GROUP, GLOBAL PARAMETERS. 3. GENRAL LEDGER: GL MASTER RECORD, NEW GL, POSTING OF DOCUMENT, DIPLAY BALANCES OF GL, PARKING, HOLD, SAMPLE, RECURRING, ACCURAL, DEFERAL DOCUMENTS, FOREIGN EXCHANGE, REVERSAL OF DOCUMENTS, INTEREST CALCULATION,CREDIT MANAGMENT 4. ACCOUNTS PAYABLE: VENDOR GROUPS (MM AND FI VENDORS), NO. RANGES FOR VENDOR ACCOUNTS, VENDOR MASTER RECORD, TOLERANCE GROUP FOR VENDORS, HOUSE BANK, CORRESPONDENCE, ADVANCE PAYMENTS, AUTOMATIC PAYMENT PROGRAM, EXTENDED WITH HOLDING TAX, TERMS OF PAYMENTS, CASH DISCOUNT (RECEIVED), PURCHASE RETURNS 5. ACCOUNTS RECEIVBLE: CUSTOMER GROUP (SD AND FI CUSTOMERS),NO.RANGES FOR CUSTOMERS ACCOUNTS, CUSTOMER MASTER RECORDS,ADVANCE RECEIPTS, DUNNING, CASH DISCOUNT (GRANTED), INPUT & OUTPUT TAX, BILLS OF EXCHANGE, LOCKBOXES 6. ASSET ACCOUNTING: CHART OF DEPRICATION, ACCOUNT DETERMINATION, SCREEN LAYOUT, ASSET CLASSES, INTEGRATION WITH FI, DEPRICATION, DEPRICATION KEYS, ASSET MASTER, SUB ASSET MASTER, ASSET REPORT, DEPRICATION RUN, SALE OF ASSET, TRANSFER OF ASSET, SCRAPPPING OF ASSET, CAPTIAL WORK IN PROGRESS 7. CONTROLLING: CONTROLLING AREA, NO.RANGES FOR CONTROLLING DOCOUMENTS, VERSIONS, COST ELEMENT ACCOUNTING, COST CENTRE ACCOUNTING, REPOST LINE ITEMS, REPOST OF COST, ACTUAL OVERHEAD ASSESMENT, PLANNING COST CENTRE AND COST ELEMENT,BUDGETING 8. INTERNAL ORDERS: ORDER TYPE, INTERNAL ORDER, PLANNING INTERNAL ORDER WISE, VIEW INTERNAL ORDER WISE REPORT, SETTLEMENT PROFILE 9. PROFIT CENTRE ACCOUNTING (PCA): CONTROLLING SETTINGS, DUMMY PROFIT CENTRE, ACTUAL DATA, PROFIT CENTRE, ASSISGNMENT OF REVEUNE ELEMENTS, CHOOSE ACCOUNTS, CREATION OF COST OBJECT, PLANNING PROFIT AND LOSS ITEMS, PLANNING BALANCE SHEET ITEMS. 10. PROFITABILITY ANALYSIS (CO-PA): OPERATING CONCERN, PROFITABILITY SEGMENTS, ASSISGNMENT OF CONTROLLING AREA TO OPERATING CONCERN, ACTIVATE PROFITABILITY ANALYSIS, MAPPING OF CONDITIONS TO COPA VALUES, DRILL DOWN REPORT, REPORT PAINTER 11. PRODUCT COSTING: CREATION OF SECONDRY COST ELEMENT, ACTIVITY TYPE, PRICE CALUTATION, WORK CENTRE, ROUTING, COST SHEET, COST ESTIMATE WITH QUANITTY STRUCTURE, COST ESTIMATE WITHOUT QUANTIY STRUCTURE, WORK IN PROGRESS 12. INTEGRATION: PROCRUMENT CYLE, INTEGRATION WITH MM, SALES PROCESS, INTEGRATION WITH SD, INTEGRATION WITH ASSET ACCOUNTING, INTEGRATION WITH CONTROLLING, INTEGRATION WITH PP. 13. REPORTS: FINANCIAL STATEMENT VERSION, GL REPORTS, ACCOUNTS PAYBLE REPORTS, ACCOUNTS RECEIVBLE REPORTS, ASSETS, CASH BOOK REPORTS. 14. 14 REAL TIME SCENARIOS: RESOLVING TICKETS, LSMW, IMPLEMENTATION OVERVIEW, SAP SOLUTION MANAGER, SOX, SUPPORT AND MAINTENANCE PROCESS 15. MOCK PROJECT, OVERVIEW OF ACCOUNTS AND RESUME PREPRATION

SAP R/3 FICO COURSE CONTENT

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• • • • • • • • • • • • • • • • • • Organization Structure Master Records Documents Posting periods Accounts/line items Foreign Currency Other special features Reference documents Reports Incoming payments Account analysis Outgoing payments Clearing Closing using New GL Preparing a Balance Sheet Valuating Foreign Currency Financial Statements Overhead cost controlling

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