Wednesday, July 27, 2016

SAP FICO Basic Questions

 1) Explain the term SAP FICO?
SAP FICO stands for FI (Financial Accounting) and CO (controlling). In SAP FICO, SAP FI take cares about accounting, preparation of financial statements, tax computations etc, while SAP CO take cares of inter orders, cost sheet, inventory sheet, cost allocations etc. It is the software that stores data, and also computes them and retrieves the result based on the current marketing scenario. SAP FICO prevents data lost and also does the verification and reporting of data.

2) What are the other modules to which ‘Financial Accounting’ is integrated?
The other modules to which ‘Financial Accounting’ is integrated are
o Sales and Distribution
o Material Management
o Human Resource
o Production Planning
o Controlling of financial transaction

3) In SAP FI what are the organizational elements?
The organizational elements in SAP FI are:
o Company Code
o Business Area
o Chart of Account
o Functional Area

4) In Asset accounting what is the organizational assignments?
In Asset Accounting, chart of depreciation is rated as the highest node, and this is assigned to the company code. All the depreciation calculations are stored under the chart of depreciation.

5) What is the importance of asset classes? What asset classes are there?
The asset class is the main class to classify assets. Every asset must be assigned to only one asset class. Example of asset class is Furniture & Fixtures, Plant & Machinery, and Computers etc. The asset class also contains GL account, when any asset is procured, GL account is debited. Whenever you create and asset master, it becomes mandatory to mention the assets class for which you are creating the required assets. So, whenever any asset transaction occurs, the GL account attached to the asset class is automatically picked up and the entry is passed. You can also specify the default values for calculating the depreciation values and other master data in each asset class.

6) How many charts of accounts can company code have?
You can have one Chart of Account for one company code which is assigned. Notes on SAP FICO

7) For a Company Code how many currencies can be configured?
There are three currencies that can be configured for a Company code, one is a local currency and two are the parallel currencies.

8) What are the options in SAP for Fiscal years?
The fiscal year in SAP is the way financial data is stored in the system. In SAP, you have 12 periods and four special periods. These periods are stored in fiscal year variant that is:
§ Calendar Year: From Jan-Dec, April-March
§ Year dependent fiscal year

9) What is a ‘year shift’ in SAP calendar?
SAP system does not know what broken fiscal year e.g is April 2014 to March 2015 and only understand the calendar year. If, for any business, the fiscal year is not a calendar year but the combination of the different months of two different calendar year and then one of the calendar year has to classified as a fiscal year for SAP and the month falling in another year has to be adjusted for the fiscal year by shifting the year by using the sign -1 or +1. This shift in the year is known as ‘year shift’.
Example: April 2015 to Dec 2015 is our first calendar year, and Jan 2016 to March 2016 is our second year, now if you are taking April-15 to Dec-15 as your fiscal year, then Jan-16 to March-16 automatically becomes the second year, and you have to adjust this year by using -1 shift, and vice versa if the scenario is reversed, here you will use +1 shift.

10) What is year dependent fiscal year variant?
In a year dependent fiscal year variant, the number of days in a month is not as per the calendar month. For example, in year 2015, month January end on 29th, month Feb ends on 26th etc.

11) What is parallel and local currency in SAP?
Each company code can have two additional currencies, in addition to the company code, currency entered to the company code data. The currency entered in the company code creation is called local currency and the other two additional currencies are called parallel currencies. Parallel Currencies can be used in foreign business transactions. In order to do international transaction, parallel currency can be used. The two parallel currencies would be GROUP CURRENCY and HARD CURRENCY.

12) Where can you use the internal order?
To track the cost, internal orders are used; they are proposed to be incurred over on a short-term basis. 

13) Is it possible to calculate depreciation to the day?
Yes, it is possible to calculate depreciation, to do that you have to switch on the indicator Dep. to the day in the depreciation key configuration.

14) Explain what is posting key and what does its control?
In order to determine the transaction type which is entered in the line item, a two digit numerical is used known as ‘Posting Key’. Posting key determines
o Account Types
o Types of posting. Debit or Credit
o Field status of transaction

15) What is the company code in SAP?
To generate financial statements like Profit and Loss statement, Balance sheets etc. company code is used.

              Ledgers in FICO

You define the ledgers that are used by you in General Ledger Accounting. The ledgers are based upon a totals table. Using the delivered standard totals table FAGLFLEXT is recommended by SAP. The Ledgers that are available are mentioned as follows:
Leading Ledger:
The leading ledger is classified into three types. They are:
·                Two additional currencies apart from Local Currency
·                 Fiscal year variant
·                 Posting period variant

Note: Only the values from the leading ledger are posted to CO in the standard system.
·                 Group currency: Group currency is the currency which is specified in the client table or which is to be entered there.
·                 Hard Currency: the Hard currency is a country-specific second currency which is used in countries with high inflation.
·                 Index-based currency: the Index-based currency is a country-specific fictitious currency which is required in some countries with high inflation for external reporting (for example, tax returns).
·                 Global company currency: Global company currency is the currency which is used for an internal trading partner. Maintaining the two parallel currencies would highly impact the system performance as the system is preparing additional two ledgers, besides the normal ledger.

·                Index-based currency and Hard currency are maintained at country key level (T.code: OY01)
·                 Group Currency will update from the client currency (T.code: SCC4).
·                 Global Company currency is maintained at company level (T.code: OX15). 

Currency types in non-leading should be in line to leading ledger currency type’s i.e. currency types maintained at leading ledger and non-leading ledger is same.
1. At what level is the FI-MM, FI-SD account determination settings?

They are in the chart of accounts level.

2. How do you go about setting the FI MM account determination?

FI MM settings are maintained in transaction code OBYC. Within these, there are various transaction keys to be maintained like BSX, WRX, GBB, PRD etc. In each of these transaction keys you specify the GL accounts which get automatically passed at the time of entry. Few examples could be : BSX- Stands for Inventory Posting Debit GBB-Stands for Goods Issue/Scrapping/delivery of goods etc PRD-Stands for Price Differences.

3. Can we change the valuation class in the material master once it is assigned?

Once a material is assigned to a valuation class in the material master record, we can change it only if the stocks for that material are nil. If the stock exists for that material, then we cannot change the valuation class. In such a case, if the stock exists, we have to transfer the stocks or issue the stocks and make the stock nil for the specific valuation class. Then only we will be able to change the valuation class.

4. What is Valuation and Account assignment in SAP?

    This is actually the link between Materials Management and Finance. The valuation in SAP can be at the plant level or the company code level. If you define valuation at the plant level then you can have different prices for the same material in the various plants. If you keep it at the company code level you can have the only price across all plants. Valuation also involves the Price Control .Each material is assigned to a material type in Materials Management and every material is valuated either in Moving Average Price or Standard Price in SAP. These are the two types of price control available.

5. What is Valuation Class?

The Valuation Class in the Accounting View in Material Master is the main link between Material Master and Finance. This Valuation Class along with the combination of the transaction keys (BSX, WRX, GBB, and PRD) defined above determines the GL account during posting.
We can group together different materials with similar properties by valuation class.
E.g.: Raw material, Finished Goods, Semi Finished. We can define the following assignments in customizing:
•All materials with same material type are assigned to just one valuation class.
•Different materials with the same material type can be assigned to different valuation classes.
•Materials with different material types are assigned to a single valuation class.

6. Does the moving average price change in the material master during the issue of the stock assuming that the price control for the material is Moving Average?

The moving average price in the case of goods issue remains unchanged. Goods issues are always valuated at the current moving average price. It is only in goods receipt that the moving average price might change. A goods issue only reduces the total quantity and the total value in relation to the price and the moving price remains unchanged.

7. What is the accounting entry in the financial books of accounts when the goods are received in unrestricted use stock? Also, mention the settings to be done in the ‘Automatic postings’ in SAP for the specific G/L accounts?
            On receipt of the goods in unrestricted-use stock, the Inventory account is debited and the GR/IR account gets credited. In customization, in the automatic postings, the Inventory G/L account is assigned to the Transaction event key BSX and the GR/IR account is assigned to the Transaction event key WRX.

8. What is the procedure in SAP for initial stock uploading? Mention the accounting entries also?

Initial stock uploading in SAP from the legacy system is done with inventory movement type 561(a MM transaction which is performed).
Material valuated at standard price: For a material valuated at standard price, the initial entry of inventory data is evaluated on the basis of standard price in the material master. If you enter an alternative value at the time of the movement type 561, then the system posts the difference to the price difference account. Material valuated at moving average price. The initial entry of inventory data is valuated as follows:
•If you enter a value when uploading the initial data, the quantity entered is valuated at this price.
•If you do not enter a value when entering initial data, then the quantity entered is evaluated at the MAP present in the material master.
The accounting entries are: Inventory account is debited and Inventory Historical upload account is credited
To know the link between FI-MM-SD, we should know the link between SD-MM, Next the link between SD-FI, later FI-MM and at last FI-SD integrations.

Link between SD and MM:
·                    When you create the sales order in SD, all the details of the items are copied from Material master of MM.
·                     MRP and availability check related data is also taken from MM although you control this data in SD also.
·                    While you create inbound/outbound delivery with reference to a sales order, the shipping point determination takes place with the help of the loading group, plant data, shipping conditions etc. This also refers to Material Master.
·                   The material which you are entering in a sales order must be extended to the sales area of your sales order/customer otherwise you cannot transact with this material.

 Note: There are many such links between SD and MM.

Link between SD and FI:
·                     Whenever you create a delivery with reference to a sales order, goods movement takes place in the background. E.g. In the case of a standard sales order, you create an outbound goods delivery to the customer.
·                     Here movement 601 takes place. This movement is configured in MM. Also, this movement hits some G/L account in FI. Every such movement of goods hits some G/L account.
·                    The accounts posting in FI is done with reference to the billing documents (invoice, debit note, credit note etc) created in SD. Thus this is a link between SD and FI
·                     Tax determination: In case of a tax determination also, there is a direct link between SD and MM

Note: SD Integration points with other modules. SD module is highly integrated with the other modules in SAP.

Link between FI-MM:
Transaction code : OBYC (in easy access)
In this transaction, we have to specify GL account codes for material valuation created by MM consultants. The process in MM is here below,
·                Purchase Order : Tr code ME21N - here no integration required with FI
·                · Goods Issue : Tr Code MIGO - here no integration with FI
·                · Invoice Receipt - Tr Code MIRO - here when the invoice is received & MM process the transaction based on OBYC configuration system will generate FI document. System also generates Material document as well
·                · Payment : Tr code F110 - Here also the transaction affects FI

Link between FI-SD:
This integration is done by using Tr Code VKOA. Here we have to define GL account codes to Condition types. The process is here below,
·                SD Raises Sales Order - No implication in FI
·                 SD raises Delivery doc - No implication in FI
·                 SD processes billing - no implication in FI
·                 SD releases billing doc to FI - FI document gets generated (Tr Code VFX3)