Introduction to SAP and ERP

- SAP: Systems, Applications, and Products in Data Processing, a German

software company, market leader in ERP software.

- ERP (Enterprise Resource Planning): Software that helps manage and

automate daily business processes.

- SAP HANA: An in-memory database and platform enabling real-time

analytics and transactions.
- SAP S/4HANA: ERP suite optimized for SAP HANA, integrates finance,
logistics, manufacturing, supply chain, and human resources.

2. SAP S/4HANA Financial Accounting (FI)

- Focuses on managing company financial records.

- Key Components: General Ledger (G/L), Accounts Payable (FI-AP),

Accounts Receivable (FI-AR), Asset Accounting (FI-AA), Bank
Accounting.

- General Ledger: Central record of all business transactions, supports

real-time posting from other modules such as Logistics and HR.

3. Master Data in SAP

- Master Data: Core information shared across multiple processes and

modules, entered once and updated as needed.

- Material Master Data: Includes client-level data, inventory management,

finance and controlling data.

4. Document Structure in SAP S/4HANA

- Each document has a header and line items. The header contains
general details like document type, dates, and currency, while line
items cover details like G/L accounts and cost centers.

5. Journal Entries
 - Parked, Hold, and Post Documents: Documents can be parked
(saved but not posted), held (temporarily saved), or posted (final and
affects accounts).

- GL Clearing: Matching debit and credit entries to clear open items.

6. Universal Journal

- Combines different SAP modules into a single table, simplifying

reporting and financial analysis.

7.Asset Accounting (FI-AA)

- Definition of Assets: Includes tangible (physical) and intangible (non-

physical) assets like software and goodwill.

- Depreciation: The process of charging a portion of an asset’s cost over its

useful life.

- Asset Classes: Different types of assets, each linked to G/L accounts.

8. Intercompany Accounting

- Manages transactions between different company codes within the

same group, ensuring proper financial reporting and compliance.

9. Management Accounting (CO)

- Deals with cost and revenue management, used for internal decision-
making.

- Profitability Analysis (CO-PA): Helps determine profits by analyzing

revenue and costs for different market segments.

- Overhead Cost Controlling: Tracks costs for cost centers, internal

orders, and activities.

10.Inventory Management

- Involves tracking materials and products in the warehouse, from

goods receipt to goods issue.

- Types of Inventory: Raw materials, work-in-progress, finished goods, and

supplies.
11. Period-End Closing in SAP

- Ensures accurate financial reporting by performing tasks like

foreign currency valuation, GR/IR clearing, and reconciliation.

12.Production Order and Integration with FICO

- Tracks production activities and integrates costs into the financial

system. Key processes include goods issue, goods receipt, and
overhead calculation.

13.Accounts Payable (FI-AP)

- Definition: Manages vendor-related financial data and handles

transactions such as vendor invoices and payments.

- Integration: Works closely with the Materials Management (MM)

module, where deliveries and invoices are managed according to
vendors.

- Key Functions: Automatic postings for vendor transactions,

vendor account management, and payment processing.

14.Accounts Receivable (FI-AR)

- Definition: Manages customer-related financial data and handles

transactions such as customer invoices and payments.

- Integration: Integrated with the Sales and Distribution (SD) module,

where sales orders and billing are linked to customer payments.

- Key Functions: Manages customer credit limits, handles incoming

payments, and tracks customer invoices.

15.Bank Accounting and Cash Management (FI-BL)

- Bank Accounting: Manages bank transactions such as payments,

receipts, and reconciliations.
- Cash Management: Monitors cash inflows and outflows, ensuring
sufficient liquidity while avoiding idle cash.
 - Bank Reconciliations: Matching bank statements with internal financial
records to ensure accuracy.

16.Cash Flow Management

- Cash Flow Analyzer: App that tracks cash position over time (daily,
quarterly, yearly) and allows detailed analysis by company code
and bank account.

17.Fixed Asset Management

- Asset Lifecycle: Tracks an asset from acquisition to retirement.

- Key Processes:

- Depreciation: Straight-line or declining balance method depending on

asset usage.

- Retirement of Assets: Either through sale or scrapping (without

revenue), each handled differently.

- Asset Transfers: Assets can be transferred between company codes or

within the same company code.

18.Depreciation and Closing Tasks

- Depreciation Posting: Schedules depreciation for the relevant assets.

- Year-End Closing: Involves asset reconciliation, retirement, depreciation,
and other year-end processes.

19.Profitability Analysis (CO-PA)

- Purpose: Allows businesses to analyze profits by market segments,

linking revenues with the related costs.

- Integration: Pulls data from Sales and Distribution (SD) for revenue
postings and Cost Center Accounting (CO) for cost allocations.

20.Cost Center Accounting

- Purpose: Assigns costs to different areas (cost centers) within the

organization to ensure accountability for where costs are incurred.
 - Allocation of Costs: Costs from departments like HR or logistics are
allocated to production cost centers through various methods like direct
allocation or distribution.

21.Internal Orders

- Purpose: Collects and monitors costs associated with specific jobs or

projects.

- Integration: Links with cost centers and other controlling objects to

allocate costs effectively within the organization.

22.Product Cost Controlling

- Overview: Tracks production costs to ensure the final product is priced

correctly.

- Costing Run (CK40N): Calculates expected costs before production and

compares them to actual costs.

- Make-to-Order and Make-to-Stock: Defines costing methods based on

whether the production is driven by customer orders or inventory stocking.

23.Period-End Closing in Management Accounting

- Activities: Includes overhead calculation, work-in-process (WIP)

calculation, variance analysis, and settlement of production orders.

- Tools: Various SAP transactions such as KGI2 (overhead calculation),

KKAX (WIP calculation), KKS1 (variance calculation), and KO88
(settlement) are used.

24.Material Requirement Planning (MRP)

- MRP Live (MD01N): Ensures optimal inventory levels and production

schedules by forecasting material needs based on demand.

- Key Concepts: Covers material selection, BOM explosion, and costing

analysis.

25.Inventory Management

- Key Concepts:
- Goods Receipt: Recording incoming goods, increasing stock levels.
 - Goods Issue: Recording outgoing goods, reducing stock levels.

- Internal Movements: Transfers of goods between storage locations or

plants.

- Inventory Valuation: Periodic method for determining material

value based on average cost.

26.Production Order Settlement

- Steps:

- Creation and confirmation of production orders.

- Goods receipt (GR) for finished products.

- Settlement of production orders to clear open balances.

27.Inventory Valuation

- Definition: Process of determining the value of materials in stock

according to different accounting standards and valuation methods.

- Valuation Methods:

- Periodic Method: Calculates inventory value at the end of a reporting

period based on the periodic unit price, which is the average cost of the
material during that period.

- Material Price Determination: The process that calculates the

actual costs of materials based on their consumption and production
activities.

28.Cycle Counting – Periodic Inventory

- Definition: A method of physical inventory where inventory is

counted at regular intervals within a fiscal year, depending on the cycle
counting indicator set for the material.

- Process Flow:

- Create and activate system inventory records.

- Print the warehouse inventory list.

- Carry out the physical inventory and enter count results.

- Process the inventory differences.

29.Project Accounting

- Definition: Involves managing the financial aspects of projects such

as planning, budgeting, monitoring, and invoicing.

- Integration: Often linked with modules like FI (Financial

Accounting) and CO (Controlling) to ensure project costs and
revenues are properly tracked.

30.Project System (PS)

- Purpose: Manages large-scale projects by integrating various SAP

modules like Material Management (MM), Controlling (CO), and Financial
Accounting (FI).

- Components:

- Work Breakdown Structure (WBS): Divides a project into smaller,

manageable components.

- Network Planning: Helps schedule project tasks and resources.

- Project Planning and Monitoring: Tracks project progress, costs, and

resource allocation.

31.Overhead Cost Controlling

- Definition: Controls costs that cannot be directly assigned to a product or

service but are essential for production or operations (e.g., utilities,
administration).

- Allocation Methods: Costs are allocated to cost centers, internal orders,

and activity- based costing (ABC).

- Cost Centers: Functional units responsible for incurring costs (e.g.,

production, HR, sales).

32.Variance Analysis in Production Orders

- Purpose: Analyzes the differences between actual and planned production

costs.
- Variance Calculation: Performed after the completion of production to
identify where and why deviations occurred.
33.WIP (Work-in-Process) Calculation

- Definition: WIP refers to partially completed goods that are still in

production. The WIP calculation helps determine the value of these goods
for financial reporting.
- Methods: WIP is calculated based on the status of production orders
and is crucial for accurate financial statements.

34.Settlement of Production Orders

- Definition: The process of clearing costs from production orders and

posting them to financial and controlling ledgers.

- Steps: Includes overhead calculation, variance calculation, and the

settlement of production orders at the end of each period.

35.Intercompany Transfer Pricing

- Definition: Setting prices for goods or services exchanged between

different entities within the same company group.

- Importance: Ensures proper financial reporting and compliance,

particularly for tax purposes.

36.Cost Object Controlling

- Purpose: Tracks costs related to specific production orders, processes, or

projects.

- Integration: Links with both FI (Financial Accounting) and CO (Controlling)

to ensure accurate cost tracking for products or services.

37.Product Costing

- Purpose: Assists in determining the cost of manufacturing a product or

delivering a service.

- Costing Methods:
- Standard Costing: Pre-determined costs based on standard rates.

- Actual Costing: Uses real-time data to calculate the true cost after
production.
38.Material Requirements Planning (MRP)

- Purpose: Ensures that materials are available for production and that
products are available for delivery to customers.
- MRP Live: New transaction (MD01N) that optimizes inventory levels
while planning production.

39.GL Account Reconciliation

- Definition: The process of ensuring that General Ledger (G/L) account

balances match across different systems or departments.

- Reconciliation Types:

- Manual Reconciliation: Manually matching G/L entries.

- Automated Reconciliation: Automated matching based on predefined

rules (e.g., same amounts, dates, or account numbers).

40.SAP Fiori Apps

- Overview: Modern user interface (UI) for SAP S/4HANA, providing

simplified and task-based apps for various accounting and controlling
functions.

- Key Apps:

- Post General Journal Entries: Simplifies the process of posting journal

entries.

- Asset Accounting Apps: Manage fixed assets, including creation,

depreciation, and retirement of assets.

Steps to Generate Balance Sheet Report

1. Access Transaction Code: Use the transaction code F.01 to access

the financial statement report.

2. Input Parameters:

o Company Code: Enter the company code for which the balance
sheet is being generated.

o Fiscal Year: Specify the fiscal year for the report.

o Variant: Select the appropriate variant for the financial

 statement version.

3. Execute Report: Click on the execute button to generate the report.

4. Review and Export: Review the balance sheet on-screen. You can
export it to various formats like Excel or PDF for further analysis.

Material Requirements Planning (MRP)

1. Definition: MRP ensures materials are available for production and

products are available for delivery.

2. Key Steps:

o Master Data Setup: Ensure material master, BOM (Bill of

Materials), and routing are set up correctly.

o Run MRP: Use transaction code MD01N for MRP Live to plan
material requirements.

o Review MRP List: Check the MRP list to review planned orders
and purchase requisitions.

o Convert to Orders: Convert planned orders to production

orders and purchase requisitions to purchase orders.

Master Data

1. Definition: Core information that remains consistent across different

processes.

2. Types:

o Material Master: Information about materials, used in

inventory and production.

o Customer Master: Details about customers, used in sales and

billing.

o Vendor Master: Information about suppliers, used in

procurement.

3. Maintenance: Master data is maintained through transaction codes

like MM01 for materials, XD01 for customers, and XK01 for vendors.

Period End Closing

1. Definition: Activities performed at the end of a financial period to

ensure accurate financial statements.
2. Key Activities:

o Reconciliation: Ensure all accounts are balanced.

o Accruals: Post accruals for expenses incurred but not yet

billed.

o Depreciation: Run depreciation for fixed assets.

o Financial Statements: Generate profit and loss statements

and balance sheets.

3. Tools: Use transaction codes like FAGLGVTR for balance carryforward

and F.16 for foreign currency valuation.

Project Accounting - WBS Element

1. Definition: A Work Breakdown Structure (WBS) element is a

component of a project that helps in planning, execution, and
monitoring.

2. Key Steps:

o Create Project: Use CJ20N to create a new project with WBS

elements.

o Assign Costs: Allocate budgets and costs to each WBS

element.

o Monitor Progress: Track the progress and financial

performance of the project.

3. Reporting: Use reports like S_ALR_87013558 to monitor costs and

progress.

Profitability Analysis (CO-PA)

1. Definition: CO-PA helps analyze the profitability of different market

segments.

2. Key Components:

o Costing-Based CO-PA: Analyzes costs and revenues based on

cost elements.

o Account-Based CO-PA: Uses accounts for analysis, integrating

with the general ledger.

3. Steps:
 o Define Operating Concern: Set up the structure for CO-PA.

o Mapping: Map revenue and cost elements to CO-PA

characteristics.

o Reporting: Use reports like KE30 to analyze profitability.

Treasury and Cash Management

1. Definition: Manages a company's liquidity, cash flow, and financial

risk.

2. Key Activities:

o Cash Position: Monitor daily cash inflows and outflows.

o Liquidity Forecasting: Predict future cash flows to ensure

sufficient liquidity.

o Bank Reconciliation: Match bank statements with internal

records.

3. Tools: Use transaction codes like FF7A for cash position and FF7B for
liquidity forecast.