What is SAP:

SAP (Systems, Applications, and Products in Data Processing) offering wide range of
enterprise resource planning solutions providing software. that helps businesses
manage various operations, and customer relationships.

1. Integrated: integrates various business processes across departments like

finance, human resources, supply chain, and manufacturing into a single
system.
2. Industry-Specific Solutions: solutions for various industries, such as
healthcare, retail, automotive, and more. These solutions address specific
industry needs and regulatory requirements.
3. Scalability: SAP providing solutions for small scale industries to large
enterprises, It’s helpful to growth of the business.
4. Real-Time Data Processing: SAP provides real time data analysis for
business, It’s helpful to analyse and make decisions in live & analyse future
performance.

General
Abbreviations
SAP

SAP Systems, Applications, and Products

ERP Enterprise Resource Planning

GUI Graphical User Interface

T-Code Transaction Code

IDoc Intermediate Document

RFC Remote Function Call

OSS Online Service System (SAP support portal)

Implementation Guide (customization

IMG
settings)

SAP Project Reference Object (Customizing

SPRO
menu)

FI & CO

FI Financial Accounting

CO Controlling

GL General Ledger

AR Accounts Receivable

AP Accounts Payable

AA Asset Accounting

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FI & CO

PCA Profit Center Accounting

COPA Controlling – Profitability Analysis

WBS Work Breakdown Structure

Organization
Structure

CC Company Code

COA Chart of Accounts

CCA Cost Center Accounting

BA Business Area

CO Area Controlling Area

PC Profit Center

OC Operating Concern (for CO-PA)

Technical / System
Terms

Advanced Business Application

ABAP
Programming

Business Application Software Integrated

BASIS
Solution

PI / PO Process Integration / Orchestration

Business Application Programming

BAPI
Interface

IDoc Intermediate Document

ALE Application Link Enabling

RFC Remote Function Call

LSMW Legacy System Migration Workbench

BADI Business Add-In

TMS Transport Management System

Fiori SAP's modern user interface framework

UI5 User Interface for HTML5 apps

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Modules:

Functional Modules:
1. Financial Accounting (FI)
2. Financial Supply Chain Management (FSCM)
3. Controlling (CO)
4. Customer Relationship Management (CRM)
5. Materials Management (MM)
6. Business Intelligence (BI)
7. Sales and Distribution (SD)
8. Logistics Execution (LE)
9. Production Planning (PP)
10.Quality Management (QM)
11.Plant Maintenance (PM)
12.Project System (PS)
13.Human Capital Management (HCM)

Technical Modules:
1. Basis
2. Security
3. NetWeaver
4. Advance Business Application Programming.

SAP Landscape:
The SAP landscape is a structured setup of SAP systems for smooth development to
production flow.

Sandbox - Free testing area with no restrictions, Golden Client - Clean master
configuration zone, DEV - Development area, QAS – Testing Zone, PRD - Live business
use.

Sandbox System

Development System ( Golden Client ) ( DEV)

Quality System (QAS)

Production System (PRD)

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SAP GUI
SAP GUI (Graphical User Interface) is the visual interface that allows users to interact
with the SAP system. Instead of typing commands in a text-based terminal, users get
menus, buttons, fields, and screens to work with — similar to any Windows-based
application.
It’s made SAP user-friendly and accessible to more users across different business
departments.

Golden Rules:
1. Personal Account - Debit the receiver, Credit the giver.
2. Real Account - Debit what comes in, Credit what goes out.
3. Nominal Account - Debit all expenses & losses, Credit all incomes & gains.

Types of Accounts
 Nominal Account
A nominal account is a general ledger account that records all income, expenses,
profits, and losses for a business within a specific fiscal year. At the end of the year,
the balances are reset to zero, allowing the process to begin anew. Nominal accounts
play a critical role in understanding a business’s financial performance over a
particular period.

 Real Account
A real account is a ledger account that records all assets and liabilities, including both
tangible and intangible assets. Tangible assets might include furniture, land,
buildings, and machinery, while intangible assets encompass goodwill, copyrights, and
patents. Real accounts differ from nominal accounts because they remain open at the
end of the fiscal year. Businesses carry them forward to the next year, and they
appear on the balance sheet.

 Personal Account
A personal account pertains to individuals or entities, whether natural persons
(humans) or artificial persons (corporations, firms, associations). In transactions
involving personal accounts, the entity receiving funds is the debtor, while the entity
giving funds is the creditor. For example, if Company A receives a loan from another
firm, Company A is the receiver, and the other firm becomes the giver.

Types of Journal Entries:

1. Standard Journal Entry - Regular one-time transactions.

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 2. Recurring Journal Entry - Repeated regularly (monthly/quarterly) for the same
amount.
3. Accrual Entry - Expenses or income recognized before payment is actually
made or received
4. Reversing Entry - Entry made automatically in the next period to reverse an
accrual or adjustment entry.
5. Adjustment Entry - Made to correct an error or adjust balances during closing.
6. Opening Entry - First entry when the company starts or when starting a new
fiscal year.
Organization Structure:
SAP Client
└── Company ( OX15 )
└── Company Code ( OX02 ) (Legal entity for financial reporting)
│├ Chart of Accounts ( OB13 )
├ Operating COA
├ Group COA
└ Country-specific COA
│├ Fiscal Year Variant ( OB29 )
├ Posting Period Variant ( OBBO )
├ Credit Control Area
│├ Controlling Area ( OKKP )
├ Cost Center Accounting (CCA)
├ Profit Center Accounting (PCA)
├ Internal Orders
├ Product Costing
└ Profitability Analysis (CO-PA) Operating Concern
│├ ── Business Area
│├ ── Functional Area
│├ Financial Accounting (FI)
├ General Ledger Accounting (FI-GL)
├ Accounts Payable (FI-AP)
├ Vendor Master Data
├ Invoice Posting
├ Automatic Payment Program (APP)
└── Integration with MM
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 │ ├ Accounts Receivable (FI-AR)
├ Customer Master Data
├ Incoming Payments
├ Dunning Process ─ Integration with SD
│├ Asset Accounting (FI-AA)
├ Asset Master Data
├ Asset Acquisition
├ Depreciation ( Chart of Depreciation )
└── Asset Retirement
│ └── Bank Accounting (FI-BL)
├ House Banks
├ Bank Reconciliation
└── Electronic Bank Statement (EBS)
└── Integration with Other Modules
│├ MM (Materials Management)
├ Purchase Requisition
├ Purchase Order (PO)
├ Goods Receipt (GR)
├ Invoice Receipt (IR)
└── Vendor Payment (via FI-AP)
│├ SD (Sales & Distribution)
├ Sales Order
├ Delivery
├ Billing Document
├ Customer Invoice (via FI-AR)
└── Incoming Payment
│├ PP (Production Planning)
├Material Consumption
├ Production Order
└── Settlement to Cost Centres or COPA
│└── HCM (Human Capital Mgmt.)
├ Payroll Posting to FI

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 └── Employee Cost Allocation to CO

Enterprise Structure:
SAP Client
( Top-level container )

├ Operating Concern
 Define Operating Concern - Costing-based, Account-based, or Both - Assign to a Controlling Area.
 Define Characteristics & Value Fields – Char : Customer, Product, Region, Sales Org). Val : Revenue, COGS,
Discounts, Profit).
 Activate Operating Concern
 Assign Operating Concern to Controlling Area - One Controlling Area can only be assigned to one Operating
Concern.
 Integrate CO-PA with SD, FI, and CO - post a billing data flows into CO-PA. Revenue and cost data posted in
FI also flow to CO-PA
 Data Collection (Posting) - Automatic postings from SD, FI, CO based on account assignments. Revenue → Value
Field ( - ) COGS → Value Field = Profit.

├ Controlling Area
 Define Controlling Area - Controlling Area ID (e.g., CA01), Currency, Fiscal year variant, Chart of accounts.
 Assign Company Code(s) - This enables integration between FI and CO.
 Create Cost Elements (G/L Accounts for CO) - Convert P&L G/L accounts into Primary Cost Elements in CO.
 Create Organizational Units in CO - Cost Center, Internal Orders, Profit Center, Projects (WBS), Activities.
 Integration with Other Modules - Financial postings create cost elements in CO.
 Perform CO Transactions - Post cost, Internal order posting, Allocations, Activity Allocation, Budget Control.
 Reporting and Analysis.

├ Chart of Accounts
 Create Chart of Accounts
 Create G/L Accounts
 Assign CoA to Company Code
 Integration with Modules ( FI ) - All postings go to G/L accounts from CoA.
 Posting Transactions –
 Reporting.

├ Chart of Depreciation
A Chart of Depreciation is a framework that defines how assets lose value over time.

 Define Chart of Depreciation

 Define Depreciation Areas
 Assign Chart of Depreciation to Company Code
 Configure Asset Classes & Depreciation Keys
 Create Asset Master
 Post Acquisition (F-90 or ABZON)
 Run Depreciation (AFAB)

├ Company
 Define Company
 Assign Company Code(s) to Company
 Intercompany Transactions
 Consolidated Financial Reporting

├ Company Code
 Define Company Code
 Assign Organizational Elements like ( Chart of Accounts, Fiscal Year Variant, Posting Period Variant, Company,
Currency).
 Integration with Other Modules
 Financial Transactions at Company Code Level
 Reporting.

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General Ledger Master Data: ( GL Accnt Group / GL Accnt Type
General Ledger (G/L) Master Data is the core financial data structure used to
record all business transactions in SAP. Every financial entry — like a sale, purchase,
expense, or asset — is recorded in a G/L account.
Each G/L account is like a category or bucket that stores financial values for a
specific purpose (e.g., sales, rent expense, inventory, bank, tax payable).
It’s allows segregation of different types of financial data (assets, liabilities, income,
expenses).
Vendor Master Data:
Vendor Master Data is the central record that contains all essential information
about a vendor (supplier) a company does business with — such as name, address,
bank details, payment terms, tax info, etc.
1. When you raise a Purchase Order in MM → the system pulls info from the
vendor master.
2. When you receive invoice and pay the vendor → data from the FI view is
used.
So, the same vendor record is shared between MM and FI.
Customer Master Data:
Customer Master Data is a centralized record that holds all important information
about a customer your company sells goods or services to.
 Creating sales orders
 Posting customer invoices
 Receiving payments
 Managing customer balances and reports
 When your sales team creates a Sales Order, system pulls info from customer master.
 When you post customer invoice in finance, SAP uses the reconciliation account and payment
terms.
 When customer pays, SAP posts against their account using customer master data.

Chart of Accounts (CoA):

A Chart of Accounts is a list of all G/L accounts (General Ledger accounts) used by a company for
accounting and financial reporting in SAP.

Think of it as a master list or "catalog" of all the account numbers used to record business transactions (like
Sales, Rent, Cash, Bank, Assets, Liabilities, etc.).

Account Group:

An Account Group is used to classify G/L accounts inside the Chart of Accounts by their nature and control
field status (which fields are required, optional, hidden, etc.).

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Think of Account Groups as folders in which similar G/L accounts are grouped (like all cash accounts,
expense accounts, revenue accounts, etc.).

Controls number range for G/L accounts

Controls which fields are mandatory, optional, suppressed

Helps in organizing CoA in logical sections

Reconciliation Accounts:

Reconsolidation is the process of re-running the financial consolidation for a specific period after changes or
corrections are made in the individual company accounts.

It is used when:

 A company posts late adjustments

 There are errors or omissions in intercompany data
 Audit or tax teams give year-end corrections

Reconsolidation ensures that the group-level financial reports (like Balance Sheet and P&L) always reflect
the latest and most accurate data from all group companies.

Transaction Data:

Transaction data represents the actual business activities and events conducted
within an organization. It captures the specific details of individual transactions or
operations.
It includes records of business transactions, such as sales orders, purchase orders,
invoices, deliveries, and production orders.
For example, a sales order may reference the customer's master data, and a purchase
order may reference vendor master data.
Document Types:
A Document Type in SAP is a 2-character identifier that categorizes financial
transactions. It helps to know :
1. The type of transaction (e.g., invoice, credit memo)
2. The account types involved (customer, vendor, G/L)
3. The number range for document IDs
4. Whether posting to special G/L is allowed
Doc Type Description Module Example

SA G/L Account Posting FI Manual journal entry

KR Vendor Invoice MM/FI Purchase invoice from supplier

KZ Vendor Payment FI Payment made to supplier

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Doc Type Description Module Example

DR Customer Invoice SD/FI Sales invoice issued

DZ Customer Payment FI Customer paid invoice

AB Accounting Document FI General entry like opening balances

RE Incoming Invoice MM Invoice after goods receipt

WE Goods Receipt MM Goods received for purchase order

Posting Key :
A Posting Key is a two-digit code in SAP Financial Accounting (FI) that determines,
The type of account (G/L, Customer, Vendor, etc.),
whether the amount is a debit or a credit, and the layout of the data entry screen
for that line item.
It guides SAP on how to process each line item in a financial transaction.
Posting Key Description Debit/Credit Account Type

01 Customer Invoice Debit Customer

11 Customer Credit Memo Credit Customer

21 Vendor Invoice Credit Vendor

31 Vendor Payment Debit Vendor

40 G/L Account Posting Debit G/L Account

50 G/L Account Posting Credit G/L Account

70 Asset Posting Debit Asset Account

75 Asset Retirement Posting Credit Asset Account

81 Customer Down Payment Debit Customer

19 Customer Payment Credit Customer

29 Vendor Down Payment Credit Vendor

39 Vendor Payment Debit Vendor

Dates in SAP :
 Document Date = When the transaction actually occurred
 Posting Date = When you recorded it in SAP
 Entry Date = When you typed it into the system
 Baseline Date = Used to calculate payment due date

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  Value Date = Used in bank transactions to define interest or balance update
date
Open Item Management:
Open Item Management (OIM) is a feature in SAP that helps you track unpaid or
uncleared items in accounts like vendors, customers, and bank clearing accounts. It
ensures that every debit has a matching credit and helps monitor what is still
outstanding.
 Helps monitor pending payments or receipts
 Makes account reconciliation easier
 Required for proper financial closing
 Crucial for aging reports (like outstanding vendor/customer balances)

Process flow of P2P:

The Procure-to-Pay process refers to the entire process of purchasing goods or
services from a vendor and making payment for them. It covers all the steps from
purchasing goods or services to paying the supplier. It's widely used in finance and
logistics and closely integrates with SAP MM (Materials Management) and SAP FI
(Financial Accounting) modules.
P2P Process Flow in SAP:
Purchase Requisition (PR) - ME51N
 Internal request to procure a material/service. ( it's just an internal document ).

Request for Quotation (RFQ) & Vendor Selection - ME41 (RFQ), ME47 (Price
compare), ME49 (QA)
 Invite vendors to quote prices. ( Procurement team asks 3 vendors to quote for the chairs ).

Purchase Order (PO) - ME21N

 Formal order to vendor. Integrated with: FI (for commitment), MM (for inventory).
Goods Receipt (GR) – MIGO
 Record receipt of goods. ( Chairs are delivered and warehouse confirms receipt ).

Invoice Receipt (IR) – MIRO

 Record supplier invoice. ( Vendor sends an invoice for ₹20,000 ).

Payment to Vendor - F-53 (manual), F110 (automatic payment run)

 Pay the vendor for the invoice. ( Accounts Payable team makes payment to Vendor A).

[PR] --> [RFQ] --> [PO] --> [GR] --> [IR] --> [Payment]

| | | |

| | | --> FI Posting

| | --> MM Posting

| --> MM Posting

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--> Procurement

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P2P Accounting Entries Flow
Goods Receipt (GR)
Dr Inventory (Raw Materials or Finished Goods) ₹20,000

Cr GR/IR (Goods Receipt / Invoice Receipt) Clearing Account ₹20,000

Invoice Receipt (IR)

Dr GR/IR Clearing Account ₹20,000

Cr Vendor Account (XYZ Ltd.) ₹20,000

Vendor Payment
Dr Vendor Account ₹20,000

Cr Bank Account ₹20,000

Order to Cash (O2C) Process Flow:

Sales Order Creation
 The sales team creates a sales order.

Credit Management
 The system or credit team checks the customer’s creditworthiness.

Order Fulfilment (Delivery Processing)

 The delivery document is created and goods are physically sent.

Shipping and Transportation

 Tracking number and shipment status updated in system.

Billing (Invoice Generation)

 Once goods are delivered, the system creates a customer invoice.

Accounts Receivable / Payment Collection

 Payment is received and recorded against the open invoice.

Reconciliation and Reporting

 Payment is matched (cleared) with invoice.

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O2C Accounting Entries:
Delivery and Goods Issue
Cost of Goods Sold A/c Dr ₹6,000
To Inventory A/c ₹6,000
Billing (Invoice Creation)
Customer A/c Dr ₹11,800
To Sales Revenue A/c ₹10,000
To Output GST Payable A/c ₹1,800
Incoming Payment from Customer
Bank A/c Dr ₹11,800
To Customer A/c ₹11,800

Record to report: R2R.

Record to Report (R2R) is the end-to-end process that starts with recording financial
transactions and ends with the reporting of financial results.
The R2R process includes all financial transactions from the time they're recorded in
the system until financial statements are generated.
o GL Accounting
o Accounts Reconciliation
o Data Validation
o Reporting
Down Payment Request Flow:
A Down Payment Request in SAP is a non-posting, memo document used to request
an advance payment from a customer (or prepare to make one to a vendor) before
the actual invoice is issued.
Creation of Down Payment Request: F – 37 Customer / F – 47 Vendor
 It’s just a memorandum entry to indicate that a down payment is expected.

Incoming/Outgoing Down Payment: F – 29 Customer / F – 48 Vendor

 When the payment is actually made, this is recorded in SAP. It creates a special G/L transaction.

Invoice Posting: FB70 Customer / FB60 Vendor

 The actual invoice is posted for the total amount, Now, the down payment can be cleared
against this invoice.

Clearing Down Payment Against Invoice: F – 39 Customer / F- 54 Vendor

 This clears the down payment against the final invoice, The system reduces the
receivable/payable by the amount of the down payment.

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Stock Transfer Order: STO
A Stock Transfer Order (STO) is a document used in SAP to initiate and track the
movement of stock between two locations, such as
o Between two plants within the same company code
o Between two plants in different company codes
o Between storage locations in different plants
There are two types of STO are there :
o Intra-Company STO
o Inter-Company STO

Stock Transfer between storage locations ( Movement between storage locations within the
same plant (not usually using STO)

Credit Memo:
A Credit Memo is a document used to reduce the amount that a customer owes (in
AR) or reduce the amount you owe to a vendor (in AP).
o Goods are returned.
o There is an overcharge in the original invoice.
o A discount or refund is provided.
Debit Memo:
A Debit Memo is used to increase the amount owed by a customer (in AR) or increase
the amount you owe to a vendor (in AP).
o There was an undercharge in the original invoice.
o Additional costs are identified after invoicing (e.g., shipping charges).

Feature Credit Memo Debit Memo

Purpose Reduce invoice amount Increase invoice amount

Customer Case Refund, return, overbilling Underbilling, missing charges

Vendor Case Goods returned, overbilled Missed charges (freight etc.)

AR Impact Decrease customer receivable Increase customer receivable

AP Impact Decrease vendor payable Increase vendor payable

Common T Codes FB75 (AR), FB65 (AP) FB70 (AR), FB60 (AP)

Direct Tax in SAP FI:

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  Corporate Tax
 Capital Gains Tax
 Dividend Income Tax
 Securities Transaction Tax (STT)
 Banking Cash Transaction Tax (BCTT) (Abolished)
TDS (Tax Deducted at Source)
Tax deducted by payer before making certain payments like salary, fees, rent. Term
used in India under the Income Tax Act.
 Withholding Tax applicable:
Tax is deducted by the payer at the time of making certain payments (like rent,
professional fees, etc.), More global term used in international taxation and in
SAP systems, especially used for payments to non-residents/foreign vendors.

 Withholding Tax not applicable (non-withholding):

Tax is not deducted, either due to exemption, threshold limits, or nature of
transaction.
TCS (Tax Collected at Source):
Tax collected by seller at source while selling certain goods/services.
Income from Other Sources:
Includes winnings from lottery, betting, interest, etc., taxable under direct tax.

Indirect Tax in SAP FI:

 Goods and Services Tax
 Customs Duty ( imported/exported goods )
 Excise Duty (merged in GST) ( Earlier on manufacturing of goods )
 Stamp Duty & Registration Charges ( On property transactions, legal
documents )
 Entertainment Tax (merged in GST)

Moving Average Price :

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Implementation Workspace Setup:
Activate business process content in different local versions (countries/regions).

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Define core finance settings that affect the entire system (e.g. group currency and fiscal
year variant).
Build the customer's organizational structure.
Enter configuration values specific to the active business processes.

Create one workspace per SAP S/4HANA Cloud Development System

tenant:
The partner lead configuration expert logs into SAP Central Business Configuration and
creates two different workspaces with the type: Implementation. One workspace will be
connected to the customizing tenant (client 100), and the other workspace will be
connected to the development tenant (client 80) of the SAP S/4HANA Cloud development
system.

Next, add the partner LoB configuration experts, the customer IT Contact, and customer
and partner project managers as team members to the workspace.

The partner lead configuration expert will complete the majority of the
activities in SAP Central Business Configuration to set up the development system
tenants, as they did in for the starter system tenants.

Partner LoB configuration experts only need to access SAP Central Business
Configuration when the workspace is in the Product-Specific Configuration phase to
enter the configuration values collected through the Business Driven Configuration
Questionnaires before and during the Fit-to-Standard workshops for their relevant
line of business area(s).

Scope Phase:
Next, the lead configuration expert opens and completes each activity in the Scope
phase in SAP Central Business Configuration.

Where to find the finalized business scope?

The finalized list of business processes and the country/regions in which they
should be implemented should be documented in SAP Cloud ALM → Processes app.

During the Fit-to-Standard workshops, the LoB configuration experts would have
removed or added exactly which processes need to be activated and configured
in the customer's development system tenants, and documented customization
requirements. All processes should be in the Realization status.

Select the Deployment Target:

The deployment target is where SAP Central Business Configuration will activate
the business processes and country/regions. Each workspace should be connected
to one of the two SAP S/4HANA Cloud development system tenants.

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