SAP R/3 Financial Accounting

Contents 1. Introduction 1 2 The SAP AG Company and its Product SAP R/3 4 2.1 The Development of SAP AG 4 2.2 The SAP AG Software Concept 5 2.2.1 The R/3 System 5 2.2.2 The Module Structure of the R/3 System 6 2.2.3 The Architecture of the R/3 System 6 2.3 SAP R/3 and the Internet 7 3 Integration 8 3.1 Modular Structure of the SAP System 8 3.2 Aims of Integration 10 3.3 The Challenge of Integration 10 3.4 Integration in the Financial Accounting Module 11 4 Basic Principles of Business Accounting 13 4.1 Tasks and Structure of Business Accounting 13 4.1.1 Overview of Business Accounting 13 4.1.2 Financial Accounting and Preparation of Balance Sheets 16 4.1.3 Cost Accounting 22 4.1.4 Business Statistics and Comparative Accounting 24 4.1.5 Cost Budgeting 24 4.2 Basic Terms in Business Accounting 25 4.2.1 Definition of Inpayments - Revenues and Outpayments - Expenses 25 4.2.2 Definition of Revenues - Earnings and Expenses - Expenditure 25 4.2.3 Definition of Earnings - Income and Expenditure - Costs 26 4.2.4 Definition of Operating Expenses and Expenditure 26 4.2.5 Definition of Operating Revenues and Earnings 27 4.2.6 Definition of Income and Operating Result 27 4.3 Accounting and Changing to the Euro 28 5 Complying With the Accepted Principles of Computerized Accounting in SAP R/3 31 5.1 General Area of Application of the Accepted Principles 31 5.2 The Document, Journal and Account Function 33 5.2.1 The Document Function 33 5.2.2 The Journal Function 33 5.2.3 The Account Function 34 5.3 Posting in SAP R/3 34 5.4 The Internal Control System (ICS) in SAP R/3 36 5.5 Data Security in SAP R/3 37 5.6 Documentation and Auditability in SAP R/3 38 5.7 Content of the Documentation of the Method 39 5.7.1 Description of the Factual-Logical Solution 39 5.7.2 Description of the Program-Technical Solution 39 5.7.3 Description of the Program Identity 40 5.7.4 Description of Data Integrity 40 5.7.5 Description of the Instructions for the User 40 5.8 General Periods of Preservation 41 5.9 Output of the Information Stored on Data Media 41 6 Customizing in the SAP R/3 System 43 6.1 The R/3 Reference Model 43 6.2 Implementation Management Guide (IMG) 45 6.3 Components of the IMG 46 6.3.1 Information Section of the IMG 46 6.3.2 The Project Steering Section of the IMG 47 7 Organizational Structures and Business Transactions in SAP R/3 50 7.1 The Organizational Structures of Accounting 51 7.1.1 The Client 51 7.1.2 The Company Code 52 7.1.3 The Business Area 53 7.1.4 The Company 53 7.1.5 The Credit Control Area 53 7.1.6 The Finance Code 55 7.1.7 Dunning Area 56 7.1.8 The Chart of Accounts 57 7.1.9 The Cost Accounting Code 61 7.2 The Organizational Units of the SAP Logistics Modules 61 7.2.1 Plant and Storage Location 62 7.2.2 Sales Organizations, Distribution Channels and Line 63 7.3 The Structure of Financial Accounting in SAP R/3 64 7.4 Connection to Other SAP Modules 65 7.5 The Document Principle 65 7.6 Realtime Posting 66 7.7 The Joint Accounting Technique 66 7.8 General Ledger Accounting 66 7.8.1 The General Ledger Account 66 7.8.2 The Financial Accounting Documents 68 7.8.3 Document Type 68 7.8.4 Assignment of Document Numbers 69 7.8.5 Posting Procedure 70 7.8.6 Document Currency 71 7.8.7 Posting Key 72 7.8.8 Posting Documents 74 7.8.9 Financial Statements in SAP R/3 74 7.9 Subledgers in the SAP R/3 System 77 7.9.1 Accounts Receivable 77 7.9.2 Accounts Payable 80 7.10 The Bill of Exchange 81 7.11 Asset Accounting 86 7.12 Reporting 87 8 Tax on Sales/Purchases in the IMG 1 8.1 Tax on Sales/Purchases as a Trading Tax 1 8.2 Handling the Prior Tax Deduction 3 8.3 [D] Handling Tax-Exempt Turnover 4 8.4 Basis for Assessment of Tax on Sales/Purchases 7 8.5 Customizing Settings for Tax on Sales/Purchases 8 8.5.1 Settings for the VAT Number 8 8.5.2 Basic Settings for Tax on Sales/Purchases 10 8.5.3 Calculation of Tax on Sales/Purchases 11 8.5.4 Posting Tax on Sales/Purchases 12 8.5.5 Prior Tax on Sales/Purchases Returns and Post-Payment of Tax on Sales/Purchases 12 9 Withholding Tax 101 9.1 The Principle of Withholding Tax 101 9.2 Time-Dependent Definition of the Withholding Tax Settings 101 9.3 Withholding Tax versus Extended Withholding Tax 102 9.3.1 Withholding Tax 102 9.3.2 Extended Withholding Tax 103 10 Written-Down Current Replacement Cost and Reinstatement of Original Values/Appreciation in Value 1 10.1 Inflation 1 10.2 Technical Progress 2 10.3 Insurance Values 2 10.4 Indexed Written-Down Current Replacement Costs 2 10.5 Handling Inflation 3 11 Individual Financial Statements 108 11.1 External Accounting Regulations 113 11.1.1 United States Generally Accepted Accounting Principles (US GAAP) 114 11.1.2 International Accounting Standard (IAS) 115 11.1.3 [D] German Commercial Law 115 11.2 Rules for the Formal Layout of Balance Sheets 116 11.2.1 Principle of Layout 116 11.2.2 Components of the Annual Accounts 116 11.2.3 Content of the Supplement 117 11.2.4 Content of the Annual Report 117 11.3 [D] Classification Regulations for the Balance Sheet and P&L 118 11.4 Balance Sheet and Valuation Methods for the Annual Accounts 119 11.5 Valuation of the Fixed Assets 122 11.5.1 Acquisition Costs 122 11.5.2 [D] Manufacturing Costs 123 11.5.3 Fixed Valuations 123 11.5.4 Ordinary Depreciation 124 11.5.5 Extraordinary Depreciation 126 11.5.6 [D] Depreciation Only Permitted by Tax Law 127 11.5.7 Depreciation Adjustments 128 11.6 Valuation of the Current Assets 128 11.6.1 Manufacturing Costs 128 11.6.2 Valuation Simplification Methods and Collective Valuation Methods 128 11.6.3 Depreciation 129 11.6.4 Principle of Loss-Free Valuation 129 11.6.5 Depreciation Only Permitted by Tax Law 129 11.6.6 Depreciation Based on Reasonable Commercial Judgement 130 11.6.7 Depreciation Adjustments 130 11.7 The Balance Sheet Items 131 11.7.1 Formation Expenses 131 11.7.2 Fixed Assets 132 11.7.3 Handling Down Payments in the Balance Sheet 138 11.7.4 Tax on Sales/Purchases in the Balance Sheet 141 11.7.5 Reporting Accounts Receivable and Accounts Payable in the Balance Sheet 142 11.7.6 Other Accrued Assets and Liabilities 143 11.7.7 Prepaid Amounts and Deferred Income 143 11.7.8 Equity Capital 145 11.7.9 Annual Profit, Annual Loss, Balance Sheet Profit 146 11.7.10 Capital-substituting Loans and Rights of Use 147 11.7.11 Corporation Tax in the Equity Capital 147 11.7.12 Special Items with Reserves 148 11.7.13 Untaxed Reserves 148 11.7.14 Fiscal Law Value Adjustments (Special Depreciation) 148 11.7.15 Provisions for Pensions 149 11.7.16 Provisions for Taxation 149 11.7.17 Residual Time to Maturity of Accounts Payable 150 11.8 The Items of the Profit and Loss Account 151 11.8.1 The Total Cost Type of Short-term Results Accounting 151 11.8.2 The Cost of Sales Type of Short-term Results Accounting 152 12 Consolidation 155 12.1 Structure and Types of Groups 156 12.2 Conditions for Consolidation 158 12.3 Aims of Consolidated Accounting 159 12.4 International Theories for Consolidated Accounts 159 12.4.1 The Entity Point of View 159 12.4.2 The Proportional Consolidation or Parent Company Point of View 160 12.5 The Consolidation Code 160 12.6 General Principles for Drawing Up Consolidated Accounts 161 12.7 Maintaining Master Data in Customizing 163 12.8 Consolidation Preparation 166 12.9 Consolidation Activities 167 12.9.1 Intercompany Elimination 168 12.9.2 Elimination of IC Profit and Loss 169 12.9.3 Capital Consolidation 170 12.9.4 Reclassifications 171 12.9.5 Data Evaluations 171 13 Asset Accounting FI AA 172 13.1 Basic Principles and Overview 172 13.1.1 Organizational Units of SAP R/3 Asset Accounting 172 13.2 Fixed Assets 173 13.3 Terms in Asset Accounting 174 13.3.1 [T 11] Asset 174 13.3.2 Real Property and Plant Facilities 175 13.3.3 Physical Inventory 175 13.3.4 Asset History Sheet or Inventory List 176 13.4 Asset Accounts 177 13.5 Integration With Internal Accounting 177 13.6 Useful Life 178 13.7 Inventory Rules for Fixed Assets 178 13.8 Classification of the Fixed Assets 178 13.8.1 Balance sheet level 179 13.8.2 Classifying level 183 13.8.3 Asset-related level 183 13.9 Functions of Asset Classes 183 13.10 Plant Maintenance of Fixed Assets 183 13.11 Asset Types 184 13.12 Special Forms of Fixed Assets 184 13.12.1 Assets Under Construction 185 13.12.2 Low Value Assets (LVA) 186 13.13 Depreciable and Non Depreciable Fixed Assets 186 13.13.1 Depreciable Fixed Assets 186 13.13.2 Non Depreciable Fixed Assets 186 13.14 Representation of Assets 187 13.14.1 Single-entry Assets 187 13.14.2 Assets with Partial Assets 187 13.14.3 Additional Entries 188 13.14.4 Depreciation Parameters 188 13.14.5 Asset Super Number 189 13.14.6 Asset Complex 189 13.14.7 Negative Assets 189 13.15 Asset Master Data Record 189 13.15.1 Structure of the Asset Master Data Record 190 13.15.2 Master Data in Asset Accounting 190 13.15.3 Creating Asset Master Data 196 13.15.4 Number Assignment for Asset Master Data Records 196 13.15.5 Changing Asset Master Data Records 196 13.15.6 Decapitalizing Asset Master Data Records 197 13.15.7 Deleting Asset Master Data Records 197 13.15.8 Blocking Asset Master Data Records 197 13.16 Valuation 197 13.17 Depreciation 202 13.17.1 Planned and Manual Depreciation 202 13.17.2 Time and Amount of Depreciation 202 13.17.3 Additional Allocation to Accounts for Controlling 202 13.18 Reorganization and Archiving 203 13.19 The Information System of Asset Accounting 203 13.19.1 Report Tree in Asset Accounting 203 13.19.2 The Asset History Sheet 204 13.19.3 Simulation 206 14 Special Purpose Ledgers 208 14.1 Special Purpose Ledgers versus Standard Ledgers 208 14.2 Master Records of the Special Purpose Ledgers 210 14.2.2 Field Transfer 212 14.2.3 Procedures 212 14.2.4 Posting Periods 212 14.2.5 Versions 212 14.2.6 Validation and Substitution 213 14.3 Functions 213 14.3.1 Sets 213 14.3.2 Functions in the Special Purpose Ledger 214 15 Travel Management 218 15.1 [D] The most important rules for income tax-related handling of trip costs (Germany) 218 15.1.1 Official Trips (Domestic) 218 15.1.2 Handling Official Trips (Abroad) 219 15.2 Overview of Travel Management in SAP R/3 225 15.2.1 Important Customizing Settings for Travel Management 225