Table of Contents

1.

SAP Financial Accounting

1.1

Brief

1.1.1

The General Ledger

1.1.2

The Accounts Payable

1.1.3

The Accounts Receivable

1.1.4

Bank Accounting

1.1.5

Asset Accounting

1.1.6

Withholding Tax

1.1.7

Country India version

1.2

Implementation Scope

1.2.1

Client

1.2.2

Company

1.2.3

Company Code

1.2.4

Business Area

1.2.5

Company Code Segment

1.2.6

Chart Of Accounts

1.3

Master Data

1.3.1

General Ledger Master

1.3.2

Asset Master

1.3.3

General Master Data

1.3.4

Vendor Master Data

1.3.5

House Bank

1.3.6

Cash Journal

2.

SAP Controlling

2.1

Brief

2.2

Cost Center Details

3.

SAP Asset Accounting

3.1

Brief

3.1.1

Asset Class Details

3.2

Depreciation

3.2.1

Purpose

3.2.2

Features

3.2.3

Asset Depreciation

3.2.4

Asset Retirement & Transfer

3.2.5

Closing operation

4.

SAP Business Process

4.1

Basic Setting

4.1.1

Parameter of settings

4.1.2

Currency

4.1.3

Fiscal Year

4.1.4

Fiscal Year Variant

4.1.5

Posting Period Varian

4.1.6

Number Range.

4.1.7

Document Type

4.1.8

Posting key

4.1.9

Account Group

4.1.10

Field Status Variant

4.2

Extended Withholding tax

4.3

General Ledger Account

4.3.1

Purpose

4.3.2

Features

4.4

Manual payment

4.4.1

Prepaid Expenses

4.4.2

Parked Documents

4.4.3

Document Reversal

4.4.4

Closing Procedures

4.4.5

Accruals & Reversal of provisions

4.4.6

Closing of Period

4.4.7

Balance Carried Forward

4.5

Accounts Payable

4.5.1

Traveling Expenses

4.5.2

Vendor Payment

4.5.3

Vendor Down Payment

4.5.4

Down Payment Request & Advance Payment

4.5.5

Invoice Booking & Settlement of Advances

4.5.6

TDS Processing

4.5.7

TDS Calculation Requirement

4.5.8

TDS Certificate

4.6

Advances/Loans to employees & Travel expenses

4.7.1

Purpose

4.7.2

Clearing of Accounts

Annexure 1

SAP FINANCIAL ACCOUNTING:

1.1 Brief:
The Financial Accounting (FI) module components address the requirements of the financial
accounting department of an organization. It provides the following features:
Management and representation of all accounting data: All business transactions are recorded
with an unbroken audit trail from the financial statements to the individual documents.
Open and integrated data flow: Data is available in real time within Financial. Accounting.
Postings made in the sub ledgers always generate a corresponding posting in the General Ledger.
Thereby the necessity of reconciling the sub-ledger with the general ledger is undone with.
All accounting-relevant transactions made in Logistics (LO) are posted real-time to Financial
Accounting by means of automatic account determination. This data can also be passed on to
Controlling (CO). This ensures that logistical goods movements (such as goods receipts and
goods issues) are exactly reflected in the value-based updates in accounting. The financial impact
of the goods movement, inwards and outwards, are accounted online real time.

The Financial Accounting (FI) application component fulfills all the external reporting
requirements that must be met by the organization whether national or international. The SAP FI
application provides the following features

1.1.1 The General ledger:

The central task of G/L accounting is to provide a comprehensive picture for external accounting and
accounts. Recording all business transactions (primary postings as well as settlements from internal
accounting) in a software system that is fully integrated with all the other operational areas ensures
that the accounting data is always complete and accurate.

1.1.2 The Accounts Payable:

The Accounts Payable application component records and manages accounting data for all vendors
as a whole. It is also an integral part of the purchasing system: Deliveries and invoices are managed
according to vendors. The system automatically triggers postings in response to the operative
transactions in MM. The concept of sub-ledger is used to ensure that the vendor related financial
entries are updated in the vendors accounts and also to the general ledger accounts. This is done by
the assignment of the general ledger account in the vendor master.
1.1.3 The Accounts Receivable:
The Accounts Receivable application component records and manages accounting data of all customers.
All postings in Accounts Receivable are also recorded directly in the General Ledger. Different G/L
accounts are updated depending on the transactions involved (for example, receivables & down
payments).

1.1.4 Bank Accounting:

This component is used to handle accounting transactions to be processed with the banks. It
includes the management of bank master data; cash balance management and the creation and
processing of incoming and outgoing payments.

1.1.5 Asset Accounting:

The Asset Accounting component is used for managing and supervising fixed assets with the SAP
R/3System. In SAP R/3 Financial Accounting, it serves as a subsidiary ledger to the FI General
Ledger, providing detailed information on transactions involving fixed assets.

1.1.6 Withholding Tax: (Tax deducted at sources)

Country Version India uses the standard functions for calculating and collecting withholding
taxes. However, Withholding Tax comes with additional functions for tax remittance, journal
vouchers, creating withholding tax certificates, and preparing quarterly returns.

1.1.7 Country India Version:

Most of the country-specific functions for India relate to Financial and Logistics.
Company is subject to deductible as well as non deductible input tax and will also have relevant output
tax for processing of sales process.
Tax will be calculated through tax codes maintained with rates as per requirement. The relevant input
tax codes are listed below:-

1.2 Implementation Scope:

For SAP FI module the following are implemented:

General ledger

Accounts payable

Accounts receivable

Bank accounting and Cash journal

Fixed assets

FI organization structure:
CLIENT

Chart Of Account

Compa
ny Code

1.2.1 Client:
Client is the highest level in the SAP hierarchy.
Specifications or data which will be valid for all organizational units in all SAP applications
are entered at the client level, eliminating the need to enter this information more than once
(e.g. exchange rates).
Each client is a self-contained unit which has separate master records and a complete set of tables
and data.
Users must enter a client key and have a user master record in the client in order to log on to the
system.
The Enterprise Structure in SAP Finance module consists of the following entities under
Client: Company
Company Code
Chart of Accounts

1.2.2. Company
A Company represents a group of entities (one or more Company codes) in SAP.This entity is used for
consolidation of accounts of multiple entities (Company Codes). All company codes within a company
must use the same transaction Chart of accounts and the same Fiscal Year breakdown. However, the
company code currencies can be different.

1.2.3. Company Code

A Company Code represents an independent legal accounting entity in SAP. Balance Sheets
and Profit/Loss statements required by law will be created at the Company Code level. In
other words, the organizational unit for which a complete self-contained set of accounts can be
drawn up for external reporting purpose. The process of external reporting involves recording

all relevant transactions and generating all supporting documents required for financial
statements.

1.2.4 Business Area:

Business area in sap is defined as an organisational area within the financial accounting module. Business
area in SAP is used for internal and external reporting.Financial statement can be created for business area
and this financial statement can be used for internal purpose.

1.2.5 Company Code Segment:

The information, which is specific to a particular Company, is maintained in the Company code
segment of the General Ledger Master record. This data controls how one enters and processes
business transaction data in the appropriate account as well as how the account is managed within a
company code. The following are some of the specifications which will be made for each G/L
account:

1.2.6 Chart of Accounts:

Definition consists mainly of the account number, account name and the type of GL account, i.e.
whether the account is a Profit & Loss account type and Balance Sheet type of account. Chart of
accounts relation between company code.
1:1 or 1 :n

1.3 Master Data:

1.3.1 General ledger Master:
All the transactions in SAP FI Module will be processed only by using General Ledger
Accounts contained in the Chart of Accounts.
G/L accounts will also be used for posting transactions from other modules of SAP
there are 2 Segments to a GL master data:
(a) Chart of Accounts Segment and
b)Company Code

1.3.2 Asset Master:

In order to make it easier for the user to create, maintain and evaluate master data, varied individual
information is structured according to its area of use and the relevant functions in the system. The
asset master record consists of two main parts.
General Master Data
Data for calculating asset values

1.3.3 General Master Data:

This part of the master record contains concrete information about the fixed asset. The following

field groups exist

General information (description, quantity, etc.)

Posting information (for example, capitalization date)

Time-dependent assignments (for example, cost center)

Information on the origins of the asset

Data for Calculation Asset Values:

You can specify depreciation terms in the asset master record for each depreciation area in the chart
of depreciation. In order to make these specifications, the master record contains an overview of the
depreciation areas. In addition, there is a detailed display available for each depreciation area. If the
depreciation areas that are not needed for a specific asset, it is possible to deactivate these
depreciation areas at the asset level.

Financial Statement Version:

Financial Statement Version

1.3.4 Vendor Master Data:The vendor master database contains information about the vendors that supply an enterprise. This
information is stored in individual vendor master records. A vendor master record contains the vendors
name and address, as well as data such as:

The currency used for ordering from the vendor

Terms of payment

Names of important contact persons (sales staff)

Since, to the accounts department, vendors are generally creditors (accounts payable), the vendor master
record also contains accounting information, such as the relevant control account (reconciliation account)
in the general ledger.Therefore, the vendor master record is maintained by both Accounting and
Purchasing .

1.3.5 House Bank

House Banks are Banks through which the company deals with payment transactions. House Banks and
Banks are pretty much the same but the structure of a house bank is different to a bank in their G/L
account composition.
A House Bank can contain multiple G/L accounts allowing you to define one for each operation. You can
define one for payments, one for deposits, one for clearing cheqs, one for cash..etc. And the sum of all
these accounts will make the balance of the House Bank.
Each House Bank is represented by a Bank ID in SAP and every account at a House Bank by a
Account ID

1.3.6 Cash Journal

The cash journal is a subledger of Bank Accounting. It is used to manage a company's cash
transactions. The system automatically calculates and displays the opening and closing balances, and
the receipts and payments totals. You can run several cash journals for each company code. You can
also carry out postings to G/L accounts, as well as vendor and customer accounts.
The cash journal is a single-screen transaction. This means that you can enter, display, and change
cash journal documents on one screen.cash payment not more than Rs.20000. but we can receive
more than 20000 amount .

2.SAP CONTROLLING:
2.1 Brief:
The controlling area is the highest organizational unit in Controlling.

2.2 Cost Center Details:

Cost center allocation of departmental cost ,here also using for department wise cost .Cost center and cost
center hierarchy is in place, however budgeting is being done by expenditure / income / cost center wise
for the company

3. SAP ASSET ACCOUNTING:

3.1 Brief:
The Fixed Asset module is an integrated asset management solution for additions, updating, tracking,
depreciation and administrative purposes. Assets are depreciated periodically to arrive at their
current net value. Once an asset is capitalized, it can be transferred between locations, cost centers.
Assets can be removed from the Assets Ledger by disposing them.
Asset is a subsidiary ledger accounting module in Financial Accounting.
Company code

Chart Of Depreciation

3.1.1 Asset Class details:

It is being decided that depreciation rate for all new company codes will be used as per Companys
Act 1956 with WDV method.
The Fixed Assets Module will provide following functions:

New Asset addition

Add to an existing asset

Modify Asset details

Asset Transfer Asset

Disposal

3.2 Depreciation:
3.2.1 Purpose:
The Asset Accounting (FI-AA) component is used for managing and supervising fixed assets with
the SAP R/3 System. In SAP R/3 Financial Accounting, it serves as a subsidiary ledger to the FI
General Ledger, providing detailed information on transactions involving fixed assets. Various types
of reports are available for both internal and external reporting with regard to the assets maintained
in an organization. The system maintains the asset master data, manages the transactions and updates
the depreciation run.

3.2.2 Features:
Drill down for a particular asset to view the transaction history for that asset.Depreciation is run only
once for each period. The system will record the last period for which depreciation was run. The user can
only run the depreciation program for the next period. Asset that is depreciated, the system automatically
generates a journal and posts it to the Fixed
Asset sub ledger for the depreciation amount.
When posting the depreciation expense for an asset the cost center of the asset at the time of
depreciation run is considered.

3.2.3 Asset Depreciation:

Different depreciation rates are configured using different depreciation keys and they will be
attached with the asset masters at the time of creating an asset master.
Depreciation as per the Companies Act will be handled by creating Book Depreciation ,
depreciation area where as depreciation as per the income tax act will be handled by Country India
Version settings. Country India version allows calculating depreciation on each asset block and also
facilitates calculation of capital gains and losses as per the Indian income tax act, 1961.

3.2.4 Asset Retirement & transfer:

The asset retirement consists of any of the following:
1. Sale of asset with customer,
2. without customer scrapping of an asset
3. Transferring of an asset

The asset transfer consists of any of the following:

1. Transfer due to wrong posting to asset class using
2. Intra Company Transfer.
3. For transfer of asset between the business areas (asset to asset transfer)

3.2.5 Closing Operation:

The year-end closing program is used to close the Fiscal Year for the asset accounting. Once the
fiscal year is closed, one can no longer post or change values within asset accounting (say,
recalculate depreciation). The fiscal year that is closed is always the year following the last closed
fiscal year.
At the time of closing the period system performs certain checks like proper depreciation calculation,
proper update to general ledgers etc.

4. SAP BUSINESS PROCESS:

4.1 Basic setting:
The purpose of this setting is to document the global configuration settings in Financial Accounting for
the Company Code. These settings control the transaction entry and the dependent controls in SAP across
all the modules.

4.1.1 Parameter of setting:

Posting of transactions in SAP require the following settings:
Currency
Fiscal Year in which the transaction is to be posted Fiscal year variant for determining the posting periods
Document Types
Document Numbering
Document Posting Keys (debit/credit)
Posting Period Variant to determine the open and close periods
Tax Deducted at Source (Extended Withholding Tax)

4.1.2 Currency:
For each company code a currency must be specified. Accounts are managed in the company code
currency. All other currencies are indicated as foreign currency. The system converts the amounts
posted in a foreign currency into the company code currency. The currency defined in the company
code is known as the local currency within SAP.

4.1.3 Fiscal Year:

The fiscal year is defined as a variant which is assigned to the company code. Standard fiscal year
variants are already defined in the system and can be used as templates. The fiscal year variant
contains the definition of posting periods and special periods.
Special periods are used for postings which are not assigned to time periods, but to the process of
year-end closing.
A fiscal year will consist of maximum of 12 posting periods and maximum 4 special periods.
4.1.4 Fiscal Year Variant:
Maintain Fiscal Year Variant- (Consider Fiscal Year April to March)

4.1.5 Posting Period Variant:

Posting Period Variant
4.1.6 Number Range :
Number range can be maintain external or internal

4.1.7 Document Type:

The document type controls the document header and is used to differentiate the business
transactions to be posted, e.g. customer invoice, vendor payments, etc.

4.1.8 Posting Key:

Posting Key controls Debit or Credit account indicator for each line item.The posting key also describes
the type of transaction that is entered in a line item and allowable account type, which will be entered for
the respective line item.

Standard Account Types in SAP are as follows:

S- General Ledger
A- Assets
K- Vendor
D- Customers
M- Materials
4.1.9 Account Group:
The account group is a summary of accounts based on criteria that effects how master records are
created. The account group determines: The number interval from which the account number is selected
when a G/L account is created
ANNEXURE 1