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One of the foremost and spicy modules of SAP is (FICO) or Financials and controlling module. Lots of users value more highly to dive into the venture for obtaining SAP FICO online training completely. This is often splendidly accepted as an awfully hot and spicy section of SAP and many learners value more highly to endure its technical training. It covers the best technical aspects i.e. Book keeping and management of your business. Lots of organizations are conducting crash SAP FICO training courses to coach their staff. Moreover, the IT department has lots of superlative FICO connected jobs for all those of us who grasp ins and outs of FICO.

                                     Introduction to SAP FICO

SAP stands for Systems, Applications and Products in Data Processing. It is also called ERP software or ERP package.

ERP stands for Enterprise Resources Planning. It is the process of planning for the effective utilizations of the available resources of the company to maximize the profits. Every company will have the following resources.

  1. Men
  2. Materials
  3. Machines

These are the natural resources and they are not available to the companies plenty. So with the limited resources they want to maximize the profits. For this purpose the company has to plan the utilizations of these resources   in such a way that the profits are maximized. So the concept of ERP covers the techniques and procedures which help the business organization to maximize the profits by enabling them to utilize the available resources in the most effective manner.

Benefits ERP systems:

  1. It eliminates the data redundancy (it eliminates the data duplication)
  2. All the data is available in the common or central data base
  3. Data is updated and available in real time
  4. One point entry of data: when the data is entered in one department of the organization , then it will update the relevant data   in other departments of the organization.
  5. Best business practices .
  6. Modular system: the separate software are available within same ERP product to manage different departments in the organization.
  7. Can be implemented only in the required functions or depart ments
  8. Others modules can be integrated later.
  9. Mangers can utilize their time in analysis and spend less time in co-ordination effort.
  10. It improves the customer satisfaction and quality of the customer service
  11. It reduces the idle time
  12. We can deal with the multiple languages and currencies.

List of ERP softwares:

  1. SAP
  2. ORACLE
  3. BAAN
  4. JD EDWORD
  5. PEOPLESOFT
  6. MISCROSOT DYNAMICS etc.

The ORACLE is specialized in the management of finance department. BAAN is specialized in the management of production department. JD EDWARD is specialized I n the management of sales and distribution department. PEOPLESOFT is specialized in the management of HR department. But SAP provides the effective solutions for the management of all most all the departments in the company. It is very user friendly and can be integrated with any other third party soft wares. With the SAP software, we can achieve the high level of integration among the departments in the company. Because of these reasons SAP is the largest used ERP soft ware in the world.

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                                           SAP PRODUCT DEVELOPMENT

The sap software was developed by a German company SAP.AG. it was established in the year 1972. Its head quarters are at Waldorf, Germany.

  • In 1972 the company has developed the product called SAP R/1 SUITE
  • In 1988 the company has developed the product called SAP R/2 SUITE
  • In 1995 the company has developed the product called SAP R/3 SUITE.

“R” stands for the real time data processing. Real time data processing means, when we process the data elements, the related data base is instantly updated.

“3” stands for three tier architecture. It refers to the levels of hardware set up we require to use the SAP ERP software. Under the three tier architecture the following three layers are available.

  1. Data base server layer
  2. Application server layer
  3. Cient/ presentation server layer.

Data base server layer: it is the computer system in which the data base is organized or hosted. The data base is managed on the principles of Related Data Base Management systems. Ex: ORACLE, SQL SERVER ETC.

Application server layer. it is the server   in which the sap application is hosted . it contains the programming code or processing logic necessary to process the business transaction.

Client/ presentation server layer: all the client systems, used by the employees of the company together is called client or presentation server layer.

Now a days we are suing only the three ties architecture. The advantage or the reason is that we can increase of decrease the size of any layer without disturbing the size of other layers.

The current version sap software is ECC 6.0 EHP 6.

ECC stands for ERP Central component

EHP stands for enhancement package.

There are two types of modules in SAP R/3 SUITE.

  1. Functional modules: these include
  2. FICO (financial accounting and controlling)
  3. MM   (materials management)
  4. SD     (sales and distribution)
  5. HR     (human resources management)
  6. PPC   (production planning and controlling)
  7. PM     (plant maintenance)
  8. PS       (project systems)
  9. REM   (rear estate management)
  10. WF     (work flow)
  11. FSCM(financial supply chain management)
  12. TRM (treasury and risk management) etc.
  13. Technical modules: these include
  14. ABAP (advances business application programming language)
  15. BASIS (business application software integrated systems)

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FICO

FI stands for financial accounting. Using the financial accounting component we can prepare the financial statements according to the legal requirements of the country in which the company is registered and doing the business. The following are the sub modules in the financial accounting component.

  1. General ledger accounting
  2. Accounts payables
  3. Accounts receivables
  4. Asset accounting.

Co stands for controlling (Cost accounting). Using this component we can provide the information to the middle level management (to analyze the performance) and to the top level management ( to assist in the strategic decision making). The following are the sub modules in controlling component.

  1. Cost element accounting
  2. Cost center accounting
  3. Internal order accounting
  4. Profit center accounting
  5. Profitability analysis
  6. Product costing.

GENERAL LEDGER ACCOUNTING

There are two types of data.

  1. Master data: the data which is permanent in existence is called master data. The record which contains the master data is called master record. The master data is again and again used during processing.
  2. Transactional data: it is the data which is posted to the master record during the daily management of the business. This is temporary in existence

The General ledger master record contains the data under two segments.

  1. Chart of accounts segment: this segment contains the data such as account group, short text and long text etc. When all the company codes are using the same chart of accounts this data is same in every company code.
  2. Company code segment: this segment contains the data such as account currency, line item display and sort key etc. This data is specific to every company code.

We can create the general ledger master record in the following ways.

  1. At chart of accounts level first then at the company code level
  2. Centrally (we can enter the data both in chart of accounts segment and company code segment at the same time)

The fields in the General Ledger master record:

  1. Account Currency: it is the currency in which the GL account is maintained. The account currency is automatically defaulted from the company code local currency. We can change the account currency, if necessary. If the account currency is company code local currency then we can post the business transactions in any currency into that account. If the account currency is other than company code local currency (foreign currency), then we can post the business transactions into that account in that currency only.
  2. Only balances in local currency: if this check box is selected, the system displays the balances in the company code local currency only. For this purposes if any foreign currency business transactions are posted, the system will convert those foreign currency business transaction in to the company code local currency. For this we require some settings.
  3. Line item display: by selecting this check box the system displays the line items in this GL account. i.e it maintains the details of the business transactions posted.
  4. Sort key: it is the criteria according to which the business transactions are organized in the GL account. The sort keys are system defined.

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EDITING GL MASTER RECORD

Once the GL account master record is created we can not change the following fields

  1. GL Account number
  2. Company code
  3. Account group
  4. Status of open item management if the any business transactions are existing as open items in that GL account. Once open items are cleared we can change the status

PARKING THE DOCUMENTS

It is the activity of keeping the documents pending for posting due to want of authorization. The need for parking arises due to the operation of tolerance group for employees. The documents are parked by the junior level employees and authorized by the senior level employees. The parked documents do no update any gl accounts. The gl accounts are updated when that is authorized i.e. posted by the senior employees. The junior level employee or the senior level employee can change the parked document before it is authorized. Once it authorized and posted by the senior employee neither of them can change it. While authorizing the parked document the senior employee has the following options.

  1. he can post it as it is
  2. he can change it if necessary
  3. He can delete
  4. he can reject

Even though the parked documents do not update any GL accounts, the system considers these parked documents for evaluation purposes such calculating taxes etc.

HOLDING DOCUMENTS

It is the activity of keeping the documents pending for posting due to want of information. When the information necessary to post the document is not completely available we hold the document. The held documents do not update any gl accounts. When the required information is available we can retrieve the held document and give the information and we can post it. Then only the gl accounts are updated. When holding the document the system will ask for the temporary document no. which is to be given by the user. The temporary document no is alphanumeric.

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SAMPLE DOCUMENTS

This is the special type of document. This is used to post the business transactions which occur frequently every day. Using the sample document we can reduce the posting

burden on the users. The sample document is template for original/accounting document. Sample documents do not update any transaction figures. We have to define a special number range for sample documents. The number range no. for sample documents is X2. The following functions are available for the sample documents.

  1. Display
  2. Change
  3. Delete.

RECURRING DOCUMENTS

There are some business transactions which occur regularly at fixed intervals. Examples are rent payment; payment of term loan installment and payment of vehicle loan installment. In order to post this type of transactions we can use this recurring document functionality. To use the recurring documents two conditions are to be satisfied..

  1. The day of posting should be same in every interval
  2. The amount of the transaction should be same in every interval.

For every recurring document we should specify the fist run date. Last run date and interval for posting.

The original recurring documents do not update any transactional figures. The transactional figures are updated when the accounting documents are posted using the recurring documents by running the recurring cycle.

The following functions are available for recurring documents.

  1. Display
  2. Change
  3. Delete.

We have to define the special number range for recurring documents also. The number range no. for recurring documents is X1.

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FOREIGN CURRENCY POSTINGS

Translation ration for currency translation: it is the relation between the minimum units of two currencies in the commercial usage for the conversion purpose. For any pair of currency the translation ration is always 1:1. but for the Japanese Yen the relation is always 1:100

Foreign exchange quotations: there are two types of quotation which we can enter in the foreign currency tables.

  1. Direct quotation: for one unit of foreign currency how many number of units of company code local currency. It is convenient to use the direct quotation when the foreign currency is bigger than the company code local currency.
  2. Indirect quotation: for one unit of company code local currency, how many number of units of foreign currency. It is convenient to use the indirect quotation when the company code local currency is bigger than the foreign currency.

Transaction currency: it is the currency in which the business transaction occurs. It is also called document currency. For every foreign currency posting the system stores two figures. One in document currency and the other   in company code local currency.

INTEREST CALCULATIONS

 Interest calculation types: there are three interest calculation types in sap.

  1. Balance interest calculation. This type is used to calculate interest on gl account balances. For example on term loans. This type is denoted as ‘S’ in the system
  2. Item interest calculation. This type is used to calculate the interest on vendor/customer account balances. This type is denoted as ‘P’ in the system.
  3. Penalty interest calculation. This type is used to impose the penalty on the interest payments. this is denoted as ‘Z’ in the system

The first and second types are used by the commercial enterprises and the third type is used by the financial institutions.

Interest indicator: This is the identification for which we assign all values necessary for calculating the interest. The interest indicator is assigned in the term loan account master record to enable he system to calculate the interest according to the values specified in it.

Reference rate of interest: It is identification for which we assign the real interest rate i.e. 12%, 13% etc. the reference rate of interest is assigned to the interest indicator. We can define any no of reference rates of interest.

Calendar type: the calendar type determines the no of days to be considered for per period for which interest is calculated. There are 4 types of calendars available for interest calculations in sap.

  1. Bank calendar (B): it uses 30days as basis for the month and 360 days as the basis for the year
  2. French calendar (F): it uses the actual no of days in a month as the basis for the month and 360 days as the basis for the year
  3. Gregorian calendar (G): it uses the actual no of days in a month as the basis for the month and 365 days as the basis for the year.
  4. Japanese calendar (J): it uses 30 days as the basis for the month and 365 days as the basis for the year.

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REVERSALS

The reversal function is used to reverse the error documents. There are five types of reversals in sap.

  1. Individual reversals: this function is used to reverse a single document only at a time. When the document is reversed, the system reverses the posting keys only.
  2. Reverse of reversal: this function is used to reverse a document which was already reversed.
  3. Mass reversal: this function is used to reverse a group of documents at a time. But once the document is reversed it cannot be reversed directly. We can do it in the indirect way.
  4. Accrual/deferral document reversals: this function is used to reverse the accrual and deferral documents posted on the last day of the month
  5. Cleared item reversals: this function is used to reset the   open items which were cleared.

At the time of reversing the documents, the user can give the date on which the reverse document is to be posted. If the user does not give any date, the system posts thereverse documents as on the posting date of the original document.

While reversing the document the user has to specify the reversal reason. We can define our own reversal reasons in addition to the reversal reasons which were already defined in the system

ACCRUAL AND DEFFEREAL DOCUMENTS

In every business transaction there are two aspects.

  1. service aspect
  2. payment aspect

if the service aspect happens first and then the   payment aspect, it is called accrual business transaction. Example: out standing expenses (expenses payable) and out standing incomes (incomes receivable). If the payment aspect happens first and then the service aspect then it is called deferral business transaction. Example: pre paid expenses and incomes received in advance.

Open item management: if any GL account is maintained on the open item management then we can display the items which are pending for payment or the items which are pending for receipt.   We can manage only the balance sheet accounts on the open item management. For the GL account which is managed on the open item management we display

  1. only open items ( items which are pending for payment or the items which are pending for received. OR
  2. Only cleared items (the items on which the amount was paid or the items on  which the amount was received OR
  3. all items : we can display both open items and cleared items ( in one screen).

AUTOMATIC PAYMENT PROGRAM IN SAP

SAP FI component offers a beautiful and effective tool in its Accounts Payable module.
Using this tool we can see that the due invoices of the vendors are paid in time. Every
company has huge number of vendors. For every vendors many number of invoices are due
on different dates. These invoices are to be paid in time. Otherwise the company may have to
pay penalty interest which is the burden on profits or sometimes it has to accept the inferior
quality of goods supplied by the vendor. This is even more dangerous on the credibility of the
company regarding the quality of the finished products. As a result it may to lose some of the
existing customers and it may find difficult to attract new customers. So in any case, the
company has to make to payment to vendors in time, for this, the accounts department of
the company should know the due date of each invoice of huge number of vendors. This is
just impossible for any company .

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So using the AUTOMATICA PAYMENT PROGRAM OF TH SAP FI COMPONNENT
We can make the payment to the due invoices of huge number of vendors. The FI consultant
will configure the settings of automatic payment program in the implementation. Then the
accounts payable accountant will execute the automatic payment program daily or once in
two day or once in week according to payment policy of the company. Then the system
automatically selects those vendors who have become due as on the date. And for every
vendor it selects only those invoices which have become due as on that date. Then it will
print the cheques for those invoices only for every due vendor.it also prints the payment
advice and payment summery. The company can avoid the late payment interest charges and
it can avail the available cash discounts offered by vendors. When the company is prompt in
the payments to vendors, it will be in a position to demand most favourable payment terms
from the vendors.
The automatic payment program of sap offers the following additional functions:
1. We can configure any payment method according to the client requirement like
payment through cheque, bank transfer, automatic clearing house (ACH) etc.
2. We can block any invoice for any vendor which may be necessary because of the
disputes on the quality of the material received.
3. We can make the payments due date wise
4. We can make payments invoice wise also.
5. The accountant can see the list of vendors and list of invoices for every due vendor.
6. Once the payment program is executed, the system will affect all the accounting
functions.

Automatic payment program configuration

The following steps are involved in the configuration of automatic payment program:
1. Set up the payment method for the country for payment transactions
2. Set up the payment method for company code for payment transactions
3. Set all company codes for the payment transactions
4. Set up paying company codes for payment transactions
5. Define respective Bank GL accounts
6. Define house banks
7. Creation of check lots
8. Set up bank determination for payment transactions
9. Assign payment methods in all the vendor master records
10. Post the invoices in the vendor account
11. Execute the payment run.

Different phases in the execution of automatic payment program
The following phases are there in the execution of automatic payment program.
1. Parameters
2. Proposal
3. Program
4. Print
We will see now what happens in the each phase while the payment program is executed
b the user.
1. Parameters: in this phase the user enters the selection parameters like company codes
for which the payment program is to be executed, payment methods to be considered
in the payment run, next payment run date, vendor number range to be considered in
the payment run, documents posted up to etc. he can also enable the system to
maintain log of payment methods used for each vendor, due date of each invoice
selected and paid.
2. Proposal: based on the selection criteria entered, the system generates list of vendors
who are going to be paid and list of invoices for each vendor which are going to be
paid in the payment run. This is called proposal. The user has the facility to display
the proposal, edit the proposal. In the editing mode, he can block the required invoice
for the payment, he can change account id, house bank etc.
3. Program: once proposal is verified and authorised by the higher level employee, the
user can proceed with the execution of the payment run. In this phase the system
automatically affects all the accounting functions as follows
1. The system will clear the open items of the vendors for whom the cheques
have been printed
2. The cheque register is automatically updated
3. Vendor account balances are automatically updated
4. Respective vendor reconciliation accounts are updated
5. Bank accounts are updated
6. The payment documents (accounting entries) are automatically posted
4. Print: in this phase the system prints the following objects

1. Cheques
2. Payment advices
3. Payment summary.

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COST ELEMENTS

Using the Cost Element Accounting we can identify all the expenses and incomes from
Financial accounting to Controlling component for analysis purpose
Cost Element: It is the cost relevant item in the chart of accounts. The cost elements are used
to identify all the expenses and incomes from financial accounting and bring them into
controlling for analysis purpose. There are two types of cost elements in controlling.
1. Primary cost elements: all the cost elements which have the corresponding GL
accounts in financial accounting and to which cost elements we can post directly are
called primary cost elements. The primary cost elements are used to identify all the
expenses and incomes from Financial Accounting into controlling. Primary cost
elements arise due to the consumption of production factors which are sourced
externally. Ex. Material, labor, other direct and indirect expenses. In order to create a
primary cost element in controlling, first it should be created as a GL account in
financial accounting.

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PRIMARY COST ELEMENT CATEGORIES

1. General primary cost elements/cost reducing revenues: this category is used to
identify all the expenses and other revenues which have the effect of the reducing the
cost directly. For example. Salaries ,rent, wages, and sale of scrap
03. imputed cost elements: % method
04. Imputed cost elements: target = acutals

The categories 03 and 04 are used to provide the provisions in controlling.
11. Revenue elements: this category is used to identify all the incomes in to controlling.
Example. Sales
12. Sales deductions: this category is used to identify all the expenses which have the
effect of reducing the sales revenues. Example: trade discounts, sales man commission
etc.
22. External settlement cost elements: this category is used to settle or apportion or
transfer the cost of a controlling object such as internal order to an object out side
controlling component. For example cost of the production order settled to the GL
Account in financial accounting i.e Finished goods stock a/c
Note: all the primary cost elements are profit and loss account items.

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SECONDARY COST ELEMENTS

All the cost elements which do not have the corresponding GL accounts and to which
cost elements we can not post directly are called secondary cost elements. The secondary
cost elements are created in controlling only. The secondary cost elements are used to
identify the activities in controlling such as assessment of over heads and settlement of
internal orders. Secondary cost elements arise due to the consumption of production
factors which are sourced internally.

SECONDARY COST ELEMENT CATEGORIES

21. Internal settlement cost elements: this category is used to apportion the cost of an
internal order to cost centers or other controlling objects.
41 Overhead cost element: this category is used to apportion the functional overheads i.e
administration overheads, factory overheads, sales and distribution overheads and
research and distribution overheads to other cost centers
42. Assessment cost elements: this category is used to apportion the cost of the service
cost centre to other cost centers.
43. Allocation cost elements: this category is used to allocate the activity quantities to the
cost centers.

All the primary cost element categories and secondary cost element categories are system
defined and cannot be changed or added.
The primary cost elements can be created in the following ways.
1. from financial accounting
2. in the controlling component directly
3. automatic creation of cost elements.

This component is also called overhead cost accounting. Using this component we can find
the origin of the cost I.e. which department or which group of people or which group of
machines or which manufacturing process or phase or manufacturing process is responsible
for incurring the cost.

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COST CENTRE: it is the area of activity or the area of responsibility for which the costs are
incurred. Generally the departments in the organization can be taken as the cost centers.
During the process of implementation we divide the enterprise in to different cost centers
based on the requirements of the organization. With the configuration we make in the cost
element accounting when we post to any cost element in the general ledger of financial
accounting the expenditure is identified with relevant cost centre, which is the actual
expenditure. For every cost centre we can plan for every expenditure. This information is
used by the system to generate the variance reports.
We have to maintain the master records for the following objects in Cost Center Accounting.
1. Cost element
2. Cost center
3. Statistical key figure
4. Activity type.
The cost centers can be created on the basis of one or more of the following criteria.
1. allocation criteria
2. physical location
3. functional requirements
4. Responsibility for costs.
Based on the above criteria, a department or a group of people or a group of machines or a
manufacturing process or a phase of the manufacturing process can be created as cost
center.
Cost Center Categories: The cost center category controls the activities we can perform for
every cost center created under the respective category. We can use the cost center categories
already defined in the system or we can create our own cost center categories. In most of the
cases the cost center categories already defined in the system are sufficient for the purpose.
For the every cost center we can perform the following activities.
1 posting of quantity particulars
2. Posting of actual primary costs
3. Posting of actual secondary costs
4. Posting of actual revenues
5. Posting of planned primary costs
6. Posting of planned secondary costs
7. Posting of planned revenues.
In the cost center categories screen if the ‘quantity’ check box is selected then we can
maintain the quantity particulars for the cost centers created under that cost center category.
For the other check boxes, if the particular activity is selected, then that particular activity
cannot be performed for the cost centers created under the respective category.

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FISCAL YEAR VARIANT

FISCAL YEAR: it is the period of 12 months for which the organisations prepare the
financial statements.
Variant: it is the object for which some values are defined. When this object is assigned to the
other object, then the values are also applicable to the other object. This is called variant
principle. The variant principle is widely used in sap.
One of the requirements in the accounting is the definition of an accounting year which
known as fiscal year. It is necessary to complete the transactions and to prepare the financial
statements at the end of the year and also to carry on compliance of the other statutory
requirements. The months in the accounting year are called posting periods in SAP. The
accounting year may be calendar year or non-calendar year. Based the statutory requirements
of the country in which the company (company code in SAP) is registered and doing the
business, it has to follow the respective fiscal year. In that case the fiscal year may or may not
correspond to the calendar year.

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Calendar year as fiscal year: in this case, the fiscal year will contain the same number of the
months of calendar year, with 12 posting periods. The first period of the fiscal year is January
and the last period is December. The start date and end date of each posting period is same as
with the calendar month. It is not necessary to define the posting periods when the calendar
year is taken as fiscal year.
Non –calendar year as the fiscal year: in this case, the fiscal year does not start with January.
It may start with April and ends with March. It may start with July and ends with June or it
may start with October and ends with September. in the case of non-calendar year as fiscal
year, it is necessary to define the number of posting periods and how the system is to
determine the posting periods. This is achieved by defining the year displacement factor or
year shift.
There are two types of posting periods existing in SAP. They are
1. Norma posting periods: they are used to post the daily business transactions. So the
normal posting periods are mandatory
2. Special posting periods: they are used to carry on the yearend adjustments to the
previous year’s books of accounts before preparing the financial statements. The
special posting periods optional. We can have up to 4 special posting periods in SAP.
The last posting period of the fiscal year is further divided in to special periods. In total
we can have a maximum of 16 posting periods for the purpose of the general ledger
accounting. But for the purpose of the special purpose ledger we can have 366 posting
periods. In the fiscal year variant we define the number of normal posting periods and the
number of special posting periods. It is the mandatory that every company code should be
assigned with one fiscal year variant. We can assign the system defined fiscal year
variant or we define our own fiscal year variant and assign.

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Credit control area

It is the organisational unit in sap which is used to monitor the credit information of the
customers. It is identified with 4 characters id. A credit control area can be assigned to single
company code or multiple company codes. When the credit control area is assigned to
company code, it acts as default credit control area for that company code. It is also possible
for the user to enter the credit control area at the time of posting the transactions. It can also
be derived from sales order, business area, and sales area segment of the customer master
record.

Credit information of each customer is made available in the credit control area of the
respective company codes. The credit control area has the currency. We can define the credit
limits for the customers in that currency only. If the customer is created in multiple company
codes, and the company codes are assigned to different credit control areas, we can define
separate credit limit in each credit control area.

Functional area

Functional areas are used to classify the expenses of the company code into various
categories like administration. Sales, marketing, production and research etc. The definition
of functional areas are optional. Generally the concept of functional areas are used to report
on the basic of “cost of sales accounting”. We can use the sap system delivered functional
areas or we can define our own functional areas. examples of functional areas are
1. Sales
2. Production
3. Manufacturing
4. Marketing
5. Research and development.

Financial management area

It is the organizational unit in financial accounting to classify the business transactions from
the view point of cash and funds management. The financial management areas are defined
separately for cash and funds management and the company codes are assigned to the
financial management areas. Multiple company codes can be assigned to the one company
code. The company code currency and the financial area management area currency should
be same.

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Controlling Area:

it is the organizational unit in the controlling component in which all the controlling
activities are conducted. It is very wider definition. The main configuration unit in the
controlling component is controlling object
controlling object : it is the entity in controlling component for the information of expenses,
revenues are maintained, processed and analysed. The controlling objects were already
defined in the sap R/3 system. We cannot define our own controlling objects. The system
maintains the information for each controlling objects in the form of the primary cost
elements and secondary cost elements. The following are the controlling objects already
defined in the system. They are
1. Cost centre
2. Internal order
3. Cost object
( the cost object can be a production order, or manufacturing order, or sales order or
sales order item)
4. Profit centre
5. Profitability segment
6. Project
Each controlling object receives the value flows from MM, SD, HR, PP, FI etc. from all most
all the other components of sap. The controlling object receives different values from
different modules as follows
From MM it received the raw material consumption values and other expenses relating to
procurement
From SD modules it received the sales revenues and other expenses relating to the sales
From PP C it receives the production information
From HR it receives the salaries and other employee related expenses
From QM it receives the quality inspection related expenses
From FI it receive all the expense other than above. These expenses are called over heads.
Overheads: it is the sum of the indirect material cost, indirect labour cost and indirect
expenses. The overheads are classified in the many perspectives. They are
1. Factory overheads
2. Administration over heads
3. Sales and distribution overheads
4. Research and development overheads.
Other classification of the overheads is fixed over heads and variable overheads.

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Tolerance groups in sap financial accounting:

The tolerance groups are defined in the financial accounting for the following objects
1. GL accounts
2. Users ( employees in the finance and accounts department)
3. Vendors and customers
The basic purpose of the tolerance groups is enable the system to process the difference in the
GL accounts, vendors and also customers. We can also control the posting activities of the
employees in finance and accounts department.
Tolerance groups for GL accounts: these are the upper limits below which or equal to which
the differences in the Balance Sheet GL accounts are automatically transferred to the balance
sheet or profit and loss account. We define the upper limits either in the absolute terms or
percentage or both. When both the terms are defined, the system will consider the lower
value of the two and proceeds accordingly. The tolerance group is assigned in the GL
account master record. We can also define the separate upper limits for debit differences and
credit differences.
Tolerance groups for employees: these are the upper limits for the posting procedures of the
employees. The following are the posting procedures.
1. The amount of a business transaction an employees can post in GL accounts, Vendtor
accounts, Customer accounts and asset accounts
2. The amount of the open item he can post ( either payment received from customer or
payment made to vendor)
3. The amount or percentage of the cash discount he can post
4. The amount of the payment difference he can post.
The tolerance groups are assigned to the users. Then the upper limits are applied when the
business transactions are posted by the employees. When the employee post the business
transactions whose amount is more the allowable upper limit, then the business transactions
can be moved to the parked status. The upper limits of the tolerance groups are defined in
the company code local currency.

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Segmental reporting in Sap

Segment: segment is the business activity in which the major part of the share capital of the
company is invested. According to the International financial reporting standards the
reporting at the segment level is mandatory. To meet this requirement, sa has developed the
enhancement in New GL functionality. The segmental reporting tool is used to report the
financial statements at business line level, and geographical level according to IFRS
requirement. We define the segments in the enterprise structure folder and assign them in the
profit centre master records. While posting the documents the sap system derives the
respective segments from profit centre master records.

Profit centres in SAP

Profit centres are primarily the area of responsibility within a company for which we can
identify the expenses and revenues. In some cases it is also possible to identify the assets and
liabilities as well. The profit center accounting is the part of enterprise control module of sap.
But the total information is extracted from the controlling area. The profit centre accounting
can be used to divide the enterprise on the following lines.
1. Fictional divisions (production, marketing, and R&D etc.)
2. Geographical divisions (regions, locations etc.)
3. Product divisions (product lines)
4. Mixed divisions (combination of the above three divisions).
The profit centre always receive the statistical postings from other modules of controlling. It
is possible to post profit centre relevant data automatically to profit centres. In the profit
centre master records we can assign the segments there by makes it possible to report at the
segment level. We can main the profit centre standard hierarchy which contains the logical
arrangement of the profit centres for reporting purpose. For every profit centre we can also
maintain the validity period.

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Bank Accounting
In SAP Bank accounting component is used to process all the accounting transactions done
with the BANKS. It is possible to define all the country specifc characteristics lime various
settings for both manual and electronic payment processing, definitions and settings for
automatic payment program, specifications for master data, and definition of bank forms.
The bank accounting component contains the following elements
1. Bank Master data
2. Check/bills of exchange management( i.e cash balance management)
3. Payment processing of incoming payments and outgoing payments.
Bank Master data: the bank master data is stored centrally in bank directory (in the table
BNKA). While defining the bank master data, we can also define our own banks which are
called house banks in the sap terminology to process receipt and payments through banks.
The Bank master data includes 1. Address data 2. Control data
1. Address data: it includes the following

1. Bank key
2. Bank name
3. Bank address
4. Bank country

2. The control data: it includes the following

1. SWIFT code
2. Bank groups

We can create the bank directory in two ways.
1. Automatically: we can use the program RFBVALL_0 to import the bank directory
into the sap system from an ASCII (American standard code for information
interchange) file. The bank directory file on a data medium (tape or disk) can be
obtained from the central bank or banking organisation of the country. However it is
important to note that the bank directory should be updated periodically. We can use
the following path to import the bank directory.
IMG –cross application components – bank directory – bank directory data transfer.
2. Manually: normally we use IMG screen to create all bank master data. This is in
contrast to creating the master data for vendor and customer on the application side.
However we can create the bank master data while processing the master data of the
business partners (vendors and customers).in case of one time customers and one time
vendors we can maintain the bank’s data while posting the transactions .

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GENERAL SETTNGS IN SAP

The general settings include the different parameters which are pre-configured in the sap
system. They are independent of application components. That means these general settings
can be used in every module. The general settings include:
1. Sect countries
2. Set up geo-codes
3. Set up currencies
4. Set up unit of measurements
5. Maintenance of calendars
6. Time zones
7. Field display characteristics.
Set countries: SAP software contains all the country specific detail which are groups into
1.general data 2. Foreign trade characteristics 3. Further test data. All the countries were
defined according to the international ISO standards to facilitate international data exchange
parameters.
2.Geo codes: In SAP geo-code refers to the geographical longitude and latitude degree of
a location ( address). Geo coding is normally done at the country and region level (it is SAP
default). The geo-codes are used to determine the distance between the two business partners.
3.currencies: the currencies are identified in sap with the 3 digit code which follows the ISO
standards along with the name or description and the number of decimal places required. We
can also define our own currencies in to the list according to the own requirements. The sap
system allows for entering the exchange rates, their conversion factors, validity period and
maintaining the rounding off rules etc.
4. unis of measurements: the units of measurements are required for making the
calculations with the physical units and quantities to be displayed on the screens. They are
also required for internal conversions. Sap follows the international system of units and is
based on the seven basic units of measurements.
5. calendars: in sap the calendar contain 1. Public holidays 2. Public holiday calendar, and 3.
Factory calendar. He The sap standard system is delivered with definitions of all the ublic
holiday and holiday rules beside the standard factory calendar.

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Chart of accounts

A chart of accounts is a grouping of General Ledger accounts (both expenses and as well as
revenues). The chart of accounts is the basic framework to record the accounting transactions
in an orderly manner. For each GL account the chart of accounts contain the information like,
GL account number, account name, and some control parameters as to how the account is
created in a company code and how the account is posted. In other words the chart of
accounts control the structure of the GL accounts. Already some internal chart of accounts
were defined in the system to meet the legal requirements of the various countries. The
following are the different charts of accounts available in the system.
1. Operating chart of accounts: it is the list of all the General ledger accounts used by the
company code into which the daily business transactions are posted. The financial
statement according to the legal requirements of the country in which the company
code is doing the business are prepared from this operational chart of accounts.it is
mandatory that every company code should be assigned with one operational chart of
accounts. This is also called standard chart of accounts. The financial accounting and
controlling components both use this operational chart of accounts.
2. Country specific chart of accounts: it is also called simple country chart of accounts.
It is used to meet the country specific legal requirements. The assignment of the
country specific chart of accounts to the company code is optional. It is the possible
that the operating chart of accounts and country specific chart of accounts are one and
the same. In this case we do not need the two different chart of accounts. In case
where the two chart of accounts are different, the link is to be provided by entering
the G/L account number from the country chart of accounts in the GL master of the
operating chart of accounts operating chart of accounts.
3. Group chart of accounts: it is the list of the GL account used by the corporate group to
prepare the consolidate financial statements. It is also called corporate chart of
accounts. The assignment of the group chart of accounts to the company code is not
mandatory.
It is possible that more than one company code can use the same chart of accounts. In that
case the structure of the GL accounts in all the company codes using the same chart of
accounts. Moe than one company codes can use the same chart of accounts provided all the
company codes are the same nature of business and all the company codes are in the same
country.

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Read what my students say about my training

Student Testimonials

I heard about Mr.Lakshman and contacted him about learning SAP(FICO).He is a competent teacher who imparts training in a very easy way,so much so that a person like me, who has not any accounting background,can understand the terms of accounting and its functions very easily.Moreover,he is always there to help his students ,and in case of any need he explains and repeats the lectures to the students satisfaction.He is also available to answer the the queries regarding the training and practical work on what'sapp. He provides his students with the extra access to the SAP login. In short, Mr.Lakshman is a nice,diligent and very helpful SAP teacher. i highly recommend aspiring individuals to join his classes to make a bright career in SAP FICO.

Malik Naveed
New York, USA

Mr.Lakshman not only possess very good hold over SAP FICO module but with his mastery over accounting he walks through SAP FICO tool step by step so beautifully so detail and his material is enough to master this subject. Thank you very much Lakshman sir for departing all the knowledge and experience.

Anita Gupta
India

I have deepest Respect for Mr. Lakshman. He is one of the finest instructors in SAP. A very deep understanding of Subject matter and a very convincing style distinguishes him from others in Market. Mr.Lakshman is one of the best in SAP FICO Industry and i refer him to all my friends those looking for a career in SAP FICO. 

Nisar Ahmed
Valsatech ,Maryland, USA

I am an experienced Chartered Accountant and Company Secretary from India working for a Singapore based Multinational company. When my company decided to Implement SAP, I watch videos on SAP on Youtube of various tutors. Finally, I approach Mr. Lakshmana swamy for SAP online coaching. Mr. Laskhmana Swamy teaches the subject through lucid power point presentations for conceptual clarity and walks us through live demo on the SAP Server to understand better. He has amazing teaching capabilities and makes subject interesting and easy. After completing SAP FICO Ecc 6 training, now I am taking coaching for SAP Simple Finance. I recommend his coaching for anyone contemplating join SAP coaching.

Sudhakar.V
CA and CS (Singapore)

Mr. K. Lakshmana Swamy's teaching style is really very nice and interesting as he goes step by step in line with the material provided by him.The material is very useful for practice at any point of time in future if one has SAP server in hand.If any body wants to learn SAP FICO module, I sincerely recommend to join the online classes of Mr. Lakshmana Swamy only as no body can teach like him.He is very friendly and easily reachable whenever required.

Sathyanarayan gorthi
Financial Analyst, India

My training on SAP-FICO with Mr.Lakshman has been awesome. I took class for almost three months. His training and the way of teaching is more to practical side. One great thing about sir is he always available to clear all the doubts and help you in a right direction. He has prepared his own goals for the students and prepared the material effectively with clear instructions and in a planned way. I really thank him for all his patience and extraordinary support. I fully recommend SAP-FICO training from laxman sir. i got a job as SAP FICO Consultant in Bangalore.

Vishwa
SAP FICO Consultant, Malaysia

Configuration steps of SAP-fico nicely explained.Personal attention to students.anytime post class willing to solve student problems,Overall excellent online classes for SAP FICO, Thank you Lakshman sir for parting your knowledge with realtime examples, you made our training journey a cakewalk

Amit
Bangalore

Thank you Mr.Lakshman for your excellent tutorials. Your style of teaching is very interactive, realistic and comprehensive. 20 years of your industry experience and in depth knowledge has certainly helped me to achieve my goals. Thank you so much

Monty Dixit
London, United Kingdom

It is owesome , really. I can’t say enough about how well he has trained me .I am satisfied fully . Thanks a lot. If anyone is looking for SAP FICO TRAINING i suggest to go with Lakshmana Swamy, he's the best in the market.

Sushil Kumar
MCOM,VIE

"Technology is just a tool. In terms of getting the kids working together and motivating them, the teacher is the most important."  

and Mr.Lakshmana Swamy teaches from heart not book.. thank you sir

G.Dilip Reddy
India

I am enrolled in Laxmana Sir's SAP FICO training. He is very knowledgeable in Financial Accounting and SAP ,clear all the confusions and encourages questions with real time examples. His material is an additional help which is very detail oriented and amazing. Even if you the miss the virtual classes ,you can listen to his recording. I highly recommend it to anyone who is looking for excellent training.

Vishwa
India

Mr. Lakshamana Swamy is my teacher for a SAP course on FICO & S4 HANA simple finance conducted by him held in the month of june to September. He trained us on the use of Finance & Controlling while studying SAP. SAP is a very complex topic and He did very well to teach it to us in a easy manner in short span of 4 months time. Also, all the topics that we analyzed, moved in the same way as discussed by him and now I can able to develop with the accuracy. Thanks to him, i have a great base in SAP FICO which will help me make important interview topics and with real time examples. It was a great to be taught by him. Mr. Lakshamana Swamy has a got a vast understanding and knowledge in SAP which makes him a very valuable to next generation. His delivery of service is phenomenal and always trides the extra mile to ensure service is met with a smile.



Giridhar
Mumbai, India

I want to introduce one of d best faculty in India. He is a realtime SAP FICO consultant working for top most MNC.His way of teaching from basic things to end to end process flow,planning and methodology are superb. Also his teaching style of detailed activities of a Consultant where we have to performs at implementation project which very important to get on board and very helpful for realtime consultant as well as for new joinee. Lakshman swamy is a ca cwa with 13 year of industry exp and 8 years of SAP exp as a cost accountant. He explains all the SAP FI & CO in depth. If you want to learn all SAP FI & CO in depth Lakshman is d best faculty. Thank you Lakshman sir, i got placed as a SAP FICO Consultant in TCS, Chennai.



Ajay
SAP FICO Consultant, TCS, Chennai

Hey there! In case you are looking to enroll for the SAP FICO course, I will happily recommend Mr Lakshmana Swamy to you. His teaching methods & techniques can be best described as "SAP FICO made simple". He delivers his lectures with passion, perspicacity and simplicity. You can confirm my quote against some of his YouTube videos online. I enrolled with him and I am glad I did as I had excellent value for my hard earned cash paid for this course.



Aruna Conteh
India

"Laxman Sir is very Organised and structured in his approach with regards to the teaching the Topics.He first explains the Terms, gives examples/real time scenarios to explain the Terms and then shows that Practically in the System , due to which we can relate and understand the topic thoroughly.Due to the above approach we feel comfortable and confident to do it on our own.He takes pain and effort to teach each and every term.He will teach you the detailed way and then also show alternate methods to do the same.By this, we get a complete overview of the navigation.        "IF YOU WANT TO LEARN THE SUBJECT BELIEVE IN SIR AND YOU WILL EXCEL."




Nitya
India

"Lakshman sir, you are an outstanding teacher. I do not have any word to say. When I was searching for doing sap course, I met many people and went few places but all of them just no use. Fortunately one day I saw you on YouTube and then I stopped my searching for a teacher. You are supportive, knowledgeable , Experience and the most important thing that you are an honest man which can found very rarely.Thank you for helping me to make my career in SAP"




Sumit
India

Your classes are very informative with simple language which makes me to follow you easily eventhough am from a non accounting background. Each one of your class is very elaborate with step by steps. The way you present powerpoint documents with examples to make us clear about the topic is excellent. The material you provided us is really helpful for doing practice sir. Recordings provided at the end of the sessions are very clear and informative even if i miss the session am able to get to know about it. You are readily available to clear our queries then and there. I really thank satheesh for helping us to get your contacts.




Akila Sriram and Ramasamy
India

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What is SAP FICO?

SAP FI stands for Financial Accounting and it is one of important modules of SAP ERP. It is used to store the financial data of an organization. SAP FI helps to analyze the financial conditions of a company in the market. It can integrate with other SAP modules like SAP SD, SAP PP, SAP MM, SAP SCM, etc.SAP Controlling (CO) is another important SAP module offered to an organization. It supports coordination, monitoring, and optimization of all the processes in an organization. SAP CO includes managing and configuring master data that covers cost and profit centers, internal orders, and other cost elements and functional areas.This is an introductory tutorial that covers the basics of SAP FICO and how to deal with its various modules and sub-modules.

Who can join this SAP Finance Course?

This SAP Finance Training Modules has been designed for Students, Working Professionals and Entrepreneurs with skills equivalent to Bcom, Mcom or any other Finance and Accounting background. The main aim of this entire SAP FICO, FSCM and Simple Finance Online Training is to create awareness and enlighten aspiring individuals to enrich their skills and enhance their future with Ever green SAP Finance Modules.

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