GL Master Data – SAP General Ledger Accounts
GL Master data in SAP control the posting & Processing of accounting transactions to G/L accounts. In order to post anything to General Ledger, GL Master data is mandatory.
G/L Accounts
General Ledger (G/L) accounts are the fundamental master data in FI. These SAP GL Accounts are essential for capturing accounting details and financial reporting. Also, we use them for recording financial transactions and tracking account balances to fulfil external financial reporting requirements, legal or otherwise.
Throughout the use of SAP GL Accounts
In SAP, we assign GL accounts a chart of accounts. We use them in all accounting transactions and enter them either manually or derive through account determination. This is a procedure which uses predetermined G/L accounts.
Before getting into the specifics of the GL Master Data structure, it is important that you understand the value of a clean, well-organized chart of accounts.
The backbone of GL Master Data in SAP
The chart of accounts is simply a complete collection of the G/L accounts in your system. In SAP, we define a chart of accounts and assign it to a company code. When FI is first set up, one of the most important steps is to determine the structure of your chart of accounts.
Use of Chart of Accounts in GL
Over the decades, we have been using various approaches. Generally, a simple structure is best to easily understand and maintain your chart of accounts and the G/L accounts in it. You also want a structure that provides a solid basis for financial reporting.
The good thing is that in addition to G/L accounts by number range, SAP enables you to designate each as a balance sheet or profit and loss (P/L) account. This subdivides G/L accounts further into account groups and makes individual settings within each G/L account for added control.
Now that you have a better understanding of the overall structure and importance of the G/L account. Let’s look at the specific elements of its structure. The G/L account itself is made up of three distinct segments i.e.
- Chart of Accounts
- General Data
- Company code data.
Chart of Accounts
In the previous section, we described the chart of accounts at a high level. It’s an important concept so here we will go into greater detail. SAP defines a chart of accounts as a classification scheme consisting of a group of G/L accounts that provides a framework for recording values to ensure an orderly rendering of accounting data.
COA- As Collection of GL accounts Master Data
A chart of accounts is a collection of G/L accounts that we use in a company code to record financial transactions and balances. Therefore, all the G/L accounts that a company code needs are contained in the chart of accounts. Thus, it is always important to keep in mind that financial reporting is based on G/L account transaction details and balances.
Types of Chart of accounts
In SAP, there are three different charts of account types:-
1. Operative chart of accounts
We use this type in our day-to-day operations and accounting entries.
The operative chart of accounts is also referred to as the operating chart of accounts. It’s assigned to a company code using T code OBY6 and used in the daily recording of accounting entries.
In addition, both FI & Controlling modules use this chart of accounts. For the CO module, this means that the operative chart of accounts contains the expensive and revenue accounts that are also cost and revenue elements in CO.
2. Country Specific Chart of accounts
We use this type to meet a country’s specific legal and tax requirements. If the operative chart of accounts does not meet country-specific legal and tax reporting requirements then we can use a country chart of accounts.
In other words, the country chart of accounts is the G/L account structure prescribed under national regulations. The assignment of a country chart of accounts to a company code is optional from a system configuration perspective.
Like the operative chart of accounts, the country chart of accounts is assigned to a company code using T code OBY6. Further, the need for a country-specific chart of accounts is typical in multinational companies, which commonly have a separate company code for each country.
3. Group Chart of Accounts
We use this type one for consolidation purposes. The optional group chart of accounts contains G/L accounts that the entire enterprise for group reporting uses.
General Data
General Data – We create G/L accounts and maintain them in the application menu path Accounting.
Financial Accounting General Ledger Master records G/L Accounts.
Individual & Collective GL Master Data
We can manage G/L accounts individually or collectively. We must create G/L accounts with basic data relevant to a chart of accounts using T Code FSP0.
After creating the basic data, we can re-use it to create the same G/L account in multiple company codes using Transaction FSS0. Also, the basic data of a G/L account is not specific to a company code. It is specific only to a chart of accounts.
An Example of a GL account screen displayed using Transaction FSP0 and containing the following three Tabs:-
The Type/Description tab
This tab contains the control in the chart of accounts area, which is where the most important settings are made. The GL account type lets you select the type of GL account types like Balance sheet, Non-Operating Exp /Rev, Primary cost/Rev, Secondary Cost Element and Cash.
Further, from the account group dropdown, we choose and assign an account group, which determines the permitted G/L account number interval and specifies GL master data fields as required, optional or suppressed.
Description area of the GL Master Data
In the Description area of the master record, you specify G/L account Short Text and long text (G/L account Long text)
The main word (translation tab) allows you to designate keywords for the account in the chart of accounts and to designate the language in which to display, enter and print text.
The information tab displays when the account was created and by whom and it provides access to change documents.
Company Code in GL Master Data in SAP
Company Code data in the master record is the most complex part of the GL master data in SAP. Without it, a company code can’t post financial transactions with the G/L account.
Thus, you must complete this section of the GL master data record. We use T Code FSS0 for each company code that the system assigns to the chart of accounts.
The control Data tab
This tab includes the Account control in company code areas with fields that determine account settings for currency, exchange rates, taxes and reconciliation account type (Customer, Vendor & Asset). While the alternate account no. the field allows you to designate an account number for a country chart of account.
In the Account Management in the Company Code area of GL master Data
Here you set G/L accounts as open items managed or not. Selecting the open item management checkbox turns on the open item managed function. Open item management is relevant to any business process in which we need to have a G/L line item cleared via a subsequent step.
Open Item management
This one is an important concept that is relevant to many processes, including bank reconciliation, goods receipt/invoice receipt (GR/IR), accounts payable and accounts receivable.
The basic concept is that we expect an accounting entry that we post to a G/L account offset (cleared) in the future and net to zero in the account balance.
Each accounting entry in a G/L clearing account has a status of open or cleared.
Related: Interview Questions on GR/IR
The create/Bank/Interest screen
This includes the control of document creation in the company code area. We use these field control settings during document creation.
The Field Status Group
It determines the screen layout for document entry and specifies document line item fields that are optional, required or suspended. If we tick this, the post automatically only option indicates that we can post an account only through account determination and therefore can’t manually enter a transaction.
Further, if we tick the supplement auto postings option, it allows us to use the account for automatic system-generated line items.
Conclusion
Creating a GL Accounts master data record in SAP FICO is a must before posting any accounting transaction to a G/L account. It carries all important data that the General ledger requires to analyse accounts’ functioning.
Thus, it makes GL master data a very important activity for an SAP Finance consultant. You have learned the conceptual part of GL master data in detail. However, you must need to do this in the system to learn how practically things work. So learn SAP FICO with its configuration to get the best clarity on this subject.
