Last Updated on April 24, 2023 by Pradeep
What are Ledgers in SAP S4 HANA?
Ledgers in SAP S4 HANA store different types of accounting documents. With this, the primary responsibility of General Ledger accounting is to provide a comprehensive picture of external accounting and accounts by reconciling all business transactions in the SAP Software system.
Since this system is fully integrated with the company’s other operational areas. Thus, it ensures that the accounting data is always complete and accurate.
Further, the documents stored in ledgers are based on rules of legal accounting and financial statements set by different types of accounting principles in SAP. It helps companies to record and report their financial data in a structured manner.
Standard Total Table
Ledgers for saving and analyzing values are based on the Total Table. SAP recommends that you use the standard total table.
- In ECC the table is FAGLFLEXT
- In S4 HANA the table is ACDOCA
Types of Ledgers in SAP S4 HANA
Ledgers in SAP S4 HANA Finance are of two types. These are the following:-
- Standard Ledgers (Leading or Non-Leading Ledger)
- Extension Ledgers
Standard Ledger in SAP S4 HANA
Standard Ledger includes Leading & Non-Leading Ledger.
Leading Ledger
In New G/L there is one leading ledger for each client that is valid for all company codes. An important decision you need to make is which accounting standard to use in the leading ledger. We cannot deactivate this assignment once we have defined it. You can define only one ledger as the leading ledger. SAP provides the leading ledger 0L as standard.
Example – A leading ledger “0L” for multiple companies codes 1000,2000,3000 & 4000.
Non-Leading Ledger
The non-leading ledgers are used as parallel ledgers together with the leading ledger.
Parallel ledgers are ledgers that we manage in parallel within a general ledger. We can use these to apply different accounting standards such as IAS/IFRS or US-GAAP etc.
Both Classic GL and New GL are standard Ledgers. These are the two ways to implement General Ledger Functionality. By implementing New GL we can get a lot of benefits.
Benefits of SAP New GL
Extended Data Structure provides flexibility
SAP combined multiple total tables of classic GL (old ERP) like GLTO, GLPCT, etc into a single total table i.e. FAGLFLEXT with New GL. This single Table provides flexibility and a faster response time for reporting. Also, we can add customer-defined fields in FAGLFLEXT.
Learn all major Tables in SAP FICO
Segment Reporting
From a statutory requirement point of view, we can define multiple accounting standards by using the New GL functionality that we call Parallel Accounting. Also, the New GL has document-splitting functionality that provides Segment Reporting. However, this functionality is not available in classic GL.
Real-Time Integration between FI and CO
Another disadvantage of classic GL has the period-end close reconciliation ledger functionality to synchronize FI and CO for cost transfers across the functional area, business area, and company code originating in CO. New GL has a real-time integration between FI and CO that occurs with each transaction originates in SAP Controlling. Instead of posting done by reconciliation ledger during period-close.
Parallel Accounting
New GL provides Non-Leading Ledger parallel with Leading Ledgers for parallel accounting like IFRS and GAAP. We can also implement Parallel accounting using an Account-based approach which is also available in classic GL.
Faster Period close is possible with New GL with the following features:
- We don’t need Reconciliation Ledger anymore
- We don’t require to do Balance sheet Adjustments
- Likewise, we also do not require to do Profit and Loss Adjustment
- Activities related to special Purpose Ledger are not required
- Depreciation Posting is online instead of a batch session
Also Read: SAP General Ledger Period-End Closing
Extension Ledger in SAP S4 HANA
While understanding the concept of SAP S4/HANA Finance Ledgers, it is important to know that SAP also introduced Extension Ledgers along with Leading and Non-Leading Ledgers.
Extension ledgers are options that we can for CO reporting. These ledgers staple on top of an Underlying Ledger (Standard Ledgers – can be leading or Non-Leading Ledger ) As a result, there are no data duplications.
As explained above, SAP S/4 HANA Ledgers are of two types- Standard Ledgers (Leading or Non-Leading Ledgers) and Extension Ledgers.
Features of Extension Ledger
We can activate Extension Ledger in S/4 HANA. We can activate standard ledgers in S/4 HANA even if we were not using New GL and not sued Non-Leading Ledgers in SAP ECC. Also, we can activate Extension Ledgers at any period.
Extension Leger stores data in ACDOCA Table only. It does not store Postings specifically made to the standard ledger.
Example – You have your standard Ledger (Leading Ledger) as “0L” and Extension Ledger as “N2”.
- If you post a document to “0L”, The system will update ACDOCA with Leading Ledger posting to “0L” only. However when you try to extract reports like FAGLL03 for ledger “N2”, the system will calculate all postings of “0L” with N2 for balances.
- Further, if you post a document to “N2”, the system will update ACDOCA with ledger postings to “N2” only.
Benefits of Extension Ledger
- Setting up new Extension ledgers is easy. It is not necessary to perform any kind of data migration only the configuration is needed. This is enabled by the extension ledger concept as just inherits the historical data of the underlying ledger. You can activate or deactivate the extension ledger in a productive system anytime during the year without having to migrate data as is the case with the standard ledger.
- All reports supporting standard ledgers work also with extension ledgers. This is also applicable to FIORI apps and classical GUI reports.
- Only Delta values are kept in the extension ledger so reduced the data footprint.
- Can be used for Foreign Currency Valuation.
- Can be used for Predictive Accounting under Marginal Analysis.
Restriction of Extension Ledgers
- We cannot post to vendor or customer reconciliation accounts
- Also, we can’t post with GL accounts with open item management
- Extension Ledger doesn’t have Integration with Asset Accounting
Configuration – The setup of the extension ledger is simple
Please note that the Extension ledger is not a replacement for Non-Leading Ledgers, but it can reduce the use of Non-Leading Ledgers.
Now let us have a comparison of the Standard Ledger and Extension Ledger.
Standard Ledger Vs. Extension Ledger
| Standard Ledger | Extension Ledger | |
|---|---|---|
| While the Extension ledgers are not independent ledgers. They remain always on top of an Underlying Ledger. | We can make postings specifically in the standard ledger i.e posting with Ledger Group. | |
| Posting made to standard ledgers will only be reflected in the standard ledger. | However, Posting made to the standard ledger will form part of reports of extension ledgers linked to a standard ledger. | |
| Total Balance = Balance in Standard Ledger | Total Balance = Balance in Standard (Underlying) Ledger with Balance in Extension Ledger | |
| We cannot activate Standard Ledger at any time in the fiscal year during the migration process. | Similarly, in extension Ledger, we can make postings specifically the extension ledger i.e. posting with Ledger Group. | |
| We cannot activate Standard Ledger any time in the fiscal year during the migration process. | However, we can activate Extension ledgers in S/4 HANA even if you were on classic GL in ECC. | |
| We can create many standard Ledgers for reporting | Many Extension Ledgers can be added on top of the standard ledgers. (N:1 possible) |
Also Read: Accounting vs. Ledger Approach in New Asset Accounting in SAP
Summary
We learnt what are ledgers in SAP S4 HANA and what are their key role in SAP Financial Accounting. We have majorly two types of ledgers with their roles and features.
Further, you understood, that the extension ledger has a special purpose in S4 HANA and those features make it mandatory to learn from an SAP consultant’s point of view.
Finally, you should conclude that ledgers form an important part of SAP S/4HANA Finance and on which many of the accounting processes are dependent.
