1.

SAP R/3 definition and 3-Tier Architecture (Explain with a diagram)

SAP R/3 ARCHITECTURE: R stands for Real time, 3 Represents 3 tier architecture. How it is different from mainframe Architecture SAP R/3 is a Client server model, using 3-tirered architecture The three layers are 1. Presentation Layer - which inputs the data? 2. Applicatiion Layer - which converts the data in to Computer language 3. Database Layer - which stores the data?

2.

What is ASAP methodology? Explain different phases of ASAP methodology?

SAP delivers the accelerated SAP (ASAP) methodology developed By SAP to optimize the success of implementing the SAP Business suite. ASAP streamlines the implementation by providing templates, methods, tools and accelerators that have been built on the success of thousands of previous SAP Implementation. The ASAP methodology adheres to specific road map that address the following five phases: 1. Project Preparation 2. Business Blueprint 3. Realization 4. Final Preparation 5. Go Live & Support

3.

Explain in brief Client / Company / Company Code

Client: A Client is the highest unit within an SAP system and contains Master records and Tables.

Data entered at this level are valid for all company code data and organizational structures allowing for data consistency. User access and authorizations are assigned to each client created. Users must specify which client they are working in at the point of logon to the SAP system.
Company: A Company is the unit to which your financial statements are created and can have one or

many company codes assigned to it. A company is equivalent to your legal business organization. Consolidated financial statements are based on the companys financial statements. Companies are defined in configuration and assigned to company codes. Each company code must use the same COA (Chart of Accounts) and Fiscal Year. Also note that local currency for the company can be different.
Company Code: Company Codes are the smallest unit within your organizational structure and is

used for internal and external reporting purposes. Company Codes are not optional within SAP and are required to be defined. Financial transactions are viewed at the company code level. Company Codes can be created for any business organization whether national or international. It is recommended that once a Company Code has been defined in Configuration with all the required

settings then other company codes later created should be copied from the existing company code. You can then make changes as needed. This reduces repetitive input of information that does not change from company code to company code as well as eliminate the possibility of missed data input.

4.

What is open item management and where it is maintained?

Open items arise from every posting transaction in a contract account and reflect unfinished business transactions. For example, an invoice item that has not yet been paid is recorded as an open item in the contract account until it is paid and cleared. The facility to manage line items on an open item basis enables you to check which receivables and payables are outstanding. In Contract Accounts Receivable and Payable, your accounts must be managed on an open item basis in order to be able to use most procedures (such as dunning or payment). When selected (at the company code level), this setting will allow items in the account to be matched against an offsetting item and closed. The GR/IR account is an example of an account that should be managed on an open item basis.

5.

What is Reconciliation Accounts?

* The reconciliation accounts are maintained in the master record of customers/vendors, so that all postings made to subsidiary ledger are also posted to the G/L. when the items are posted to subsidiary ledger the sap system automatically posts the same data to the G/L a/c's via. Reconciliation a/c in the G/L. *Reconciliation Account is basically Balance sheet account so we can't enter any entry directly to this account. It maintain only for particular Group like For Vendor or customer. *In SAP, users can specify an account type as being a reconciliation account. Each and every sub-ledger account should have a corresponding reconciliation account in the general ledger. SAP automatically posts an entry in the reconciliation account as and when an entry is made in sub-ledger. To take a simple example the "payable account for goods and services" is an example of a reconciliation account for suppliers. In the reconciliation account field, the user should enter vendor. So what is the main use of a reconciliation account in SAP? Well, with reconciliation accounts, one can generate a balance sheet or profit and loss account at any time, since amounts posted in sub-ledger are also reflected in the general ledger. One final note, I personally would advise SAP R3 users to check the balance of reconciliation account and match it with the corresponding sub-ledger account, to ensure that they match.

6.

What is Subsidiary Ledgers?

The concept of vendor subsidiary ledger comes from Accounts Payable (AP) Module. Ex: There is a GL Account "Sundry Creditors" in your GL a/c List. This particular GL account shows the balance of all Vendor a/c which your company operates. So In your balance sheet, TB and other financial statements only the cumulative balance of all Vendors would be displayed. If I ask what could be the breakup of my Sundry creditors by Vendor wise, then I have to go to Accounts Payable sub module which is a sub ledger to your GL Module. In Accounts Payable (Sub ledger) you will find the break up by each vendor wise. so in the above concept we can understand Vendor subsidiary ledger as each vendor a/c in AP.

7.

What is Sort key?

The Sort Key in a G/L determines the parameter according to which various line items are to be displayed in the G/L A/C. It determines ordering of the line items for display. For finding them in a order. There are 37 various types of sort keys in Sap FICO - most Commonly used Sort key are;1) 001 Posting Date

2) 3) 4) 5) 6) 7)

002 003 012 031 027 018

Document No by fiscal year. Document Date. Vendor Number. Customer Number. Value Date. Asset No. etc.

8.

Org. Structure for FI

Client: A Client is the highest-level element of all organizational units in SAP R/3 system. Operating Concern: An operating concern represents an organizational unit in your company for which the sales market has a uniform structure. It is the valuation level for Profitability Analysis (CO-PA). Controlling Area: The Controlling Area is the business unit where Cost Accounting is carried out. Usually there is a 1:1 relationship between the controlling area and the company code. Company Code: A Company Code is a unit included in the balance sheet of a legally-independent enterprise. Balance sheets and Profit and Loss statements, required by law, are created at company code level. The Company Code is the smallest organizational unit for which we can have an independent accounting department. Plant: A plant is the place of production or simply a collection of several locations of material stocks in close physical proximity. A plant is represented by a unique 4-digit alpha-numeric for a specific client.

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Org. Structure for CO

10.

What is difference between FI and CO?

In SAP, FI (Financials), CO (Controlling) are two different modules for accounting. FI is updates for external reporting ( Eg: Balance sheet, P&L statement..etc). Co is used for internal reporting purpose. it helps management making decision about cost.

11.

What is profit center?

A business unit which monitors both costs and revenue and behaves as an independent operating unit. Profit Centers can be viewed as companies within a company. Profit Centers determine internal Profit and Loss for specific areas of responsibility. Profit Centers can divide a company code or multiple company codes according to criteria such as functions, regions or products. Planned data can created at profit center level. Balance sheet items can also be assigned to profit center to enable analysis of key figures like return on investment.

12.

How many account types are there is SAP? List the Account types.
The 6 account types are standard SAP provided which are + - all the accounts type are allowed for posting. A - Assets D - Customer K - Vendor M - Material S- GL Account You cannot create any account type of your own. The posting keys are linked to account types as part of standard package. You can modify the field status of the relevant posting keys.

13.

What is document type? What are the configuration controlling parameters document type has?
Document type is a 2 character key in SAP to differentiate business transactions. Document type configuration controls Number range assigned. Reverse document type This document type will get posted when you reverse the document. You can also control authorization by document type. Account types allowed for the document type Asset, Customer, Vendor, Material, G/L. If document can only be used in batch input Rarely used. Net document type Used for vendor invoices to deduct cash automatically. Cust/Vend Check If checked, only one customer or vendor can be used per document. Negative Postings Permitted This check would allow to enter negative amount. This is particularly useful if you want to correct a document. You can do that by entering negative amount for wrong line item. This saves time by having not to post reversal document and corrected document. Inter-company postings If cross company postings are allowed. Enter Trading Partner Allows manual entry of trading partner. Weather Reference Number and Document header text are required.. You can also specify exchange rate type to be used with document type.

14.

What is the meaning of direct Quotation / Indirect Quotation to maintain exchange rates?
This component enables you to manage exchange rates for each currency pair using direct or indirect quotation. The type of quotation used is dependent on the market standard. You can define the type of quotation per client and currency pair (business transaction). Indirect quotation has not been required until now, because direct quotation was usually used for exchange rates. With the start of the dual currency phase of the European Monetary Union (EMU), indirect quotation is now used within Europe for exchange rates with the euro. Indirect quotation is also becoming more widely accepted internationally. Until now, there were many limitations involved in processing indirect exchange rates.

Direct quotation is where the cost of one unit of foreign currency is given in units of local currency, whereas indirect quotation is where the cost of one unit of local currency is given in units of foreign currency.

15.

GL Account is Master data or Configuration data?

GL Account is Master Data. GL Account Master Data can be created using any one of the following methods: 1. Manually 2. Creating with reference 3. Through Data Transfer Workbench 4. Copying from existing GL accounts Master Data is something that can be reused in transaction processing.

16.

What is Account group? Explain with examples.

In order to organize and manage a large number of G/L Accounts better, they are arranged in account group. So when creating a G/L account, you must specify an account group. The accounts of an account group normally have similar business functions. The account group determines:

the interval in which the account number must be which fields are required and optional entries when creating and changing master records which fields are suppressed when creating and changing master data. It enables you to control the layout of screens. Account groups for G/L accounts are based on the chart of accounts. You use account groups to combine accounts according to the above criteria (for example, a P&L account group, asset account group and material account group). Menu Path : T-Code : IMG > Financial Accounting > General Ledger Accounting > G/L Accounts > Master Records > Preparations > Define Account Group OBD4

17.

What is retained earning account?

Retained earnings account is an Equity account (of a Balance sheet) that records cumulative (from year to year) net income/loss which is retained by the corporation rather than distributed to its owners as dividends. In the closing procedure of financial report (e.g. annually), the balance of Profit & Loss (P&L) Statement accounts are carried forward to a retained earnings account, and the Profit/Loss statement accounts is set to zero. Retained Earning = Retained Earnings from previous period + Net Income Dividends. Menu: Financial Accounting > General Ledger Accounting > G/L Accounts > Master Records > Preparations > Define Retained Earnings Account. T-code : OB53

18.

What is sales area?

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Sales Area is the combination of the Sales: Organization + Distribution Channel + Division.

19.

What is house bank?

A House Bank is a combination of a Bank and a Branch. Account id is the account number. A house bank can have multiple account IDs. General Ledger accounts have to be created for each account ID in the house bank. Bank Account Master data will be maintained by the Finance Department centrally. Each house bank and account ID combination shall have one main general ledger account and several sub accounts mainly based on broad transaction types. These sub accounts are necessary to facilitate automatic bank reconciliation process in R/3 system. Operating bank of client is called House bank. It contains details about bank like bank key, account id, account number, bank country and address of bank.

20.

What is bank key?

BANK key is a registered number given by RBI (in India) to banks (corporate number) it is customized at country level.
21. What are posting keys? State the purpose of defining posting keys?

Two-character numerical key that controls the entry of line items. The posting key determines: Account type Debit/credit posting Layout of entry screens
Purpose:

When you enter a posting, enter a posting key for each item. This key determines how the item is posted. Posting keys are defined at client level and therefore apply to all company codes. The posting key determines: The data you can enter in the line item How data you post is processed How the system updates the data you enter

22.

What are field status groups?

Field Status Group is a configured group to maintain field status for General Ledger Accounts on screen layout. It controls which field should be suppress, display, optional and required. It controls the line items of a document. Field status group is mandatory in gl creation Field status variant is assigned to company code. There are two types of fields status viz., 1. Field status group: Controls fields of document entry. These fields can be made suppress, required and optional only based on priority. These fields can also be controlled by using posting key field status based on suppress, required and optional priority. 2. Account group field status: Controls fields of G/L Account group only. G/L Accounts created under this group will have only those fields which are maintained for that group. These fields can be made suppress, display, required and optional. Priority being S,D,R,O.

3. Customer group field status: Controls fields of customer master records of particular Customer group. In other words, this maintains the sub ledger. These fields can be made suppress, display, required and optional. Priority being S,D,R,O. likewise for Vendor group field status.

23.

What is chart of depreciation and depreciation area?

Charts of depreciation are used in order to manage various legal requirements for the depreciation and valuation of assets. These charts of depreciation are usually country-specific and are defined independently of the other organizational units Country-specific charts of depreciation In the simplest scenario, all of your company codes are in the same country and are subject to the same legal requirements for asset valuation, meaning that you only need one chart of depreciation. You must assign every company code defined in Asset Accounting to exactly one chart of depreciation. The depreciation areas are identified by two-digit numeric keys. Depreciation Areas You use depreciation areas to calculate different values in parallel for each fixed asset for different purposes. For example, you may require different types of values for the balance sheet than for cost accounting or tax purposes. You manage the depreciation terms and values necessary for this valuation in the depreciation areas of each asset. Since the system allows you to define up to 99 depreciation areas, you can manage many different types of valuation (Customizing: Valuation). Depreciation areas are grouped together, according to the requirements of a specific country or economic area, into a chart of depreciation.

24.

What is Asset Class?

Asset classes are the most important means of structuring fixed assets. You can define an unlimited number of asset classes in the system. You use the asset classes to structure your assets according to the requirements of your enterprise. Asset classes apply in all company codes. The asset class catalog, therefore, is relevant in all company codes in a client. The main criterion for classifying fixed assets according to legal and management requirements. For each asset class, control parameters and default values can be defined for depreciation calculation and other master data. Each asset master record must be assigned to one asset class. Special asset classes are, for example: Assets under construction Low-value assets Leased assets Financial assets Technical assets

25.

Where we define depreciation method?

IMG>Financial Accounting > Asset Accounting > Depreciation > Calculation Method (under this 1) Define Base method 2) Define Decline-Balance Method 3) Define Maximum Amount Method 4) Define Multi-Level Method - (AFAMS) 5) Maintain Period Control Methods (AFAMP)

26.

Do we assign reconciliation account is Asset master?

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No, Reconciliation a/cs( also called Control A/cs in pure accounting) are the net figures for items such as Drs and Crs of an organization. since it would not be possible to show the complete list of all vendors in the B/S, a recon a/c is maintained for the purpose. However, the main feature of a recon a/c is that the debits MUST equal the credits in each entry, and so no mistakes in entries are possible (at least mathematically). Only if the organization has a handful of suppliers and customers is it advised that no recon a/c is opened.

27.

What is posting period variant? In which transaction we configure the same?

Posting period is a period within a fiscal year, such as a particular month, for which SAP transaction figures are updated. Every SAP transaction that is posted is assigned to a particular posting period. The transaction figures are then updated for this period. By dividing a fiscal year into some posting periods, we can restrict that at a point of time we can only post to a certain periods, so we can do the closing process. After performing a closing procedure at the end of a certain period, we can then restrict that we cannot post to the previous period, so (as usually required by management and law) the figure of our financial statement at the end of that period stays the same, does not change since then. Usually we will open the current posting period (such as the current month) and will close all other periods. At the beginning of the next month, we need to close the previous posting period and open the current month as allowed posting period. We open a period by entering a range into the posting period variant which includes this period. We can have as many periods open as we desired, depends on our accounting requirement. To make posting periods maintenance easier, SAP uses the variant concept. We can make a posting periods variant that can be used by several company codes, so we only have to open and close the posting periods once for all the company codes that use the same posting periods variant. IMG:>Financial Accounting (New) > Financial Accounting Global Setting (New) > Ledger > Fiscal Year and Posting Periods > Posting Periods > Open and Close Posting Periods T-code : OB52

28.

What is fiscal year variant?

The fiscal year variant contains the number of posting periods in the fiscal year and the number of special periods. You can define a maximum of 16 posting periods in the Controlling component (CO). You define the fiscal year variant during customizing of the Financial Accounting component (FI) in the Implementation Guide (IMG). You must also define which fiscal year variant is used in the company code. Fiscal year is variant is created at company code level. When you create a controlling area, you must also specify the fiscal year variant. The fiscal year variants used by the controlling area and the corresponding company codes can only differ in the number of special periods used. You must ensure that the fiscal year variants use the same number of equally-defined standard periods. You assign a company code using a fiscal year variant with 12 posting periods and 4 special periods to a controlling area using a fiscal year variant with 12 posting periods and 1 special period. However, you cannot assign it to a controlling area with 52 posting periods. You can use V3 & K4 are available already in SAP. IMG->Financial Accounting->Global Settings->Fiscal Year->Maintain Fiscal Year Variant T-Code : OB29

29.

Customer credit limit defined at company code level or credit control area level?
You can assign a credit limit to a group of customers, as well as to an individual customer. If a company has different branches, you would define the credit limit for just one customer in this group (the head office) and this customer account then becomes the credit account. Credit limits are normally specified by credit management

staff in the individual customer master records. You can specify individual credit limits for each credit control area. You can expand your credit control for a customer by specifying a central credit limit for all credit control areas to which that customer is assigned. The total of the limits at the level of the credit control area must not exceed the total limit for all credit control areas. The credit limits at the control area level are checked during sales order processing. Credit and risk management takes place in the credit control area. According to your corporate requirements, you can implement credit management that is centralized, decentralized, or somewhere in between. - For example, if your credit management is centralized, you can define one credit control area for all of your company codes. - If, on the other hand, your credit policy requires decentralized credit management, you can define credit control areas for each company code or each group of company codes. Credit limits and credit exposure are managed at both credit control area and customer level. You set up credit control areas and other data related to credit management in Customizing for Financial Accounting. For more information, see the IMG> Enterprise Structure > Definition or > Assignment > Financial Accounting and then > Maintain credit control area. You assign customers to specific credit control areas and specify the appropriate credit limits in the customer master record.

30.

What is financial statement version? (OB58)

A FSV (Financial Statement Version) is a reporting tool and can be used to depict the manner in which the financial accounts like Profit and Loss Account and Balance Sheet needs to be extracted from SAP. It is freely definable and multiple FSVs can be defined for generating the output for various external agencies like Banks and other Statutory authorities. T-Code: OB58 Financial Accounting > General Ledger > Periodic Processing > Closing >Reports > General Ledger Reports (New)> Financial Statement/Cash Flow> General > Actual/Actual Comparisons > Financial Statement T Code :- S_ALR_87012284

31.

What is Material Period? What is the transaction code used to execute the same?
You can execute period closing up to the end of the current fiscal year. The period closing program updates the administration record, thus ensuring that the stock data of the material master are updated. If, for example, you want to close your periods up to 12/1999, you are not allowed to post values in 10/1999. Therefore, if you still want to make postings in period t, you should execute period closing only for a maximum of t+1 periods. First of all, you should check to which period the period closing was executed. This ensures that you can subsequently carry out period closing for the remaining periods of the current fiscal year. Menu path IMG> Logistics->Materials Management->Material Master->Other-> Close Period T-code: - MMPV

32.

What is Valuation class? State the usage of valuation class in FI-MM integration?
Valuation class it is used in FI and MM integration. It determines the g/l accounts to be posted automatically (Ex Raw material or Finished goods). The Valuation Class in the Accounting 1 View in Material Master is the main link between Material Master and Finance. This Valuation Class along with the combination of the transaction keys (BSX,WRX,GBB,PRD ) defined above determines the GL account during posting. We can group together different materials with similar properties by valuation class. Eg Raw material, Finsihed Goods, Semi Finished. We can define the following assignments in customizing : All materials with same material type are assigned to just one valuation class. Different materials with the same material type can be assigned to different valuation classes. Materials with different material types are assigned to a single valuation class. Valuation classes are linked to valuation class in T code OBYC.

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33.

What is primary and secondary cost element? Tell me the categories?

Primary Cost Elements are those which are created from FI general Ledger Accounts and impact the financial accounts e.g. Travelling expenses, consumption account infarct, any Profit and Loss GL account. 1 = 09Primary costs/cost-reducing revenues. 3 = 09Accrual/deferral per surcharge. 4 = 09Accrual/deferral per debit =3D actual. 11 = 09Revenues. 12 = 09Sales deduction. 22 = 09External settlement. 21 = 09Internal settlement. 31 = 09Order/project results analysis. 41 = 09Overheads. 42 = 09Assessment. 50 = 09Project-related incoming orders: Sales. 51 52 61 = = = 09Project-related incoming orders: Other. 09Project-related incoming orders: Costs. 09Earned value.

You can also use the cost element master report to see the cost element category defined for each cost element Report T Code is KA23.

34.

What is secondary cost element? Tell me the categories?

Secondary Cost Elements are those which are created only in controlling and do not affect the financials of the company. It is used for internal reporting only. The postings to these accounts do not affect the Profit or Loss of the company. The following categories exist for secondary cost elements: 1. Internal Settlement: Cost elements of this category is used to settle order costs to objects in controlling such as cost centers, pa segments etc. 2. Order/Results Analysis: Used to calculate WIP on the order/project 3. Overhead: Used to calculate indirect costs from cost centers to orders 4. Assessment: Used to calculate costs during assessment 5. Internal Activity Allocation: Used to allocate costs during internal activity allocation such as Machine Labor etc

35.

What is price indicator in material master?

If SAP R/3 PP and CO modules are implemented and customized in your system, the materials which are consumed and/or manufactured during production (such as raw materials, semi-finished products, products, etc.) are generally created with the price indicator "S". You may say that those are the materials in your bills of material (BOMs). On the other hand, the materials that are indirectly consumed during the production of other materials are generally created with the price indicator "V".

36.

What is chart of accounts? At what level we create Chart of Accounts?

This is a list of all G/L accounts used by one or several company codes. For each G/L account, the chart of accounts contains the account number, account name, and the information that controls how an account functions and how a G/L account is created in a company code. You can use the same chart of accounts for all company codes. If the company codes all have the same requirements for the chart of accounts set up, assign all of the individual company codes to the same chart of accounts. This could be the case if all company codes are in the same country.

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Chart of Accounts are created at client level

37.

What is profit center hierarchy?

A special type of profit center group. The standard hierarchy is a tree structure which contains all profit centers in a controlling area and reflects the organizational structure used in Profit Center Accounting. You should only perform the steps below if the enterprise organization is not active in the controlling area. 1. here are two places where you can create/change the structure of the standard hierarchy:
o

in the Profit Center Accounting application menu, under Master Data Create/Change/Display Standard Hierarchy.

in Customizing for Profit Center Accounting, under Master Data Profit Center Maintain Standard Hierarchy.

38.

What is cost center hierarchy?

Before cost centers can be created, a cost center hierarchy must be defined. This is referred to as standard hierarchy. The highest node in the standard hierarchy is assigned to the controlling area, which sets it apart from any other (alternative) cost center hierarchies. Each time a cost center is created, it is assigned to a cost center group within the standard hierarchy. A strong cost center hierarchy is necessary for analyzing your companys performance. If your structure is not meeting your needs, try this 11-step process to develop a new, more effective cost center hierarchy. This process is best suited for small- to medium-sized companies. Cost Center hierarchy Allows the user to design financial report templates according to their special needs. To access this window, choose Financials > Cost Accounting > Cost Center Hierarchy.

39.

What is the highest hierarchy level in SAP? Define this term and explain how it is used in the SAP system.
The Client is the highest level in the SAP organizational structure. Anything specified for a Client applies to all Company Codes that are attached to that Client. Clients have a one-to-many relationship with Company Codes. Clients are generally not reported on with balance sheet and P&Ls, the company codes are the legal entities and serve for this purpose. However, clients can be reported on as part of consolidation or extended G/L.

40.

What is a credit control area? Describe its relationship to company codes?

A credit control area (CCA) is used to set and control credit limits for customers. They include one or more company codes. There can only be one CCA per company code. Customers in several company codes can exist under several CCAs. As part of credit management, an individual customers credit limit is set based on an individual credit control area or across several credit control areas.

41.

State the number of views in Customer master data / GL master data / vendor master data?

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