Thursday 2 April 2015

SAP Chart of Accounts

Chart of Accounts in SAP


Definition

A Chart of Accounts represents set of General Ledger (G/L) Accounts in SAP. SAP provides country specific Chart of Accounts in standard configuration. These standard COA's should be considered while creating your new Chart of Accounts.

Importance

As we are aware the G/L Accounts are the backbone of any accounting system. They are the medium for recording all the transactions to be posted. We can't even imagine about booking any transactions without G/L Accounts. This is the reason why the COA which carries enterprise structure level configuration of G/L accounts, becomes very important in SAP. Hence, it is imperative to define appropriate structure for Chart of Account from the beginning of a project. 

Considering above facts about COA, utmost care should be exercised during finalisation of Chart of Accounts.

Implementation Consideration (I)

Creating Chart of Accounts

IMG Path
Financial Accounting (New) > General Ledger Accounting (New) > Master Data > G/L Accounts > Preparations > Edit Chart of Accounts List

While creation of Chart of Accounts, following fields needs to be carefully configured:

Description
Enter appropriate Description of your Chart of Accounts. This description will be displayed whenever we opt for search option.

Maint. Language
The Maintenance Language is mostly EN i.e. English.

Length of G/L
This is very critical part of COA. Here we define the length of G/L Accounts which will become part of this COA. It is advised to have 8 digit G/L Accounts, this helps in segregating the G/L Account numbering according to nature of accounts.

Controlling Integration
As you must be aware, COA is not just assigned to Company Code, but it is also assigned to Controlling Area. The Revenue/Expense G/L Accounts are known as Revenue/Cost Elements in Controlling Area.

This field contains following options:

Manual Creation of Cost Elements
Cost Element for the G/L Accounts are to be created manually after creating a G/L Account.

Automatic Creation of Cost Elements
Cost Element for the G/L Accounts are automatically created upon saving of G/L Account.


Group Chart of Accounts
In case of companies with Group reporting, this field becomes very useful. The Company Code can be it's own COA (operating COA) at the same time a Group COA can be assigned to this operating COA. 

Once group COA is assigned to any operating COA, the field "Group G/L Account" starts appearing in the G/L Account master data. This field helps us to map the operating G/L account with group G/L account.


Status
This section has a radio button "Blocked". This can be used in case no G/L account to be created.

Implementation Consideration (II)

Creating Account Groups

Another important part of COA is Account Groups. Account Groups act as separators between various types of G/L Accounts. 

Account Groups are to be created considering the nature of G/L Accounts. Majorly in following categories:
  • Liabilities
  • Assets
  • Income
  • Expenses
  • Purchase Accounting

The numbering of Account Groups should be designed carefully based on client requirement. A detailed discussion should be made before finalising the number ranges for Account Groups.

Further it is better to ensure enough availability of number range for General Ledgers in future.

Following sample Account Group will help you understand the numbering logic for Account Groups:







Tips

Design the Account Groups in such a way that there is sufficient space for expansion in future. 

The numbering should be in logical order so as to enable use of number ranges for various reports. This allows ease of operation and also avoids missing of G/L Accounts during report execution ;).

The Chart of Accounts is assigned to Company Code and Controlling Area as well. Company Code can be assigned to a Controlling Area only when both have same Chart of Accounts. This is why ensure that you assign same Chart of Account to both Company Code and Controlling Area.



Reference material:




Tags#

SAP Account Group Number Range, SAP Account Groups, SAP Chart of Accounts, SAP COA, 

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I am SAP FICO Consultant with 7+ years of SAP experience having done 4 Projects.