IT2401 Financial Accounting Quiz and Flashcards (FI)

Study Notes

Designed to collect transactional data for preparing standard reports, primarily for external parties
Reports include balance sheet, income statement, and statement of cash flows

Internal: executives, senior management, administrative staff, and employees
External: legal authorities, banks, auditors, shareholders, insurance, taxing authorities, media, and financial analysts

Client: an independent environment in the system
Company Code: the smallest organizational unit where a legal set of books can be maintained
Chart of Accounts: a classification scheme for general ledger (G/L) accounts used by one or more company codes
Credit Control Area: an organizational entity that grants and monitors a credit limit for customers
Business Area: represents a separate area of operations or responsibilities within an organization

Three types: General Ledger (G/L) accounts, Customer Master Data, and Vendor Master Data
General Ledger (G/L) accounts: data storage area created by the unique combination of Company Code and Chart of Account

Customer and vendor account balances are maintained in FI through fully integrated accounts receivable and accounts payable sub-ledgers
Accounts Receivable Sub-ledger (FI-AR): information concerning customers who purchase the enterprise's goods and services
Accounts Payable Sub-ledger (FI-AP): information concerning vendors from whom the enterprise purchases goods and services

Balance Sheet: presents an organization's assets, liabilities, and equity at a point in time
- Assets: what the company owns
- Liabilities: what the company owes
- Equity: the difference between assets and liabilities
- Formula: Asset = Liabilities + Equity
Income Statement: presents an organization's revenues and expenses for a period
- Revenues: cash inflows due to selling activities or the disposal of company assets
- Expenses: outflows of cash or the creation of liabilities to support company operations
- Formula: Net Income = Revenues - Expenses
Statement of Cash Flows: presents the associated changes in cash over a given period
Audit Trails: allow auditors to trace transactions to the affected account balance(s) on a financial statement

Provides a solid framework for a strong internal control system
Each business transaction impacting FI writes data to the SAP database, creating a uniquely numbered electronic document
The document contains critical information, including responsible person, date and time of the transaction, and commercial content
Financial documents cannot be deleted from the database once written, but can be changed to some degree.