SAP Finance: G/L, A/R, A/P & Balance Sheet

General Ledger (G/L)

• It's a central repository for all financial transactions of an organization
• It is the main accounting record where data is collected from modules within the SAP system
• The general ledger accounts for assets, liabilities, equity, revenue, and expenses
• It provides a complete overview of the organization's financial position and performance

Accounts Receivable (AR)

• AR represents amounts owed to a company by customers or clients
• It tracks invoices and payments due from customers
• It facilitates the effective management of credit sales and cash flow

Accounts Payable (AP)

• They are amounts owed by a company to its suppliers or vendors for goods/services received on credit
• It helps manage a company's cash flow and financial obligations

Balance Sheet

• A financial statement that provides a snapshot of an organization's financial position
• Presents a summary of a company's assets, liabilities, and equity, showing how assets are financed
• Equity = Assets – Liabilities

Profit And Loss Statement

• Summarizes a company's revenues, expenses, and net income over a specific period
• Provides insights into the profitability of the organization's operations during the reporting period

Chart of Accounts

• A list of all general ledger accounts used by an organization to record financial transactions
• Includes asset, liability, and expense accounts

Fiscal Year

• Represents the financial accounting period during which a company conducts its business operations
• It is typically a twelve-month period, but can vary depending on the company's accounting practices

Reconciliation Accounts

• They are intermediary accounts that consolidate balances from sub-ledgers
• They facilitate streamlined financial reporting and reconciliation processes
• Accounts Receivable Reconciliation Account aggregates balances from individual customer accounts
• Accounts Payable Reconciliation Account consolidates balances from vendor accounts

Subsidiary Ledger

• Detailed records that contain specific transactional data related to a particular type of account
• Example: vendor or customer accounts

Financial Statement Version

• Customizable template used to define the structure and layout of financial statements
• Examples: balance sheets, income statements, and cash flow statements
• It tailors financial reports to meet specific reporting requirements and presentation formats

Cost Center

• Organizational unit or location where costs are incurred
• Used for controlling, monitoring, and allocating expenses
• Businesses analyze and manage costs associated with specific activities, departments, or functions
• Facilitates financial control and decision-making

Profit Center

• Specific organizational unit/segment within a company
• Responsible for generating revenue and incurring costs

Internal Orders

• Temporary cost objects
• Used to monitor, track, and manage specific activities, projects, or events
• Companies create internal orders for activities like marketing campaigns, training programs, IT projects, product development, and event planning

Primary Cost Elements

• Represent the basic building blocks of cost accounting
• Directly capture costs associated with specific business activities like raw materials, labor, utilities, and overhead expenses

Secondary Cost Elements

• They allocate and distribute indirect costs across different cost centers or internal orders
• Used for internal allocations and postings within the organization

Statistical Key Figure

• Numeric values used for cost allocations, not direct financial postings
• Examples: number of employees, production hours, or SQFT

Activity Type

• Represent activities/services performed within an organization that incur costs
• Used to allocate overhead costs to cost centers, internal orders, or other objects
• Based on usage of these activities
• Examples: maintenance or IT services

Controlling Area

• Organizational unit that represents a separate accounting entity for cost controlling purposes
• Enables cost analysis, planning, and reporting activities

Operating Concern

• Key organizational unit used in Profitability Analysis (CO-PA)
• Framework for analyzing profitability and performance based on dimensions like products, customers, regions, or sales channels