SAP FICO Interview Question & Answers

SAP FICO Interview Questions & Answers

What is financial accounting?

SAP FI stands for Financial Accounting and it is one of important module of SAP ERP. It is used to store the financial data of an organization. SAP FI helps to analyze the financial condition of a company in the market. It can integrate with other SAP modules like SD, PP, SAP MM, SAP SCM etc.

Why do we use SAP FI?

SAP Financials accounting module enables you to manage financial accounting data within an international framework of multiple companies, currencies, and languages. SAP FI module mainly deals with the below financial components −

Fixed asset
Accrual
Cash journal
Accounts receivable and payable
Inventory
Tax accounting
General ledger
Fast close functions
Financial statements
Parallel valuations
Master data governance

What are the different submodules in SAP FI?

General Ledger
AR/AP
Banks
Fixed Assets
Travel Management
Lease Accounting, etc.

What is General Ledger in Finance accounting?

A General Ledger contains all the transaction details of a company. It acts as primary record to maintain all accounting details. Common general ledger entries are customer transactions, purchases from vendors, and internal company transactions.

What is a Company in SAP FI? What does it consists of?

A company is defined as smallest unit for which financial statements can be created in accordance with commercial legal regulations.

In SAP FI, a company can comprise of multiple codes, however it acts as a single unit for which financial statements are available. All the company codes must use the same chart of accounts list and fiscal year however each code can have a different local currency.

How do you manage transactions that comes from different line of business in a company?

Business Areas are used to differentiate transactions that comes from different line of business in a company.

Example

There is a big company XYZ, which runs multiple business. Let us say it has 3 different domains like manufacturing, marketing and sales.

Now you have 2 options −

First is to create different company codes
And other better option is to create each of these business lines into business areas,

What are the benefits of using Business areas in a company?

You can use these business areas if other company codes require the same areas

It is easy to configure if you use Business Area as you just need to attach to the company code and the other details in business area will get attach itself.

By using Business areas in controlling, you can create Profit and loss statement, Balance sheet, etc. for business areas so this is used for management accounting in few companies.

Note − Business areas are more used in Controlling as compare to Finance Accounting.

How do you manage credit limit for the customer in FI?

Credit control in FI is used to check the credit limit for the customer and it can use one or more codes. It is used for credit management in Application components- Account Receivable (AR) and Sales and Distribution.

The credit control area is determined in the following sequence −

User exit
Distribution channel
Customer master
Company code for the sales organization

What is Chart of accounts? What are the different types of COA in FI?

The FI chart of accounts represent the list of GL accounts that are used to meet daily needs and country’s legal requirement in a company. The master chart of accounts must be assigned to each company code.

Chart of accounts COA can be divided into below types −

Operating Chart of Accounts

It contains all General Ledger accounts that are used to meet daily needs in a company. Operating chart of accounts has to be assigned to a company code.

Country Chart of Accounts

It contains list of all General Ledger accounts that are required to meet country legal requirements. You can also assign company chart of account to company code.

In your company you have large number of G/L accounts, how can you manage them effectively?

You can create SAP FI chart of accounts group as per the requirement. To effectively manage and control large number of G/L accounts, you should use COA groups.

If you want to carry forward the balance from one fiscal year to next fiscal year. Which account type you should use?

Retained Earnings Account are used to carry forward the balance from one fiscal year to next fiscal year. You can assign Retained Earning account to each Profit and loss account P&L account in the chart of accounts COA. To automatically carry forward the balance to next fiscal year you can define P&L statements as per COA and assign them to retained earning accounts.

What are the different steps involved in G/L posting?

After you complete the payroll run, next is to add results to the GL accounts and this includes cost centers. GL posting includes the below steps −

Groups together posting-relevant information from the payroll results.
Creates summarized documents.
Performs the relevant postings to appropriate GL accounts and cost centers.

What is the use of fiscal year variant? How many variants you can use?

It contains the number of posting periods in fiscal year and number of special periods. You can define up to 16 posting periods in a fiscal year in controlling component CO.

You need to specify the fiscal year variant for each company code. When you create a controlling area, you also need to specify the fiscal year variant.

The fiscal year variants of the company code and controlling area may only differ in the number of special periods used. You need to ensure that the fiscal year variants match, in other words, they may not have a time conflict.

What is the use of posting period variants?

SAP FI Posting period variant is used to maintain accounting periods that are open for posting and all closed period are balanced. This is used for opening and closing period in fiscal year for posting purpose.

You can assign these posting periods to one or more company codes.

What is difference between field status variant and field status group?

Field status variant will have filed status groups. Filed status group is maintained in GL account and It defines the field’s while posting to the GL.

What are the different account types in SAP FI? How do you identify account types?

Posting Keys in SAP FI is used to determine Account types (A, D, K, M, and S) and also the type of posting. It is 2 digit numerical key.

Different Account Types in SAP FI −

A = Assets
D = Customers
K = Vendors
M = Materials
S = General Ledger Account

Why do we use document type in business transactions?

Document type key is used to distinguish between different business transactions and to classify accounting documents.

Document types key is used to determine number range for documents and account types like-asset, material, vendor, etc. for posting.

What are the common document types in FI?

Common Document types Key are −

Document TypeDocument Type DescriptionAAAsset PostingANNet Asset PostingDRCustomer InvoiceDZCustomer PaymentKAVendor DocumentKGVendor Credit Memo

When G/L document is not complete and you want to save the document at later stage, how can you manage this in FI?

You can also hold posting of a G/L document or temporarily save the document in below conditions −

When G/L document is not complete
Incomplete/Incorrect Information in the document
To save the document at later stage

In case you want to feed a document with an amount of $5000 for which you don’t have the authority. To post G/L account with amount, how can you do this?

SAP FI also provides an option with Limited Authorization Amount for Posting.

Example

An Accountant has an authority to post documents to a maximum amount $2000, now he has to feed a document with an amount of $5000 for which he does not have the authority.

SAP FI provides a Park Facility for the document which allows the user to save the document but the amount is not posted in the G/L accounts.

This allows to review the document later reviewed by higher authority Personnel who has appropriate posting amount authorization. Once approved, the document is posted in G/L accounts.

Explain the most common G/L reports in FI?

There are various G/L reports that can be generated in SAP FI. Most common are −

G/L Chart of Accounts List
G/L Account Balances
G/L Account List
G/L Account Totals and Balances

What is the use of Account Receivables in FI?

SAP FI Accounts Receivable component records and manages accounting data of all customers. It is also an integral part of sales management.

All postings in Accounts Receivable are also recorded directly in the General Ledger. Different G/L accounts are updated depending on the transaction involved (for example, receivables, down payments, and bills of exchange).

What do you understand by company and company code?

A company is the organizational unit used in the legal consolidation module to roll up financial statements of several company codes. The Company Code is the smallest organizational unit for which a complete self-contained set of accounts can be drawn up for purposes of external reporting.

Explain the relationship between company code and controlling area?

A controlling area may include one or more company codes which must use the same operative chart of accounts as the controlling area. A Controlling Area can contain multiple company code assignments but a single company code can be assigned to only one controlling area.

It is recommended to copy the company codes or it is advisable to create them manually?

There are loads of tables that get copied over when copying company codes. This might be incomplete in a manual copy, and hence the manual route is not advisable.

Explain blocking a customer in FI?

You can block a customer account in AR so that postings are no longer made to that account. You have to block a customer account before marking a customer master record for deletion.

Example

You would also block a customer that you use only as an alternative dunning recipient, so that nobody can post to that customer by mistake.

In Sales and Distribution (SD) application component, you can set the following blocks for a customer −

Posting block
Order block
Delivery block
Invoicing block

What are the different accounting groups that can be created in Account Receivable in SAP FI?

There are different types of customer account group that can be created in Account Receivable in SAP FI.

GroupNameX001Domestic CustomersX002Export CustomersX003One Time Customers

Which scenarios you can use document reversal?

You can also reverse an incorrect document and can also clear the open items. A document can only be reversed if −

It contains no cleared items
It contains only customer, vendor, and G/L account items
It was posted with Financial Accounting
All entered values (such as business area, cost center, and tax code) are still valid

What is the use of Sales returns in FI?

Sales Returns in SAP FI is used to manage full products that the customer has returned due to a complaint. These are used in consumer good industry.

All returns are related to quality defects and not incorrect deliveries. The path that the returned merchandise takes often has to be tracked in detail. Returned item has to be sent for inspection.

How can you manage partial payment from customers in FI?

In SAP FI, you can also post partial payments from customer. These partial payments are posted as separate open items.

Customer can see clearly what all invoice has been issued to customer and what payments he has made. But it keeps the multiple open items, until the invoice is fully paid/ cleared.

Example

There is a customer with an outstanding amount of 1500 and makes a payment of 500 as partial payment then there will two separate open items of 1500 Debit and 500 Credit in FI system and there will be no clearing document is created.

If a payment is made to incorrect invoices then it can be reset?

In SAP FI, this is used to reset the incorrect payment invoices. If a payment is made to incorrect invoices then it can be reset.

How do you define credit control area in FI?

T-code: FD32

What is the use of Account payable in FI? How it is related to G/L?

SAP FI Accounts payable is used to manage and record accounting data for all the vendors. All invoices and deliveries are managed as per vendor requests. Payables are managed as per payment program and all payments can be made using checks, transfer, electronic transfers, etc.

All the postings that are made in Account Payable are also updated in General Ledger simultaneously and system also maintains forecasts and standard reports that can be used to keep track of all the open items.

How do you log changes and generate change documents in FI?

When you change a master record, the system logs these changes and generates change documents. For each field, it stores the time of change, the name of the user, and the previous field contents.

Go to Accounting → Financial Accounting → Accounts Payable → Master Records → Display Changes

Which of the fields you can display and log changes in FI?

When you change a master record, the system logs these changes and generates change documents. For each field, it stores the time of change, the name of the user, and the previous field contents.

You can display all the changes for the following −

A certain field
A master record

For several vendor master records, following changes are displayed separately −

Overwritten field contents
Any bank details and/or dunning areas entered after the master record was created
Any bank details and/or dunning areas that have been deleted
Using the change documents, you can find all the changes that are made and when they were made.

What are the different block that you can apply to a vendor account?

You can apply below blocks −

Posting block for certain company codes or for all company codes
Purchasing block for certain purchasing organizations or for all purchasing organizations. This is of course only if you have purchased and installed the purchasing application component.

How do you manage outgoing partial payment for vendor in FI?

In SAP FI, you can also post outgoing partial payments for vendor. Partial payment from vendor will be open as open item and no clearing document will be generated.

What is automatic payment program?

Automatic Payment Program serves the purpose of posting accounts payable like payment to a vendor based on vendor invoices automatically, shortly termed as APP.

It is used to find out due/overdue invoices and to process list of customer and vendor invoices to make payments in one go. APP can’t be used for all company codes from different countries.

APP has below categories −

Setup all company codes
Setup paying company codes
Payment method per country
Payment method per country code
Bank Selection
House Bank

What are the common activities performed in month end closing in SAP FI?

In SAP FI, month end closing involves activities in posting a closing period. You can carry out the following activities as part of month-end closing −

Open and close posting periods
You close one or more posting periods in the past for posting, and permit posting to be made to one or more current or future posting periods.

What is dunning in FI? What are the requirement of using Dunning?

In SAP FI, If customer misses the payment for the outstanding invoice by payment due date You can generate dunning letter using SAP FI and send it to customer address for reminding the customer outstanding payment.

Requirement −

The dunning system enables to trace liable customers who have not paid their open invoices within a given time span. It enables you to handle the process from, for example, sending a reminder to customers of their outstanding payments through to referring such customers to collections agencies.

The dunning system covers below documents −

Open A/R invoices, including invoices that are partially credited or partially paid
Invoices that include installments
A/R credit memos
Incoming payments that are not based on invoices

How do you manage relationship between two currencies in SAP FI?

Exchange Rates are used to define relationship between two currencies and also to maintain exchange rates are used to translate an amount into another currency.

You define exchange rates in the system for the following purposes −

Posting and Clearing

To translate amounts posted or cleared in foreign currency, or to check a manually entered exchange rate during posting or clearing.

Exchange Rate Differences

To determine gains or losses from exchange rate differences.

Foreign Currency Valuation

To valuate open items in foreign currency and foreign currency balance sheet accounts as part of the closing operations.

Explain the process steps of Invoicing in Contract Accounts Receivable and Payable?

Data Selection

In data selection, the invoicing orders are selected for the invoicing process. You define the selection criteria for the data selection for the invoicing process.

Creation of Invoicing Units

The invoicing orders selected are grouped into invoicing units for each contract account. You can create several invoicing units for each contract account. For each invoicing unit, "Invoicing in Contract Accounts Receivable and Payable" creates one invoicing document.

You define the criteria for creating the invoicing units for the invoicing process.

Processing of Billing Documents

The billing documents selected for an invoicing unit are included in the invoicing document. The billing document items are linked with the items of the invoicing document, and the derivations required for the posting in "Contract Accounts Receivable and Payable" (FI-CA) are performed.

Performance of Additional Functions

In addition to processing billing documents, in "Invoicing in Contract Accounts Receivable and Payable" , you can integrate further functions of FI-CA. For example, interest calculation, creation of dunning proposals, or the calculation of charges and discounts. You define which additional functions are performed for each invoicing process.

Account Maintenance

Using the account maintenance integrated in "Invoicing in Contract Accounts Receivable and Payable" , you can perform clearing between the posting documents entered in Invoicing and the open items of the contract account posted before invoicing. You define the criteria for clearing in the clearing control.

Update

The invoicing document created for the invoicing unit and the posting documents are written to the database. The invoicing orders processed are deleted.

As well as the invoicing unit, a correspondence container for invoice printing and an extraction order for the update to BW are created.

What are the common types of reports that can be used for Account Analysis (A/R)?

There are many types of reports that can be used for account analysis (A/R) −

Customer Line Item Analysis
Balance Analysis
Customer Evaluation Report

What is the use of FI-Asset Accounting component?

The FI-Asset Accounting (FI-AA) component is used for managing the fixed assets in FI system. In Financial Accounting, it serves as a subsidiary ledger to the General Ledger, providing detailed information on transactions involving fixed assets.

Integration with other components −

As a result of the integration in the SAP System, Asset Accounting (FI-AA) transfers data directly to and from other SAP components.

What do you understand by cost center, profit center in Controlling?

A Cost center is defined as a component in an organization that adds to the cost and indirectly adds to profit if the organization. Examples include Marketing and Customer Service.

A company can classify business unit as profit center, cost center or an investment center. The simple and straight forward division in an organization can be classified as cost center as cost is easy to measure.

SAP CO-Profit center is used for managing internal controlling. When you dividing your company into profit centers, it allows you to delegate responsibility to decentralized units and allows you to treat as separate companies in a company.

Why do we create Profit Centers in Controlling?

The main aim of creating a Profit Center in Controlling is to analyze the cost of a product line or a business unit.

You can also generate profit and loss accounts according to Profit Center and also generate balance sheets however Profit center should only be used for internal reporting purposes.

The key components of a profit center includes - name of the profit center, the controlling area under which it is assigned, time period, person responsible for the profit center, standard hierarchy, etc.

What do you understand by Product costing in SAP Controlling?

SAP CO-Product Costing module is used to find the value of internal cost of products. It is also used for profitability and management accounting for production.

While configuring Product Costing, it involves two areas for setting −

Product Cost Planning
Cost Object Controlling

The basics of Product Costing is Cost Center Planning. The goal of cost center planning is to plan total dollars and quantities in each Cost Center in a Plant.

How do you perform Profitability analysis in SAP CO? What are the different types of profitability analysis?

SAP CO-PA is used to analyze the market segments classified as products, customers, sales area, business area, etc.

SAP CO Profitability Analysis (CO-PA) is used for the evaluation of Market segments, which is classified according to −

products, customers, and orders
or any combination of these
or Strategic business units such as sales organizations
or business areas, with reference to company's profit
or contribution margin

There are two types of Profitability Analysis are supported −

Costing-based
Account-based

Costing-based Profitability Analysis −

It is used to group the costs and revenues as per the value fields. It is used to ensure that you access at all times to a complete, short-term profitability report.

Account-based Profitability Analysis −

It is used to provide you with a profitability report that is permanently reconciled with financial accounting.

It is mainly used for getting information related to sales, marketing, product management and corporate planning departments to support internal accounting and decision-making.

What do you understand by SAP Cost Center? Explain with the example?

A Cost center is defined as a component in an organization that adds to the cost and indirectly adds to profit if the organization. Examples include Marketing and Customer Service.

How do you create Cost Center in system? What are the requirements?

To create a cost center in system, you need to define a cost center hierarchical structure. The structure of Cost center and its characteristic depend on the accounting objective and on the system you want to use to maintain accounting.

What are the benefits of using Cost Center Accounting?

Following are the key uses to create cost centers and performing cost center accounting in an organization −

Cost center is used to align overhead costs to activities performed in an organization. It is possible to assign different activity type to a cost center.
You perform cost center accounting to manage cost in the organization and to check profitability of each functional area and decision making data.
You can manage and analyze the overhead cost in an organization and to verify if they are incurred in the organization activities.
When you plan costs at cost center, this allows you to check the cost efficiency at the point when cost are incurred in the organization.
You can directly assign the cost to cost centers for products, services and market segments which are involved in performing these activities.

What is Cost Center Hierarchy?

In cost center hierarchy, at the top you have organization which is further divided as per the functional areas. Each Functional area are further divided into sub areas and can be further divided as per activities performed.

What are the different types of data in SAP system?

In SAP system, you generally have two types of data −

Transaction data

Transaction data keeps on changing in system and is stored in line item tables.

Master data

You can use the following functions to create, change master data −

Cost Center
Cost Elements
Activity Types
Key Figures
Resources

What is Cost element?

Cost element is known as cost relevant item in Chart of Accounts.

What are the different types of Cost elements?

Primary Cost Elements

A Primary cost element is defined as elements for which General Ledger Account G/L exists in Finance Accounting FI.

Common primary cost element includes −

Personnel Costs
Material Costs

Secondary Cost Elements

These elements are maintained in Cost Accounting. To create a secondary cost element, system checks account already exists in Financial Accounting and if an account exists, secondary cost element can’t be created.

Common examples of secondary cost elements −

Cost element for Order settlement

What is direct and In-direct posting?

Cost element category is used to define if you can post to cost element directly or not. When you post a fixed amount to a cost elements by mentioning account number, it is called direct posting. In direct posting, you can post directly to all primary cost elements by specifying the account number. When you can’t enter account number with posting transaction and system determines account at the time of posting automatically, this is known as indirect posting.

What is an Activity Type? For each Work Center what are different activity types that can be performed?

Activity type is defined as activity performed in cost center within controlling area. For each cost center, you perform the following activities −

Activities performed by the cost center.
Cost are debited to products when they use the activities of the cost center.
In Cost Center accounting, to plan and allocate the activities, system records quantities that are measured in activity units. Each activity in a cost center contains activity types and if the cost can be allocated to these activity types.
When you create the activity types, prices of these can be entered manually or this can be calculated in system as per the cost allocated. The cost planning, allocation and control can be performed while defining activity or can also be performed at cost center.

What is Key figure?

Key figures can be defined as fixed values and total values. All the key figures that you define as fixed values they are available for positing in full fiscal year.

Key figures defined as total values are available only for posting in the defined period.

How do you define Key figures in SAP system?

Key figures can be defined manually or you can also transfer it automatically from the information system of SAP system application.

What do you understand by Resources? What are the different resource type?

Resources are used to perform quantity based cost planning for cost centers, orders and WBS element. In SAP system as per the available data, you can select from the following resource type −

Type R for overhead cost controlling
Type M represents for Material type
Type B refers to base planning objects

What is the structure of Resource master data type?

The structure of resource master data contains the following fields −

Resource key
Purchasing organization
Resource type
Validity period of the resource
Plant
Resource units
Cost element
Resource name
Material
Base object costing

What is the Transaction Code to create a Cost Center?

To create Cost center, you can use T-code: KS01

What is Cost Center Group?

You can divide cost center in cost center groups. In system, it should have at least one group that contains all cost centers and represents the entire business organization. This cost center group is described as the standard hierarchy. You can assign more cost center groups to the standard hierarchy.

Is it possible to assign a Cost Center to multiple cost Center group?

No, in standard hierarchy, you can only assign each cost center to one group.

Why do we create an Internal Order?

You can create an internal order to monitor the costs of a time-restricted job or the costs for the production of activities. Internal orders can also be used for the long-term monitoring of costs.

What is difference between Investment Order, Internal Order and Accrual Orders?

You can create an internal order to monitor the costs of a time-restricted job or the costs for the production of activities. Internal orders can also be used for the long-term monitoring of costs.

Investment cost related to fixed assets are monitored using Investment orders.

Period-related accrual calculation between expenses in FI and the costing-based costs debited in Cost Accounting are monitored using Accrual orders.

What do you understand by Profit Center?

Why do we create Profit Centers? What are the key components of Profit Center?

The main aim of creating a Profit Center in Controlling is to analyze the cost of a product line or a business unit.

You can also generate profit and loss accounts according to Profit Center and also generate balance sheets however Profit center should only be used for internal reporting purposes.

The key components of a profit center includes- name of the profit center, the controlling area under which it is assigned, time period, person responsible for the profit center, standard hierarchy, etc.

What are the key differences between Cost Center, Profit Center and Internal Order?

Cost Center

A Cost center is defined as a component in an organization that adds to the cost and indirectly adds to profit if the organization. Examples include Marketing and Customer Service.

Cost center is used to align overhead costs to activities performed in an organization. It is possible to assign different activity type to a cost center.
You perform cost center accounting to manage cost in the organization and to check profitability of each functional area and decision making data.
You can manage and analyze the overhead cost in an organization and to verify if they are incurred in the organization activities.
When you plan costs at cost center, this allows you to check the cost efficiency at the point when cost are incurred in the organization.
You can directly assign the cost to cost centers for products, services and market segments which are involved in performing these activities.

Profit Center

Profit Center is part of Enterprise Controlling module and is integrated with new General Ledger Accounting.

Profit Center Accounting is used to determine profit for internal areas of responsibility. It lets you determine profits and losses using either period accounting or the cost-of-sales approach
It allows you to analyze fixed assets by profit center, thus using them as investment centers. This makes it possible to expand profit centers to investment centers.

Internal Order

SAP CO internal order monitor the parts of the costs and in few cases, the revenues of the organization.
You can create an internal order to monitor the costs of a time-restricted job or the costs for the production of activities. Internal orders can also be used for the long-term monitoring of costs.
Investment cost related to fixed assets are monitored using Investment orders.
Period-related accrual calculation between expenses in FI and the costing-based costs debited in Cost Accounting are monitored using Accrual orders.
Costs and revenues incurred for activities for external partners or for internal activities that do not form part of the core business for your organization are monitored using order with revenues.

Why do we perform Cost Center Planning?

You perform Cost Center planning to achieve following functions −

To Plan the structure
To control and monitor business growth
To perform target comparison-plan/actual or target/actual
Cost center planning covers following planning area −
- Cost Element
- Primary Cost
- Secondary Cost
- Revenue
- Activity Type
- Statistical Key Figures

What is the use of period End Closing? What activities are performed as part of Period End Closing?

Period end closing is work carried out at period end as part of cost controlling. To perform period end closing, it is required to transfer the data from other SAP components. You should perform all the posting in Finance Accounting.

As part of period closing, following activities are performed −

Periodic reposting
Accrual cost calculation
Pre-distribution of fixed costs
Transfer of statistical key figures from the LIS
Overhead calculation
Periodic allocations
Variance calculation
Actual price calculation

What is the meaning of Accrual Calculation?

You allocate operating expenses differently in cost accounting as compared to Finance accounting. You can distribute irregular occurring expenses as per cost origin, on the months in which they are incurred. And hence you can avoid all irregularities within cost accounting. Cost allocated in this way is known as Accrual cost.

How Accrual Calculation can be performed in the system?

Accrual calculation can be performed in following way −

Accruals in the Controlling component based on the costs posted.
Accruals in the Financial Accounting component (FI) using recurring entries.

What do you understand by Variance calculation in Period end closing?

When actual cost on cost center is different from target cost or planning was over/under, you can see a variance in controlling component.

How do perform variance calculation in Period End closing?

Using Variance calculation, you can analyze the actual balance and to find variance of actual cost from target cost with different activity types.

To perform variance calculation, navigate to Accounting → Controlling → Product Cost Controlling → Cost Object Controlling → Product Cost by Period or Product Cost by Order → Period-End Closing → Single

Functions: Product Cost Collector → Single Functions: Cost Object Hierarchy → Variances → Individual Processing or Collective Processing

What is Year End Closing? How do you perform a carry forward commitment?

In year-end closing, you can transfer carry forward to first period of next fiscal year and this is performed for each Controlling under SAP system.

What is the use of Value Field in the CO-PA module?

Value fields are number or value related fields in profitability analysis such as quantity, sales revenue, discount value etc.

What is the use of account group of the vendor/customer master records?

The number range of the customer/vendor masters
The status of the fields in only company code segment

What do you understand by Product costing in SAP Controlling?

SAP CO-Product Costing module is used to find the value of internal cost of products. It is also used for profitability and management accounting for production.

While configuring Product Costing, it involves two areas for setting −

Product Cost Planning
Cost Object Controlling

The basics of Product Costing is Cost Center Planning. The goal of cost center planning is to plan total dollars and quantities in each Cost Center in a Plant.

What do you understand by cost center, profit center in Controlling?

A Cost center is defined as a component in an organization that adds to the cost and indirectly adds to profit if the organization. Examples include Marketing and Customer Service.

What are the segments of the customer master record?

General data segment
Sales organization data segment

What is the Maximum Number of Posting Periods in SAP?

Under GL accounting, you can have a maximum of 16 posting periods (12 regular plus 4 Special Periods).

How do you 'Carry-Forward' Account Balances?

If you have already posted into the new fiscal year, you do not need to carry-forward the balances manually. But you can use the various ‘carry-forward’ programs supplied by SAP for this task.

How Currencies are maintained in SAP system?

Using 3 character Currency Code

How do you maintain exchange rates in SAP?

SAP offers a variety of tools to maintain exchange rates on an on-going basis. The tools include −

Exchange Rate Spreads
Base Currency
Inversion

What do you understand by a Line Item?

Line Items contain information relating to account number, amount, debit/ credit, tax code, amount, etc. SAP allows a maximum of 999 line items in a single document.

What is Cost based Profitability Analysis?

It is used to group the costs and revenues as per the value fields. It is used to ensure that you access at all times to a complete, short-term profitability report.

What is Account based Profitability Analysis?

It is used to provide you with a profitability report that is permanently reconciled with financial accounting.

It is mainly used for getting information related to sales, marketing, product management and corporate planning departments to support internal accounting and decision-making.

What do you understand by Posting Key?

A Posting Key in SAP is a 2-digit alphanumeric key that controls the entry of line items. SAP comes with many posting keys for meeting the different business transaction requirements.

What is the use of document reversal in SAP system?

To change some of the accounting information relating to an already posted document, you can only achieve this by Reversing option the original document and posting a new one with the correct information.

What is Number Range interval?

Number Range is defined as a number interval defined in the system so that when documents are posted, the system assigns a number from this range.

What are the different Standard reports in SAP CO system?

SAP CO: Standard Reports

There are various standard reports that exists in system for Cost Center Accounting.

1VK Library −

This contains report related to cost accounting and is based on full costs.

1GK Library −

This contains reports for cost accounting systems based on marginal costs.

1AB library −

This is used to maintain the reports for variance analyses.

1 RU library −

This is used to maintain summary reports related to overall cost center accounting process.

What are Price Reports? Where do you find them in SAP system?

Price reports in Cost Center accounting are available for activity types and for activity based costing. Under Activity-Based Costing, price report are used to provide an overview of the process prices for each business process.

To execute price report online, navigate to Information Systems → Accounting → Controlling → Reports for Cost Center Accounting → Prices

What are the different line Item reports?

You can use following line item reports −

Actual line item report
You can display line item reports for archived actual costs.
Plan line item report

What is the use of Cost Elements report? How do you access Cost Element reports in SAP system?

This report is used to perform a comparison of the figures in internal and external accounting, display the costs incurred for each object class, and see the cost flows between company codes.

Navigate to Information Systems → Accounting → Controlling → Reports for Cost and Element Accounting

What are the components in Financial Statement version?

A Financial Statement Version helps to define the Financial Statements both the Balance Sheet and Profit & Loss statements.

Explain the process of Profitability analysis in SAP CO system CO-PA? What is the use of CO-PA?

SAP CO-PA is used to analyze the market segments classified as products, customers, sales area, business area, etc.

SAP CO Profitability Analysis (CO-PA) is used for the evaluation of Market segments, which is classified according to products, customers, and orders or any combination of these or Strategic business units such as sales organizations or business areas, with reference to company's profit or contribution margin.

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