Concept Of General Ledger Accounts
The SAP general ledger is similar to the general ledger used by accountants to record business transactions using the double entry accounting system. The general ledger accounts are used by the businesses to record all the day to day transactions. These transactions, recorded throughout a certain period are then used later on to create the financial statements like the balance sheet, profit and loss statement and the cash flow statement. This same data can also be used to create reports for internal reporting and auditing purposes. The same data can be provided to modules like business intelligence to carry out advance analysis.
It is necessary to enter information about the general ledger account into ypur SAP system before you can used it to record business transactions. The master record of the general ledger account contains all the information which is needed by other modules to use that account. Some of this information is specific to a company code like the currency in which the account balances are maintained, whereas some of the information about the general ledger account is common across company codes like the description of a tax account.
The general ledger master record has a total of six tabs to store the various blocks of information about the general ledger account. Three of the tabs contain information about the general ledger account which is specific to a company code while the other three tabs contain information about the general ledger account which will remain common across all company codes. On the basis of the information being entered for a general ledger account, it can be created in the following three ways:
- IN COMPANY CODE:The company code data includes three tabs i.e. control data, bank data and information. These three tabs include information about the G/L account which is specific to the particular company code in which the G/L account is being created like the tolerance group of the account.
- IN CHART OF ACCOUNTS:The chart of accounts data of the G/L account includes three tabs i.e. description, keyword and information as shown in figure 2 below. The Chart of Accounts data about the general ledger is common across company codes like the account number. This data can be entered once at the Chart of Account level and can be used by multiple company codes. This saves the user from entering the same data again and again. It also ensures greater consistency and reduces the possibility of errors due to manual data entry.
A G/L account which is created at the Chart of accounts level can be extended to a company code by entering the rest of the three tabs which are relevant to that company code.
- CENTRALLY:SAP also allows all the data for a general ledger account i.e. for all the six tabs to be entered at the same time. Such a G/L account is said to be created centrally as shown in figure 3.
Creation Of A General Ledger Account
STEP 1:Navigate to the path as shown in the screenshot below in figure 4 or execute the transaction code FS00.
STEP 2:Enter the G/L account number to be created and the company code in which the G/L account is to be created, and click on the create button as shown below in figure 5.
STEP 3: On the description tab, enter the account group as shown in figure 6 below. The account group field is used to group together general ledger accounts on the basis of the functionality. The account group field defines the number range which can be used for a certain category of accounts. It also defines which fields are available on the different tabs while creating a general ledger account.
STEP 4: As mentioned before, one of the main reasons for defining general ledger accounts is to have the ability to produce financial statements. A general ledger account may be included in the balance sheet or the profit and loss statement depending on its type. For e.g. a ‘utilities expense’ account has to be defined as the profit and loss account as it forms a part of the profit and loss statement while any fixed asset account has to be defined as the balance sheet account, as it forms a part of the balance sheet. Select the type of general ledger account as shown in figure 7 below.
STEP 5:Enter a short as well as a long description of the GL account as shown in figure 8 below. The description should make it easy to understand the purpose of the account. A group account number may be defined to assign a group of general ledger accounts to the balance sheet or the profit and loss statements.
STEP 6: Go to the control tab and enter the details as shown in figure 9 below. The account currency is the currency in which the account balances are to be maintained. The recon account indicator sets the general ledger account as a reconciliation account. Reconciliation accounts can be defined for assets, customers or vendors. The tax category can be used to define only input tax, only output tax or both the taxes for the general ledger account.
STEP 7: Go to the create/bank/interest tab and enter the data as shown in figure 10 below. The field status group decides which fields are available for data entry for this G/L account. The interest calculation frequency defines the number of months after which the interest is recalculated.
STEP 8:Enter the data on the keyword/translation tab as shown in figure 11 below. This data provides the description of the account in different languages.
STEP 9: Enter the data on the information tab as shown below in figure 12.
STEP 10:Once the required data has been entered on all the six tabs,Click on the save button to save the information about the general ledger account. The success message indicating the creation of the general ledger account is displayed.