unit 1: sap business one standard financial processes contents: standard financial processes sales...
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Unit 1: SAP Business One Standard Financial Processes
Contents: Standard financial processes Sales and purchasing processes and their consequences on book keeping
SAP Business One Standard Financial Processes: Unit Objectives
After completing this unit, you will be able to: Discuss some general accounting conventions Describe the steps in the standard financial processes in SAP Business One Give examples of the automatic journal entries created during the sales, purchasing
and inventory processes Discuss the financial consequences of the processes on the general ledger
SAP Business One Standard Financial Processes: Course Overview Diagram
SAP Business One Standard Financial Processes
Topic 1: Standard Financial Processes
Topic 2: Sales and Purchasing Processes
You are implementing SAP Business One at a new customer, OEC Computers: Your main contact in the customer site is Maria the accountant. Maria asks about the way SAP Business One handles the financial
accounting processes. She wants to make sure she understands the big picture so she can report
to the company owners the business results periodically.
SAP Business One Standard Financial Processes:Business Example
Standard Financial Processes
SAP Business One Standard Financial Processes
Topic 1: Standard Financial Processes
Topic 2: Sales and Purchasing Processes
System Configuration
Purchasing
Warehouse management
Production
Inbound logistics
Outbound logistics
Marketing &
SalesService
Financial controlling
Master data
After completing this topic, you will be able to:
Discuss some general accounting conventions
Standard Financial Processes: Topic Purpose
Finance Basics
Every business transaction is recorded in the company's books. This allows you: To manage your company effectively with the option of producing financial
reports To report the business transactions to the authorities.
Every business transaction results with a value exchange: A certain account increases value and another decreases value, resulting in the
recording of balancing debit side and credit side postings.
Value Exchange: Question
A/R Invoice
In a current sales process what happens to the accounts involved in the A/R Invoice? (Let us assume that this is a non-perpetual inventory system)
Value Exchange: Answer
A/R InvoiceDebit Credit
Customeraccount
105
Tax account 5
Revenue account
100
Some General Accounting Conventions (1)
Debit Credit
Cash clearing account
105
Bank account 105
Deposit no. 500070
Each journal entry represents one posted business transaction. Each line in the journal entry represents one posting to an account (which could represent a
customer, vendor or a regular general ledger account). Each line in the journal entry represents a posting of either a debit or a credit amount (but never
both together).
Some General Accounting Conventions (2)
Debit Credit
Check clearing account
105
Check clearing account
300
Check clearing account
205
Check clearing account
155
Bank account 765
Total 765 765
Deposit no. 500071
Each journal entry must include debit and credit amounts; therefore, a journal entry must include at least two lines.
There is no limit on lines in a single journal entry. A journal entry must be balanced. That is, the total credit and debit amounts in a journal entry must
be equal
The Account Balance (1)
Customer XXXX7
Debit Credit Origin
105 Debit A/R Invoice
600 Debit A/R Invoice
400 Debit A/R Invoice
705 Credit Incoming Payment
200 Debit A/R Invoice
100 Debit A/R Invoice
Account Balance
700 Debit
The account balance represents the difference between the total debit transactions and the total credit transactions recorded for that account.
The transaction summary or the balance of a certain G/L account or business partner is the initial information the accounting system can provide about the business.
The Account Balance (2)
Previously, we mentioned that in each journal entry a certain account increases value and another decreases value, resulting in the recording of balancing debit side and credit side postings.
The effect on the account balance: Assets, Expenses, and Drawings accounts are generally in debit. Liability, Revenue, and Capital (Equity) accounts are generally in credit.
Value Exchange and the Account Balance
Debit Credit
Customeraccount
440
Revenue account
440
A/R Invoice
The two accounts increase their values: ▲
(Let us assume that the customer is tax exempt and that this is a non-perpetual inventory system)
Sales and Purchasing Processes
SAP Business One Standard Financial Processes
Topic 1: Standard Financial Processes
Topic 2: Sales and Purchasing Processes
System Configuration
Purchasing
Warehouse management
Production
Inbound logistics
Outbound logistics
Marketing &
SalesService
Financial controlling
Master data
After completing this topic, you will be able to: Describe the steps in the standard financial processes in SAP Business
One. Describe the automatic journal entries created during the sales and
purchasing processes. Discuss the financial consequences of the processes on the general ledger.
Sales and Purchasing Processes:Topic Purpose
Automatic Journal Entries:Reflection Question
Standard
Sales Quotation Sales Order Delivery A/R Invoice Incoming Payment Deposit
In a standard sales process which documents affect the accountingsystem?
Automatic Journal Entries:Answer
Standard
Sales Quotation Sales Order Delivery A/R Invoice Incoming Payment Deposit
When managing perpetual Inventory
In a standard sales process which documents affect the accountingsystem?
Examples of Automatic Journal Entries: A/R Invoice
Debit Credit
Customer account
105
Tax account 5
Revenue account 100
In the sales process A/R Invoice, which account is debited and which is credited?
(Let us assume that this is a non-perpetual inventory system)
Sales Quotation Sales Order DeliveryA/R Invoice
Examples of Automatic Journal Entries – Incoming Payment
Debit Credit
Cash clearing account
105
Customer 105
Possible Payment Means
Check Credit card Cash Bank transfer *BOE
*BOE - Bill of Exchange. This option is relevant for Italy, Portugal, Spain and France and activated by default.
In the sales process Incoming Payment, which account is debited and which is credited?
Sales Quotation Sales Order Delivery A/R Invoice Incoming Payment
Examples of Automatic Journal Entries – A/P Invoice
Debit Credit
Vendor105
Tax account 5
Expense account 100
In the purchasing process A/P Invoice, which account is debited and which is credited?
(Let us assume that this is a non-perpetual inventory system)
)
Purchase Order Good Receipt PO A/P Invoice Outgoing Payment
Financial Settings: Reflection Question
G/L Account Determination Control Accounts
How does the system “know” which accounts to use automatically?
G/L Account Determination
G/L Account Determination – defines default G/L accounts related to a specific business process:
Sales Purchasing General (for example, Period End Closing) Inventory – three available options to choose the default G/L method for an item:
At the warehouse level At the item group level At the item level
You need to make decisions about G/L Account Determination together with the client accountant.
G/L Account Determination - Example
Debit Credit
Customeraccount
105
Tax account 5
Revenue account
100
A/R Invoice
The Revenue default G/L account is defined in the G/L Account Determination window, under the Sales tab.
Revenue account
Control Accounts
Control Account Debit Credit
Accounts Receivable
Customer 105
Tax account Tax account 5
Revenue account Revenue account 100
Control AccountAccounts Receivable =
A/R Invoice
The Automatic Journal Entry Value
Debit Credit
Customeraccount
440
Revenue account
440
How does the system “know” the value to be credited and debited in an automatic journal entry created by an A/R Invoice?
(Let us assume that the customer is tax exempt).
A/R Invoice
Value Calculation – Invoice – Sales Process
Unit Price * Quantity = Total Value
Purchasing Price List = 100
Reseller Price List = 110
Retail Price List = 120
Star Trek Computers = Reseller Price List
110 * 4 = 440Reseller Price List = 110
Sales Quotation Sales Order DeliveryA/R Invoice
Value Calculation – A/P Invoice – Purchasing Process
Unit Price * Quantity = Total Value
Coconut Devices = Purchasing Price List
100* 10 = 1000
Debit Credit
Vendor 1000
Clearing acc. 1000
Purchasing Price List =
100
Purchase Order Good Receipt PO A/P Invoice
Purchasing Price List = 100
Reseller Price List = 110
Retail Price List = 120
Value Calculation – Inventory Process
100 * 10 = 1000
Item CostCalculated Value = 90
Unit Price * Quantity = Total Value
Item Cost * Quantity = Total Value90 * 4 = 360
Debit Credit
Clearing acc. 1000
Inventory acc. 1000
Purchasing Price List = 100
Reseller Price List = 110
Retail Price List = 120
Debit Credit
Cost of Goods Sold acc.
360
Inventory acc. 360
Sales Quotation Sales Order Delivery A/R Invoice
Purchase Order Good Receipt PO A/P Invoice
The Financial Process in SAP Business One
Financial Settings
Sales and Purchasing
process
Automatic Journal Entries
Manual Journal Entries
Reconciliations
Period End Closing
General Ledger, Chart of Accounts
and Reports
A/R Invoice Payment DepositA/P Invoice Outgoing PaymentGood Receipt PO
Chart of AccountsG/L Account Determination