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Friday, January 2, 2009

Document flow confusion in FI General Ledger

I have a problem understanding basic things like how a document flows in the Sap system. When posting a customer invoice the subledger will be debited with that amount, now my confusion is will the same amount be posted to the G/L only or the very same amount will also be posted to the reconciliation general ledger - making 3 postings or The recon acc is the G/L . I don't see 3 postings happening because then 2 debits will be Posted against one debit -please clarify me on this.

Also the different between the G/L, Special ledgers and the recon acc is not clear to me.

Customer and Vendor accounts are maintained in a subledger. Posting to these accounts will also be posted to the A/R and A/P reconciliation accounts. All Reconciliation accouints are GL accounts.

All G/L accounts are not reconciliation accounts.

Why is this done?

In large businesses, there will be hundreds/thousands of customers/vendors. All these are personalaccounts (there are three types of accounts: nominal, personal and real). These personal accounts are grouped in to sub-ledgers and any posting to them is reconciled to the G/L
via the reconciliation accounts.

Prakash

For fulfilling completing the double entry system accounting the Reconciliation accounts i.e., Accounts Receivable and Accounts Payable are used. All the Vendors are grouped under Acounts Payable & Customers are grouped under Accounts Receivable. And also always any time the balance in reconciliation account shows as zero.

Ex: 1) Vendors transaction:
For Invoice posting:
Inventory A/c Dr
To Vendor A/c................Accounts Payable A/c (Reconciliation Ledger)
(In SAP since we are linking in the G/L Master Accounts Payable with the Reconciliation Accounts type setting as Vendors. Hence, with one entry 3 Accounts are automatically updated)

Accounts Payable is Liability & Inventory is Current Assets.
For Payment to Vendor:
Vendor A/c Dr.....Accounts Payable A/c
To Bank/ Cash A/c

Ex:2) Customer Transaction:
Sales Invoice Posting:
Customer A/c Dr...Accounts Receivable A/c (Reconciliation A/c)
To Sales A/c

Receipt Posting:
Bank A/c Dr
To Customer A/c...........Accounts Receivable A/c

In Normal Accounting the Reconciliation Accounts are called as Control Accounts and we pass 2 entries for each transaction i.e., Sale, as following:
1) Customer A/c Dr (Sales Ledger / Accounts Receivable A/c)
To Sales A/c (General Ledger)
2) Accounts Receivable A/c Dr (General Ledger)
To Customer A/c (Sales Ledger Adjustment A/c)

Hence, any time the Control A/c balance is zero.

I hope I am clear and now your confusion problem gets resolved.

Ashok

These are basic accounting differentiation for different types of accoutns. This is a basic accounting concept and is not specifically mentioned anywhere in SAP terminology.

Personal accounts:

Accounts in the name of individuals, organizations etc.
For example, Company A A/c, XYZ limited co A/C, Suresh A/C, Indian Bank A/C etc

Real Accounts:

These are accounts related to assets, both real and tangible.
example, furniture a/c, machinery a/c, accounts receivables a/c etc

Nominal Accounts:

These are related to incomes/expenditures and profit/losses.
for example, sales A/c, salary a/c etc

I hope this clears your doubts

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