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1 Journal Entry
All accounting transactions are recorded in the form of a
journal entry
Accounting journal is a collection of all journal entries
All accounting journal entries have two sides, debit and
credit
For each accounting journal entry, the total of debit sides is
equal to the total of credit sides
i.e. debit side total = credit side total
If debit side total is not same as the credit side total, the
journal entry does not balance and it is not accurate
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2 Journal Posting
Posting is the process of moving the balances of
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3 Journal Opening
In BPC, You create and maintain journal entries using the
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4 Cash Flow
The cash flow statement reports activity in cash and
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5 Account Transformation
You define data transformations so that you can map
6 Account Validation
Validations exist to help control integrity of data, for
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7 Income Statement
Reports the results of operations for the period ending
on a particular date.
It reports revenue and expenses during the fiscal
period
It has 2 formats Single-step and multiple step
net income = total revenue - total expense
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8 Balance Sheet
Balance Sheet reports the financial position at the end
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10 Opening Balance
Profit and Loss accounts are not carried forward to
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11 Closing Balance
Closing balances are cumulative balances after all
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12 Retained Earning
Retained earnings represent the amount of the
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13 Minority Interest
Minority interest is the stockholders equity relating to
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GAAP
14
US GAAP,
15
UK GAAP, 16
EUR GAAP
17 Equity
Stockholders equity represents the interest of owners
in the organization
Owners Equity = Total Assets Total Liabilities
Or
Owners Equity = Par value of Equity Shares + reserves
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18 Assets
Represent future economic benefits.
Examples of types of assets: Cash, Bank, Accounts
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19 Liabilities
They represent future economic sacrifices.
They are divided in Long Term and Short Term
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20 Subsidiary
Subsidiary means an acquired or investee company
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21 Cash account
Cash account represents cash on hand. However, cash
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22 Bank account
Bank accounts are cash balances available in the bank.
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CloneSkills, Inc.
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CloneSkills, Inc.
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Phone: 800.836.5696
CloneSkills, Inc.
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27 Equity accounts
Stockholders equity represents the interest of owners in the organization.
Components of equity
Equity capital or common stock. It represents the owners' equity. Equity is a
residual concept. Hence, equity is what's left after subtracting liabilities from
assets. Equity = Assets - Liabilities
Preference capital. It has preferences in returns e.g. in receiving dividends or in
liquidation but they may lack voting rights to control day to day operations
Additional paid in capital: Paid in capital is the par value of shares in exchange
of the shares of common stock or preferred stock. While, additional paid in
capital represents premium paid for acquisition of shares in the public offering.
Retained earnings: It is sum of net income for the current year plus
accumulated in retained earnings. Dividends are paid from retained earnings
Equity accounts have normal balances on the credit side. Increases in equity
accounts are recorded on the credit side. Decrease in equity accounts are
recorded on the debit side.
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28 Currency Accounts
Foreign currency accounts are maintained in the
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29 Capital Gains
Capital gains represent sums (gains) received over and
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30 Asset Appreciation
Asset appreciation represents unrealized gains as of a
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31 Acquisition
There are many forms of acquisitions whole
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32 Depreciation of Assets
Depreciation is the process of allocating the cost of long-lived assets
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33 Net income
Net income = Revenue Expenses
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34 Dividends
Dividends are allocation of reserves to shareholders.
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35 Shareholders' equity
Already covered under equity
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CloneSkills, Inc.
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CloneSkills, Inc.
A Pioneer in EPM/BI/EIM Implementation Learning
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Phone: 800.836.5696
CloneSkills, Inc.
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Phone: 800.836.5696
CloneSkills, Inc.
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40 Company Code
"Company Code (for external purposes) A company code
41 Cost Center
Cost centers play important role in controlling costs
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42 Controlling Area
"Controlling Area is the central organizational unit
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43 Posting Period
The Posting period variant controls which posting
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44 Fiscal Year
In accounting terms fiscal year is a period of 12 months. It
45 Transaction Currency
A currency in which each transaction originates is
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46 Local Currency
The currency defined in the company code is known in
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47 Group Currency
Similar to group chart of accounts, you can define
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48 Reporting Currency
The currency used for preparing financial statements
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51 Opening Balance
Balance Sheet accounts which have closing balances
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53 Consolidation on Investment
Consolidated FS are prepared when a parent-
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54 Trial Balance
After posting all transactions from an accounting
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55 Flows
Workflow management is providing employees with
56 Transaction Types
Following are standard business transaction categories and their
postings:
Expense (E)
Expense/Cash desk
Revenue (R)
Cash desk/Revenue
Cash transfer:
From cash journal to bank (B)
Bank/Cash desk
From bank to cash journal (C)
Cash desk/Bank
Accounts receivable (D)
Customer payment receipt
Cash office / customer
Customer outgoing payment Customer / cash office
Accounts payable (K)
Vendor payment issue
Vendor / cash office
Vendor incoming payment Cash journal/Vendor
in the fiscal year and the number of special periods. You can
define a maximum of 16 posting periods in the Controlling
component (CO). You define the fiscal year variant during
customizing of the Financial Accounting component (FI) in the
Implementation Guide (IMG). You must also define which fiscal
year variant is used in the company code.
When you create a controlling area, you must also specify the
fiscal year variant. The fiscal year variants used by the controlling
area and the corresponding company codes can only differ in the
number of special periods used. You must ensure that the fiscal
year variants use the same number of equally-defined standard
periods. "
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58 Payables
Accounts payable represent the amounts to be paid to
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59 Receivables
Accounts receivables represent the amounts to be
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60 Ledger
General ledger is collection of accounts used in the
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61 Cash
In financial terminology cash includes cash
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62 Cash Management
63 Inventory
Inventory represents company's merchandise, raw
64 Invoice
Invoices are raised while recording each sale made.
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65 Credit Memo
Credit Memos are issued for goods or services not
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66 Debit Memo
Debit Memos are issued for goods or services not
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68 Sub Ledger
For all sub ledgers a reconciliation account is created
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69 Inter-Company Transfers
Refer to Internal Trading Partners.
All intercompany profits/losses have to be adjusted
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70 Reclassification
Reclassification stands for regrouping. It is the process
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