Define Account Group

Account group is a group of General Ledger (G/L) accounts that has same
characteristic in term of:
the number interval in which the G/L accounts have.
which fields are suppressed/required/optional/displayed entries when
creating and changing master records.
When we create a G/L account, we must specify the account group of that G/L account.
We use account groups to combine G/L accounts according to the above characteristics.
For example, we define an account group for Current Assets, an account group for Fixed
Assets, an account group for Liabilities, an account group for Equity, and other account
group for P&L accounts. You can define your own account group according to your
accounting
business
process
needs.
Account groups for G/L accounts are based on the chart of accounts (COA). Usually, a
COA has some account groups that can be the same or different with account groups of
other
COAs.
We can define Chart of Accounts with OBD4 T-code or through SPRO T-code menu:
Financial Accounting General Ledger Accounting G/L Accounts Master Records
Preparations

Define
Account
Group.
Define Document Number Range

The document number range in SAP is used to define the allowable range
(number interval) in which an SAP document number must be positioned and
cannot overlap. It is used in all SAP modules, for example in Material
Management (MM), we must assign a number range to Purchase Requisition
(PR), Request For Quotation (RFQ), Purchase Order (PO), Outline Agreement
documents, etc; in Sales Distribution (SD) we must assign a number range to
Quotation, Sales Order, Delivery Order, Billing documents, etc. In FI module we
must also assign number range to several FI documents, such as Customer
Invoice, Customer Credit Memo, Customer Payment, Vendor Invoice, Vendor
Credit Memo, Vendor Payment, G/L Account Posting documents.
The number range can be:

Internal numbering: SAP R/3 stores the last used document number from
the number range in the field current number and takes the subsequent
number for the next document.

External numbering: The user enters the original document number. The
numbers usually are not used in sequence and therefore the system
cannot store a current number. The numbers may be alphanumeric.

In FI module, the document number range has to be defined for the year in which
it is used. Document number ranges can be defined:

until a fiscal year in the future: At the beginning of each fiscal year the
system continues to take the next number after the current number. It
does not restart at the lower limit.

per fiscal year: At the beginning of each fiscal year the document
numbering starts again at the lower limit. This helps to avoid reaching the
upper limit of a range.

We can assign one or more document types to each number range. In Document
Type configuration we must define number range to be used for that document
type.
Create Company Code

Company Code is a unique four alphanumeric characters that represents an

independent and legal accounting entity. It's the smallest and minimum
necessary organizational structure in SAP that required by law to provide a set of
financial reports (such as Balance Sheet and Profit/Loss Statements). In the real
world, a company code can be a company of a corporate group. In an SAP client,
there can be one or several company codes. The general ledger is kept at
company code level. For consolidation process in SAP EC module, a company
code must be assigned to a company. A company can comprise one or more
company
codes.
With SAP FI module, we can generate the financial reports of a company code. A
company code's financial reports are used for external purpose, such as for
external auditors, shareholders/stock exchange commission, tax office, etc.
Company code is one of the two main organizational units of SAP FI module. The
other one is Business Area. Business areas are used for internal purpose, such
as for company's management. Business areas represent separate areas of
operation within one or some companies. With business areas, for example, SAP
can generate financial reports of a specific regional area of a company. Let's say
Coca Cola company has one company code in USA (and several company
codes in the whole world). With company code, SAP can only generate one set
of financial reports for USA office. But, with business areas (depends on how it
configured), SAP can generate sets of financial reports per state in the USA. By
doing so, the management can analyze the performance of each branch in each
state better. It gives more useful information that can be used in decision making
process. The use of Business Areas is optional in SAP FI module.
All SAP transactions that have impact to the financial reports from all SAP
modules (such as FI, MM, HR, etc) will generate accounting journals in company

code's general ledger. The transaction can determine the company code involved
either from the user input for the company code (such as in FI module) or from
other organizational unit that related to the company code (such as in MM
module, company code can be determined from the plant that input by user).
In MM module (Logistics), each plant must be assigned to a company code (you
can read our article to know how to assign plant to company code). A company
code
can
have
several
plants.
A plant can also be assigned to a business area (you can read our article to know
how to assign business area to plant). A business area can be assigned to
several
plants.
Material valuation can be set at company code level or plant level (you can read
our
article
to
know
more
about
SAP
material
valuation).
We create company code from the following menu path of "SPRO" t-code:
Enterprise Structure - Definition - Financial Accounting - Edit, Copy, Delete,
Check
Company
Code.
There are two options to create company code:
Copy from other company code (or from SAP standard company code)
Create from the scratch
SAP recommends that we copy a company code from an existing company code.
The advantage is SAP will also copy the existing company code-specific
parameters. Then we can change certain data in the relevant application if
necessary. This is much less time-consuming than creating a new company
code.
But in this example we will create company code from the scratch so we have to
define other parameters need in other relevant configuration process manually.
The step-by-step configuration process to create company code can be seen in
our video training file that can be downloaded here. You have to register as our
SAP forum member to download it.
The relationship with FICO, MM, PP, and WM modules

Sales & Distribution (SD) is one of the core and most-used modules of SAP R/3
products beside Financial & Controlling (FICO), Material Management (MM), and
Production Planning (PP) modules.
The main areas covered by SD module are:
Pre-sales activities, including Inquiry and Quotation creation.
Sales Order processing, including Sales Order (SO) creation.
Shipping, including Outbound Delivery document creation.
Billing, including Billing document and invoice creation.

The relationship between SD and MM, FI, PP, and WM modules

SD module is closely related and has integration with other modules, such as FI,
MM, PP, and Warehouse Management (WM).
A Sales Order (SO) from SD module can trigger an availability check and
demand in materials planning of products that will be sold to the customer. If the
products are not available, it may trigger the PP module to create a Production
Order; or it may trigger the MM module to purchase the products form vendor so
the product will be available at the specified time.
Once the products are available at warehouse, SD module will create an
Outbound Delivery document or Delivery Order (DO) that asks warehouse
personnel to prepare the products to be delivered to the customer. If the
warehouse uses WM module, the DO will trigger a Transfer Order document to
pick the products from warehouse storage bin.
Once the products are ready to be delivered to the customer, the warehouse
personnel will post the goods issue transaction. The inventory level at MM
module will be reduced, the inventory account of FI General Ledger (G/L)
account will be credited and inventory consumption/expense account will be
debited.
Material consumption
Inventory account
expense account
XXX
XXX
The customer will receive the products. The finance department will generate a
billing document (debit the customers Account Receivable account and credit the
Revenue account) and send invoice to the customer with FI module. The
Profitability Analysis (COPA) report will also be updated.
Customer's Account
Receivable
Revenue Account
XXXX

XXXX

The customer pays the bill and FI module will record the payments as debit to the
bank (cash) account and credit to the customers Account Receivable account
(so it will be zero)
Customer's Account
Receivable
Bank (cash) account
XXXX

XXXX

SAP SD business process

In this article we will explain more about the general business processes covered
by SD and other related modules, which are:

Pre-sales activities
When a client (existing customer or new customer) asks or requests
information (can be through a phone call, an email, or a Request For
Quotation (RFQ) document) about the products or services he needs, the
sales personnel can input that request into SAP SD module by creating an
Inquiry document.
In SD module, an Inquiry is an internal document that records the
information about request from prospective customer for internal use only.
In an inquiry, we record some information such as: which customer that
request information, what products or services customer needs, how many
products or services customer needs, etc. By creating inquiry, we can
reduce the sales opportunity lost, especially when we need some extra
time or procedures before we can reply the customer request.
If we can immediately reply the customer request (if we have a standard
products or services that the price and other condition are fixed), we dont
need the inquiry document, we can just create a Quotation document to
reply the customers request.
But if we cant, we should create an Inquiry document, so when we have
determined the price and other condition to be offered to the customer, we
can create a Quotation document that refers to the inquiry document.
We can create Inquiry with VA11 t-code.
In SD module, a Quotation is a document that legally attached for us who
issued it, that contains information about the offering to the customer, such
as: which customer that been offered, what and how many products or
services that been offered to the customer, how much the price of the
products or services, when the delivery date of the products or services,
how the term of payment that been offered to the customer, the validity
date of the offering, etc. A Quotation can be created by referring to the
Inquiry document (if any) or not, depends on the business scenario
defined.
We can create Quotation with VA21 t-code.
From the above explanation, it is clear what the differences between
Inquiry and Quotation in SD module are.
Both of them are SD document in pre-sales activities.

Sales Order processing

After we send the quotation to the customers, they will do their own
purchasing procedure to determine from where they will purchase the
products or services. If needed, they may negotiate with us about our
quotation in terms of price, terms of payment, delivery date, or something
else. We may send an updated quotation based on the negotiation. If they
decide to purchase the material or service from us, they will send us a
Purchase Order (PO). Then we create a Sales Order (SO) that refers to
the Quotation sent to the customers before. We can put the customers
PO number in our SO.
Depends on business scenario and configuration, in SAP R/3 system we
can also create an SO without referring to a Quotation. For example if we
have a products or services catalog that can be used by customers as
reference for their PO.
An SO must contain the information of:
o
o
o
o
o
o
o

Customer
Materials or services sold to the customer
Quantity of materials or services
Pricing condition of materials or services
Delivery dates
Shipping processing, such as the incoterms, etc.
Billing processing, such as terms of payment, etc.

We can create Sales Order with VA01 t-code.

Inventory Sourcing
To fulfill the products requirement from an SO at the required date, we can
obtain them by one of these options:
o Taking from Available stock at warehouse, if needed triggering a
stock transfer between warehouses.
o Triggering a production order to produce the products in-house.
o Triggering a purchasing order to purchase the products from vendor
(in case of third-party business transaction).
There is no sales document in these activities. They are done on other
modules such as Production Planning (PP) and Material Management
(MM).

Shipping
Once the products are available at warehouse, the sales personnel can
start shipping activities by creating an outbound delivery document

(Delivery Order/DO). A DO can be created by referring to an SO. A DO will

trigger warehouse personnel to prepare the products.
We can create Delivery Order with VL01N t-code.
If we use Warehouse Management (WM) module, a DO can trigger a
Transfer Order.
When the products are ready to be sent, the warehouse personnel posts
the Goods Issue (GI) transaction that refers to the DO. The GI transaction
will reduce the inventory level of products.
We can post the Goods Issue that refers to a DO with VL02N t-code.
Then the warehouse personnel sends the products to the customer by
transportation mode that has been determined in SO document.

Billing
The customer will receive the products at the delivery date promised in SO
document.
The finance department will generate a billing document and send an
invoice form to the customer. The invoice will request the customer to pay
the products we have sent at the price condition and terms of payment we
have agreed in SO document.
We can create Billing document with VF01 t-code.