SAP FICO INTERVIEW QUESTIONS AND ANSWERS

  What are the various organizational assignments to a company code ?

Company Code is a legal entity for which financial statements like Profit and Loss and Balance Sheets are generated. Plants are assigned to the company code, Purchasing organization is assigned to the company code, and Sales organization is assigned to the company code.

  What is the relation between a Controlling Areas and a Company code ?

A Controlling area can have the following 2 type of relationship with a Company code

a. Single Company code relation
b. Cross Company code relation

This means that one single controlling area can be assigned to several different company codes. Controlling can have a one is to one relationship or a one is to many relationship with different company codes. 

Controlling Area is the umbrella under which all controlling activities of Cost Center Accounting, Product Costing, Profit Center and Profitability Analysis are stored.

In a similar way Company Codes is the umbrella for Finance activities.

   How many Chart of Accounts can a Company code have ?

A single Company code can have only one Chart of Account assigned to it. The Chart of Accounts is nothing but the list of General Ledger Accounts.

   What are the options in SAP when it comes to Fiscal years ?

Fiscal year is nothing but the way financial data is stored in the system. You have 12 periods in SAP and also four special periods. These periods are stored in what is called the fiscal year variant.

There are two types of Fiscal Year Variant

• Calender Year – Jan-Dec, April -March
• Year Dependent Fiscal Year .

   What is a year dependent fiscal year variant ?

In a year dependent fiscal year variant the number of days in a month are not as per the calendar month. Let us take an example:- For the year 2005 the period January ends on 29th, Feb ends on 27th, March ends on 29. For the year 2006 January ends on 30th, Feb ends on 26th, March ends on 30th. This is applicable to many countries especially USA. Ever year this fiscal year variant needs to be configured.

   How does posting happen in MM (Materials Management) during special periods ?

There is no posting which happens from MM in special periods. Special periods are only applicable for the FI module. They are required for making any additional posting such as closing entries, provisions. which happen during quarter end or year end.

   How many currencies can be configured for a company code ?

A company code can have 3 currencies in total. One which is called the local currency ( ie company code currency) and 2 parallel currencies can be configured.

  When you do that the system has the flexibility to report in the different currencies. Do you require to configure additional ledger for parallel currencies ?

In case 2 currencies are configured. (Company code currency and a parallel currency) there is no need for an additional ledger. In case the third parallel currency is configured and is different than the second currency type, you need to configure additional ledger.

  If there are two company codes with different chart of accounts how can you consolidate their activities ?

• In this case you either need to write an ABAP programme or you need to implement the Special Consolidation Module of SAP. If both the company codes use the same chart of accounts then standard SAP reports give you the consolidate figure.

• FI-GL

• Give some examples of GL accounts that should be posted automatically through the system and how is this defined in the system.

• Stock and Consumption accounts are instances of GL accounts that should be automatically posted to. In the GL account master record, a check box exists wherein the automatic posting option is selected called " Post Automatically Only"

   What is a Account group and where all is it used ?

An Account group controls the data that needs to be entered at the time of creation of a master record. Account groups exist for the definition of a GL account, Vendor and Customer master. It basically controls the fields which pop up during master data creation.

   What is a field status group ?

Field status groups control the fields which come up when the user does the transactions. The options available are one can have the fields only for display or one can suppress it or make it mandatory. So there are three options basically.. The field status group is stored in the FI GL Master

   What is the purpose of a "Document type" in SAP ?

• A Document type is specified at the Header level during transaction entry and serves the following purposes :

• It defines the Number range for documents

• It controls the type of accounts that can be posted to eg Assets, Vendor, Customer, Normal GL account

• Document type to be used for reversal of entries

• Whether it can be used only for Batch input sessions

    What is a Financial Statement Version ?

An FSV(Financial Statement Version) is a reporting tool and can be used to depict the manner in which the final accounts like Profit and Loss Account and Balance Sheet needs to be extracted from SAP. It is freely definable and multiple FSV's can be defined for generating the output for various external agencies like Banks and other Statutory authorities.

    How are input and output taxes taken care of in SAP ?

A tax procedure is defined for each country and tax codes are defined within this. There is flexibility to either expense out the Tax amounts or Capitalise the same to Stocks.

   What are Validations and Substitutions ?

Validations/Substitutions in SAP are defined for each functional area eg Assets, Controlling etc at the following levels

1. Document level
2. Line item level

These need to be specifically activated and setting them up are complex and done only when it is really needed. Often help of the technical team is taken to do that.

   Is it possible to maintain plant wise different GL codes ?

The valuation group code should be activated. The valuation grouping code is maintained per plant and is configured in the MM module. Account codes should be maintained per valuation grouping code after doing this configuration.

   Is Business area at company code Level ?

No. Business area is at client level. Which means other company codes can also post to the same business area.

   What are the different scenarios under which a Business Area or a Profit Center may be defined ?

• This question is usually very disputable. But both Business Areas and Profit centers are created for internal reporting. Each has its own pros and cons but many companies now days go for Profit center as there is a feeling that business area enhancements would not be supported by SAP in future versions.

• There are typical month end procedures which need to be executed for both of them and many times reconciliation might become a big issue. A typical challenge in both of them is in cases where you do not know the Business Area or Profit Center of the transaction at the time of posting.

   What are the problems faced when a Business area is configured ?

• The problem of splitting of account balance is more pertinent in case of tax accounts. Also SA

• Is it possible to default certain values for particular fields? For e.g. company code.

• Yes it is possible to default for certain fields where a parameter id is present. Go to the input field to which you want to make defaults. Press F1, then click technical info push button. This open a window that displays the corresponding parameter id (if one has been allocated to the field) in the field data section. Enter this parameter id using the following path on SAP Easy access screen System 􀃆 User profile 􀃆 Own data. Click on parameter tab. Enter the parameter id code and enter the value you require to default. Save the user settings.

   Which is the default exchange rate type which is picked up for all SAP transactions ?

• The default exchange rate type picked up for all SAP transactions is M (average rate)

• Is it possible to configure the system to pick up a different exchange rate type for a particular transaction ?

• Yes it is possible. In the document type definition of GL, you need to attach a different exchange rate type.

   What are the Customizing prerequisites for document clearing ?

Account must be managed on the open item management. This tick is there in the General Ledger Master Record called Open Item Management. It helps you to manage your accounts in terms of cleared and uncleared items. A typical example would be GR/IR Account in SAP(Goods Received/Invoice Received Account)

    Explain the importance of the GR/IR clearing account.

GR/IR is an interim account. In legacy system if the goods are received and the invoice is not received the provision is made, in SAP at the Goods receipt It passes the accounting entry debiting the Inventory and crediting the GR/IR Account .Subsequently when an invoice is recd this GR/IR account is debited and the Vendor account is credited. That way till the time that the invoice is not received the GR/Ir is shown as uncleared items.

   How many numbers of line items in one single entry you can have ?

No of line items in one document you can accommodate is 999 lines.

   In Assignment Field in the Document you get some reference, which comes from where ?

This is on the basis of Sort key entered in the master.

   How do you maintain the number range in Production environment? By creating in Production or by transport ?

Number range is to be created in the production client. You can transport it also by way of request but creating in the production client is more advisable.

   In customizing " company code productive " means what ? What it denotes ?

• Once the company code is live this check box helps prevent deletion of many programmes accidently. This check box is activated just before go live..

• Accounts Receivable and Accounts Payable

   At what level are the customer and vendor code stored in SAP ?

The customer and vendor code are at the client level. That means any company code can use the customer and vendor code by extending the company code view.

   How are Vendor Invoice payments made ?

• Vendor payments can be made in the following manner:

• Manual payments without the use of any output medium like cheques etc

• Automatic Payment program through cheques, Wire transfers, DME etc.

    Where do you attach the check payment form ?

It is attached to the payment method per company code.

   Payment terms for customer master can be maintained at two places i.e. accounting view and the sales view. Which is the payment term which actually gets defaulted in transaction ?

• The payment term in the accounting view of the customer master comes into picture if the transaction originates from the FI module. If an FI invoice is posted (FB70) to the customer, then the payment terms is defaulted from the accounting view of the customer master.

• The payment term in the sales view of the customer master comes into picture if the transaction originates from the SD module. A sales order is created in the SD module. The payment terms are defaulted in the sales order from the sales view of the customer master.

   Payment terms for vendor master can be maintained at two places i.e. accounting view and the purchasing view. Which is the payment term which actually gets defaulted in transaction ?

• The payment term in the accounting view of the vendor master comes into picture if the transaction originates from the FI module. If an FI invoice is posted (FB60) to the Vendor, then the payment terms is defaulted from the accounting view of the vendor master.

• The payment term in the purchasing view of the vendor master comes into picture if the transaction originates from the MM module. A purchase order is created in the SD module. The payment terms are defaulted in the purchase order from the purchasing view of the vendor master. 

Can we change the reco account in the vendor master? If so, and how? What is the impact on the old balance ?

Reconciliation account can be changed in the vendor master provided that authority to change has been configured. Also any change you make to the reconciliation account is prospective and not retrospective. The old items and balances do not reflect the new account only the new transactions reflect the account.

   How is Bank Reconciliation handled in SAP ?

Initially the payment made to a Vendor is posted to an interim bank clearing account. Subsequently, while performing reconciliation, an entry is posted to the Main Bank account. You can do bank reconciliation either manually or electronically. Refer to the configuration book on Bank accounting for accounting entries.

   How do you configure check deposit ?

The following are the steps for configuring check deposit:-

Step1: Create account symbols for the main bank and incoming check account.
Step2: Assign accounts to account symbols
Step3: Create keys for posting rules
Step4: Define posting rules
Step5: Create business transaction and assign posting rule
Step6: Define variant for check deposit

   What is the clearing basis for check deposit ?

In the variant for check deposit we set up the fields document number ( which is the invoice number), amount and short description of the customer. The document number and the invoice amount acts as the clearing basis.

   How do you configure manual bank statement ?

The following are the steps for configuring manual bank statement:-

Step1: Create account symbols for the main bank and the sub accounts
Step2: Assign accounts to account symbols
Step3: Create keys for posting rules
Step4: Define posting rules
Step5: Create business transaction and assign posting rule
Step6: Define variant for Manual Bank statement

   How do you configure Electronic bank statement ?

The steps for Electronic Bank Statement are the same except for couple of more additional steps which you will see down below

Step1: Create account symbols for the main bank and the sub accounts
Step2: Assign accounts to account symbols
Step3: Create keys for posting rules
Step4: Define posting rules
Step5: Create transaction type
Step6: Assign external transaction type to posting rules
Step7: Assign Bank accounts to Transaction types

   What are the organizational assignments in asset accounting ?

• Chart of depreciation is the highest node in Asset Accounting and this is assigned to the company code.

• Under the Chart of depreciation all the depreciation calculations are stored

    Explain the importance of asset classes. What asset classes are there ?

• The asset class is the main criterion for classifying assets. Every asset must be assigned to only one asset class. Examples of asset class are Plant& Machinery, Furniture&Fixtures, Computers etc. The asset class also contains the Gl accounts which is debited when any asset is procured . It also contains the gl accounts for depreciation calculation, scrapping etc

• Whenever you create an asset master you need to mention the asset class for which you are creating the required asset. In this manner whenever any asset transaction happens the gl accounts attached to the asset class is automatically picked up and the entry passed.

• You can also specify certain control parameters and default values for depreciation calculation and other master data in each asset class.

   Is it possible to have depreciation calculated to the day ?

Yes it is possible. You need to switch on the indicator Dep to the day in the depreciation key configuration.

   Is it possible to configure that no capitalization be posted in the subsequent years ?

Yes it is possible. You need to set it in the depreciation key configuration.

   How are Capital WIP and Assets accounted for in SAP ?

Capital WIP is referred to as Assets under Construction in SAP and are represented by a specific Asset class. Usually depreciation is not charged on Capital WIP. All costs incurred on building a capital asset can be booked to an Internal Order and through the settlement procedure can be posted onto an Asset Under Construction. Subsequently on the actual readiness of the asset for commercial production, the Asset Under Construction gets capitalized to an actual asset.

   What is the purpose of defining Internal orders.?

Internal Orders are basically used for tracking of costs, which are proposed to be incurred over on a short term basis and time tracking is not of much essence.Eg an Advertisement campaign. Sales Promotion and Exhibition expenses etc.

    What is Valuation and Account assignment in SAP ?

• This is actually the link between Materials Management and Finance.

• The valuation in SAP can be at the plant level or the company code level. If you define valuation at the plant level then you can have different prices for the same material in the various plants. If you keep it at the company code level you can have only price. Across all plants.

• Valuation also involves the Price Control .Each material is assigned to a material type in Materials Management and every material is valuated either in Moving Average Price or Standard Price in SAP. These are the two types of price control available.

   Can we change the valuation class in the material master once it is assigned ?

Once a material is assigned to a valuation class in the material master record, we can change it only if the stocks for that material are nil. If the stock exists for that material, then we cannot change the valuation class. In such a case, if the stock exists, we have to transfer the stocks or issue the stocks and make the stock nil for the specific valuation class. Then only we will be able to change the valuation class.

    How is cost center accounting related to profit center ?

• In the master data of the Cost Center there is a provision to enter the profit center. This way all costs which flow to the cost center are also captured in the profit center.

• Cost centers are basically created to capture costs eg admin cost center ,canteen cost center etc

• Profit centers are created to capture cost and revenue for a particular plant, business unit or product line.

   What is a cost element group ?

Cost element group is nothing but a group of cost elements which help one to track and control cost more effectively. You can make as many number of cost element groups as you feel necessary by combining various logical cost elements.

   What is a cost center group ?

• In a similar line the cost center group is also a group of cost centers which help one to track and control the cost of a department more effectively. You can make as many number of cost centers as you feel necessary by combining various logical cost centers

• Infact you can use various combinations of cost center group with the cost element group to track and control your costs per department or across departments

   What is the difference between Distribution and Assessment ?

• Distribution uses the original cost element for allocating cost to the sender cost center. Thus on receiving cost center we can see the original cost element from the sender cost center. Distribution only allocates primary cost.

• Assessment uses assessment cost element No 43 defined above to allocate cost. Thus various costs are summarized under a single

• assessment cost element. In receiver cost center the original cost breakup from sender is not available. Assessment allocates both primary as well as secondary cost.

   What are the other activities in Cost center ?

If you have a manufacturing set up entering of Activity prices per cost center/activity type is an important exercise undertaken in Cost center accounting.

   How does SAP go about costing a Product having multiple Bill of materials within it ?

SAP first cost the lowest level product, arrives at the cost and then goes and cost the next highest level and finally arrives at the cost of the final product.

   What do you mean by primary cost component split ?

Primary cost split is defined when you create a cost component structure.When you switch on this setting, the primary cost from the cost center are picked up and assigned to the various cost components.

   How does primary costs get picked up from cost center into the cost component structure ?

This is possible when you do a plan activity price calculation from SAP. The primary cost component structure is assigned to the plan version 0 in Controlling

   Is it possible to configure 2 cost component structures for the same product in order to have 2 different views ?

Yes it is possible. We create another cost component structure and assign it to the main cost component structure. This cost component structure is called Auxiliary cost component structure which provides another view of the cost component structure.