The first unit of this course introduces you to the essential tasks, which need to be carried out at year-end. You’ll also learn how to adapt the R/3 system to your company’s practices using Customising.
In the first lesson you’ll learn about the different tasks that are required at year-end closing, along with the specific order in which they must be carried out.
Then in the second lesson you’ll be introduced to the Customising facility. Using the R/3 Implementation Guide, you can adapt the balance sheet and profit and loss statement to the specific requirements of your company.
A number of special tasks are due at year-end. These tasks are concerned mainly with the preparations for, and the creation of, the balance sheet and the profit and loss statement.
These tasks must be carried out in a specific order.
1. General Customising
2. Opening and Closing Posting Periods
3. Balance Carried Forward
4. Balance Confirmation
5. Foreign Currency Valuation
6. Categorising Receivables and Payables
7. Customising Balance Sheet and P&L Structure
8. Balance Sheet / P&L
9. Other Reports
10. Balance Lists
11. Journal / Balance Audit Trail
12. Document Archiving
First, you must make some general customising settings. The process of Customising involves adapting an R/3 system to the particular requirements of a company.
Then a balance sheet is prepared: the posting periods must be opened and closed, balances are carried forward to the new fiscal year, balance confirmations are sent out, a foreign currency valuation takes place, and payables and receivables are categorised.
These steps form the basis for creating the structure of the balance sheet and the P&L statement. First, however, various customising tasks must be performed. Then you can create the balance sheet and profit and loss statement, as well as other external reports.
The final step in the year-end closing process is the documentation of postings material. For this, you’ll need to print out balance lists. In addition, the usual tasks for the journal and balance audit trail are carried out one final time, and the postings are archived.
Now it’s time to take a closer look at the individual tasks involved in year-end closing. Before a year-end closing can be performed, several general system settings have to be made.
You can adapt the R/3 system to company-specific requirements using Customising.
Specific settings can be made in each module of the R/3 system. The creation of a balance sheet and a profit and loss statement requires a number of customising steps in the Financial accounting area.
Preparation for creating the balance sheet begins with opening and closing posting periods.
You need to determine which posting periods and account types are still required to be left open for the year-end closing postings. In turn, this will allow you to determine those periods and accounts, which can no longer be posted to.
The next step is to carry the balance forward.
Account balances for customer, vendor and G/L accounts are carried forward from the previous year to the new fiscal year.
You then send balance confirmations to vendors and customers.
The external business partners involved should then check the balances, which appear in the year-end closing for accuracy.
Because of the “lowest value principle”, you’ll have to re-evaluate foreign currency receivables on the last business day of the year.
As part of the year-end closing procedure, foreign currency receivables must be reduced by any difference due to a drop in the exchange rate.
For the balance sheet, you must categorise receivables and payables according to their remaining term.
Receivables are divided into those that have a remaining term of up to one year and those whose terms will run for longer than one year.
Payables are divided into those with a remaining term of up to one year, those with between one and five years, and those with more than five years.
Before the balance sheet and P&L statement can be created, you’ll need to customise the structure.
During this process you determine which accounts should be assigned to which items in the P&L and the balance sheet.
At this stage the preparatory tasks for the year-end closing have been completed, and a balance sheet and P&L structure has been created for the company.
Now the balance sheet and the P&L statement can be accessed.
Other external reports connected to the balance sheet and the P&L statement may be required. These could include, for example, the tax year reporting for use and sales tax in the US.
A balance reconciliation can then be carried out and a balance list produced.
During the balance reconciliation, the account lists as of 12/31 are compared with those of 1/1.
At the same time, positing material of the current year is documented by the accounts list as of 12/31.
The journal and balance audit trail serve to document the posting material. Both types of documentation are created not only at year-end closing, but (depending on the volume of data) also monthly or, in the case of the journal, daily.
Posting transactions within a given time frame are entered into the journal and sorted according to posting date.
Line items are archived according to account in the balance audit trail.
The final step in the year-end work process is document archiving.
In R/3, to save space, documents can be archived in designated time intervals.
They are later removed from the system on the same basis.
You can re-access archived documents. The monthly debits and credits of the accounts are unaffected.
After this final task, the year-end closing procedure is complete.
In the next lesson, you’ll learn how to use the Implementation Guide to adapt the Balance Sheet / P&L statements to the requirements of your company.
The R/3 system contains many pre-settings and defaults, used for a wide variety of tasks.
These defaults must, however, be adapted to the special needs of a particular company.
This adaptation is achieved using Customising.
During Customising, parameters are set which extend beyond one particular module, for example, Language or Local Currency.
Specific settings can also be made in each module.
In particular, creating a balance sheet and a P&L statement requires a series of customising steps.
In Customising, you can create various internal divisions within external reports. You can also specify the accounts for year-end postings and the design of the layout for account confirmations.
Customising is carried out using the Implementation Guide (IMG). This is designed primarily to provide new users with instructions on the system, enabling them to make the required settings accurately, and efficiently.
There are three main advantages of the IMG: settings can be carried out in a preset order, the user can call up complete documentation on each customising feature, and each step taken is recorded by the system.
You can get to the IMG from the SAP R/3 main screen.
From there, first select the Tools menu option.
In the submenu, click on the menu item Business Engineering.
Another submenu opens up. Click on the menu item Customising.
The Customising screen appears. Now click on the Enterprise IMG button.
All Customising features of the R/3 system are arranged hierarchically within the IMG. You’re now at the uppermost hierarchy level from where you can select individual areas.
To make the required Customising settings, single-click with the mouse on the Financial Accounting node.
From here, you need to open up the subdivisions under the G/L Accounting by clicking on the node General Ledger Accounting.
Now perform the next two steps by opening up the hierarchical nodes Business Transactions and Closing one after the other. First click on the G/L accounting business transactions hierarchical node.
Another hierarchical level opens up. Click here on the hierarchical node Closing.
All possible Customising features are arranged under the items Valuate, Regroup, Document and Report. As before, you can access each feature by single-clicking on a hierarchical node.
In this example, the documentation area will be called up by selecting Document. The features within this area are identified by the symbol of a green check mark with a red point. You can call up a feature by single-clicking on its check mark symbol.
When you double-click on the description of the feature or on the node in front of the check mark, you bring up some text.
This text explains the feature in more detail.
In this unit, you’ll learn how to prepare a balance sheet.
In the first lesson, you’ll learn how to close posting periods to which postings may not be made for the balance sheet / P&L. You’ll also learn how special posting periods can be opened as an alternative.
Then in the second lesson, you’ll learn how balances can be carried forward from the old fiscal year to the new one in either a test run or a production run.
The third lesson deals with balance confirmations. Participating business partners to review the balances that are to be declared at year-end closing generally uses these.
In the fourth lesson, you’ll learn how to evaluate foreign currency receivables and payables on the basis of exchange rate fluctuations.
Finally, the fifth lesson introduces categorisation. This is used to divide receivables and payables according to their remaining life.
Only certain posting periods and certain account types are used for the P&L statement and the balance sheet.
First, you’re going to close all periods and accounts to which postings should no longer be made.
You start off in the R/3 main screen and select the menu item Accounting.
In the submenu, you then select the menu item Financial Accounting.
Another submenu appears. There you click on General Ledger.
In the General Ledger initial screen, you select the menu item Environment.
In the submenu, you click on the menu item Current Settings.
Several features are available in the Current Settings: Select Activities screen.
To edit posting periods, you click on the Open and Close Posting Periods option.
This provides a list of all periods to which postings can be made, sorted according to company code.
The list begins with company code 0001.
Company code US01 will be processed in this example, therefore the Position button must be used to scroll through the list.
After clicking on the Position button, the Other Entry dialog box appears. To go to the correct position now, enter the company code that you would like to process and then confirm your entry by pressing the Enter key.
In order to go to the correct position in the list, click on the Continue button now.
The required company code has now been located in the list. There are 5 lines for company code US01 in this example.
The A column identifies the account type. There are five different entries for company code US01 here.
The first line contains a plus sign in the A column. The plus sign is valid for all account types and indicates that the entries in this line are minimum entries, which can be expanded if required.
Therefore, postings may only be made to accounts for the company code US01 between 1/1996 and 12/1996.
The entries for fixed-asset accounts (A), accounts receivable (D), accounts payable (K) and G/L accounts (S) are found in the next four lines. The entries in the top line can be further restricted here according to account type and account number.
In this example, accounts receivable from the old fiscal year, 1996, are to be closed for posting periods 1 through 12. However, postings will be allowed using the special posting periods 13 through 16 from the old year, and periods 1 and 2 from the new fiscal year, 1997.
If you’d like to learn more about posting periods and special posting periods now, click on more.
The fiscal year is subdivided into posting periods. It doesn’t necessarily correspond to the calendar year and the posting periods can differ from the calendar month. Each company code employs a fiscal year variant to specify the fiscal year structure.
The variant K4 specifies that the calendar year will be used for the fiscal year (periods 1-12) and also provides for 4 additional special posting periods (13-16). These special posting periods can be used for postings that are made during the year-end closing procedure.
The system generally provides variants K1-K4, which allow for 1 to 4 special posting periods. Aside from the standard variants, alternative variants can also be created to meet specific business needs.
To open the required posting periods for accounts receivable, 13 is entered in the From column for the first time period. In the To column for the first time period, 16 is entered.
Period 1 must be entered in the From column for the second time period and 1997 must be entered in the corresponding Year column.
You then enter Period 2 in the To column for the second time period and again enter 1997 in the corresponding Year column.
You’re now going to close periods 1 through 12 and open the special posting periods 13 through 16 from the old fiscal year for the A/P accounts (K). Click on the input field where you would enter the beginning of the time period.
Now enter the special beginning posting period, and then complete your entry by pressing the Enter key.
Now enter the last special posting period, which will indicate the end of the time period, and then complete your entry by pressing the Enter key.
You have now opened the special posting periods 13 through 16 in fiscal year 1996 for the A/P accounts and closed all other periods.
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