If you do any transaction, system will search for G/L account to post This is called account determination.

It searches G/L in combination of Client + Chart of accounts + Transaction key + Valuation modifier + Account Group
code + Valuation class

For example you are doing migo wrt PO using movet type 101

1. While login into the system we enter client

2. while creating PO we enter company code in Org data tab, so based on this it identifies Chart ofAccounts ( In
SPRO we link company code and chart of accounts)

3. While creating material code we use material type, based on material type it identifies Quantity or value updation
(Maintains in SPRO) & Based on business transaction (goods movement/invoice verification) it identifies Values
string (WE01). Combination of these two (Qty/value updation & Value string) it identifies Transaction key.(BSX)

4. While creating PO we enter plant, so based on this it identifies valuation modifier/valuation grouping code (In
SPRO we define valuation grouping code, it is groping of valuation areas/plants)

5. Since you use the posting transaction Offsetting entry for inventory posting for various transactions (such as goods
issue, scrap, physical inventory), and these transactions should be assigned to different accounts (such as
consumption accounts, scrap accounts, expense/revenue from physical inventory differences), it is essential to
subdivide the posting transaction according to another key - the account grouping. It is already defined in standard
SAP, we need not to define any thing.

6. While crearting material, use take material type & material type assigned to valuation class
(in SPRO material type assigned to valuation classes through account category reference.