Financials Contents:

Chart of Accounts Journal Entries Posting Tools Budgeting Fixed Assets Cost Accounting

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Financials: Unit Objectives

At the conclusion of this unit, you will be able to: Maintain the chart of accounts Post journal entries manually Create journal vouchers Use posting templates Use recurring postings Use budgeting Monitor your projects and profit centers

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Financials: Business Scenario

Due to legal requirements and business reasons, all transactions that lead to a change in a company's net worth, equity capital, and external capital must be documented in accounting records. These records are used at the end of an accounting period to prepare the company's financial statements.

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Chart of Accounts: Topic Objectives

At the conclusion of this topic, you will be able to: Change the chart of accounts for your company Create, delete, and change G/L accounts Define a control account Define the currencies the systems uses to manage a G/L account balance Use account segmentation for reporting purposes

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Account Types in the General Ledger

Balance Sheet Accounts

Asset Accounts Liability Equity Accounts Accounts

Income Statement Accounts

Revenue Accounts Expense Accounts

Balance Sheet Assets Liabilities Equity

Profit & Loss Statement Revenue ./. Expenses = Profit/Loss

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In the General Ledger, we distinguish between Balance Sheet Accounts and Income Statement Accounts, also called Profit and Loss accounts There are three types of Balance Sheet Accounts: Asset accounts Liability accounts Equity accounts After the end of the fiscal year, the balances of the asset accounts will be displayed on the active side of the balance sheet. The balances of the liability accounts and the equity accounts will be displayed on the passive side of the balance sheet. There are two types of income statement accounts: Revenue accounts Expense accounts After the end of the fiscal year, the balances of the expense accounts will be subtracted from the balances of the revenue accounts to come up with the profit or the loss for the fiscal year. The profit or loss will either increase or decrease the equity on the balance sheet.

Structure of the Chart of Accounts

Level 1
Assets

Level 2

Level 3

Level 4

Level 5
Freehold Land

Liabilities

Land & Buildings Tangible Assets Fixed Assets ... Plant & Machinery Formation Expenses Intangible Assets Current Assets ... Patents, and so on

... Buildings

General Ledger

Cap. + Res.

Turnover

...

Cost of Sales

...
Operating C.

Non-Operating

Title Active Account

Tax + Extr.

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A chart of accounts arranges a company's general ledger accounts in a hierarchical structure. The top level in the structure (level 1) consists of several account groups for accounts of different types (assets, liabilities, capital and reserves, turnover, and so on). The number of account groups depends on the company localization of which it was created and cannot be modified by the user. Choose Financials Chart of Accounts to create and maintain G/L accounts. All changes in the definition of an account are logged in a log of changes under Tools Change Log. Choose Financials Edit Chart of Accounts to maintain the structure of the chart of accounts. Levels 2 through 4 can contain either active accounts or titles that combine several active accounts. Level 5 only contains active accounts. The system displays the group (cabinet drawer as shown in the figure) titles in black with a blue background. You cannot change these titles. The system displays all other titles in blue and normal active accounts in black. Accounts that you have entered in the G/L account determination (primary accounts) are displayed in green. When you do the system initialization, you can either use one of the charts of accounts shipped with the system as a template and adjust it to your needs, create your own chart of accounts or import it from your legacy system Choose Administration System Initialization Company Details and choose a template in the Chart of Accounts Template field on the Basic Initialization tab. Another option is to import a chart of accounts using the data transfer workbench. If you wish to create your own chart of account, leave the option User Defined.

Control Accounts

General Ledger

Control accounts for payables and receivables aa bb

Control accounts aa bb Control accounts

Standard Transactions

aa bb

Customers

Vendors

Business partners aa bb

Special Transaction types

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You can define a G/L account as a control account. A control account links the business partner accounts to the general ledger. You must enter a control account in every business partner master record. Whenever you post a document to a business partner account, the system automatically adds a journal entry to the general ledger, which posts the receivables or payables to this control account. Some transactions, such as transactions with bills of exchange, must be posted to special control accounts. Therefore, you can assign these special accounts to predefined transaction types, such as Open Debts, Assets Account, Down Payments Receivable/Payable or other (country-dependent). You can also enter default control accounts under Administration Setup Financials G/L Account Determination. These accounts appear by default whenever you create a new business partner. The system displays the total account balance in the business partner master record. From there you can navigate to the line item display of the account. In the line item display, the system displays the debit values in black and the credit values in green and in parentheses. If you are working with several control accounts, the system can display the business partner balances separately for every control account. To activate this, choose Administration System Initialization General Settings and select the Display Accounts Balance by Control Accounts indicator on the BP tab. You must have the proper authorization to view the accounts and balances.

Accounting Currencies

mySAP Business Suite

SAP BW

Currency: USD

Microsoft Excel

SAP Business One

SAP Business One

SAP Business One

Local Currency: EUR System Currency: USD

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Local Currency: USD System Currency: USD

Local Currency: JPY System Currency: USD

SAP Business One can handle accounting in two parallel currencies: the local currency and the system currency. The local currency is the currency in which the company is legally required to keep its books. The system currency may be a different currency than the local currency and is especially useful for subsidiaries of global companies whose head office uses a different currency than the subsidiaries (for example, EUR () in the subsidiary and USD ($) in the head office). In this case, the system automatically calculates all postings in the local currency and manages an additional account balance in the system currency. This makes it easier to have aggregated reporting on all the subsidiaries and allows for better integration with the system of the head office. For example, you could export the financial data in system currency from the SAP Business One systems of the subsidiaries to the mySAP Business Suite or the SAP Business Information Warehouse of the head office. Alternatively, financial consolidation can be done with Microsoft Excel or any other product based on the financial data in system currency. Choose Administration System Initialization Company Details to define the local currency and the system currency on the Basic Initialization tab.

Account Currencies

Currencies for Entering Journal Entries Account Currency = Local Currency Account Currency = Specific Foreign Currency Account Currency = Multi-Currency Local Currency

Currencies of the Account Balance Local Currency System Currency Local Currency System Currency Specified Foreign Currency Local Currency System Currency

Local Currency Specified Foreign Currency Local Currency Any Foreign Currency

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You must specify an account currency for each business partner master record and each G/L account to specify the following: The currencies in which line items to this account can be entered The currencies in which the system manages the account balance If you enter the local currency in the Currency field, you can enter line items in the local currency and the system manages the account balance in the local currency and the system currency in parallel. If you enter any specific foreign currency in the Currency field, you can enter line items in the specified foreign currency or the local currency. The system then manages the account balance in the specified foreign currency, the local currency, and the system currency in parallel. If you enter multi-currency in the Currency field, you can post line items to this account or business partner in any currency. The system, however, manages the account balance only in the local and system currencies. In other words, it does not manage the balance in the currencies in which the items were entered. . For Multi currency accounts, you can only conduct external bank reconciliations in the local currency. Take this fact into account when working with multi currency accounts, since it may be difficult to reconcile it properly. You can define default currency for new G/L account creation onn the Default Account Currency field on the Basic Initialization tab under Administration System Initialization Company Details. At any point, you can change an account currency to be multiple currencies, but you will not be able to change it back once you update. The G/L Accounts and Business Partners report produces a list of all accounts, including their name, account group, and balances. To run the G/L Accounts and Business Partners report, choose Financials Financial Reports Accounting G/L Accounts and Business Partners.

Some G/L Account Definition

Balance Confidential Account Type Cash Account Alternative Account Name External Code Code for Exporting Active or On Hold

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The system displays the account balance in the account master record. From there you can go to the line item display of the account. In the line item display, the system displays the debit values in black and the credit values in green and in parentheses. For viewing the accounts and the balances you need the right authorization. You can define G/L accounts as confidential. You can use and display confidential accounts only if you have the necessary authorizations. In the Account Type field, you define an income statement account as revenue account (sales) or expense account (expenditure). All other accounts should have the account type other. Accounts that you defined as Cash Accounts appear as cash accounts in the Cash Flow report. Generally, all your bank accounts should be defined as cash accounts. In the External Code field or the Code for Exporting field, you can enter alternative codes for the account. The alternative codes can be used by external programs that you integrated with SAP Business One. In the Details area, you can enter additional information about the account: You can define an Alternative Account Name for the account. This can be useful when your company works in different languages. You can set a G/L account as Active or On Hold for a certain period of time Additional definitions will be discussed later on

Account Segmentation

n gio Re

North Sout h West

les Sa g sin ha rc Pu on cti u od Pr

Segment

Department

Equipment

Clothing

Divi sion

Natural Account - Division - Department - Region (North) (Food) (Sales)

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The accounts in SAP Business One can be subdivided into segments if you activate the account segmentation. A segment is built from the values of up to nine segment dimensions. The account code is therefore composed of the values for the following segment dimensions for example: Region Department Division Because this example uses only three segment dimensions, a segment can be pictured as a cube. When using account segmentation, you do not just post to an account but also to a segment. By doing this, you classify the posting as belonging to a certain division (for example, Food), department (for example, Sales) and region (for example, North). Account segmentation is very important for financial reporting in the USA.

Food

Definition of Account Segmentation

Account Segment Separator

Segment Dimensions

Natural Account -

Division - Region -

Department

Segment Characteristics

Clothing Equipment

North South West

Sales Purchasing Production

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You decide on the company level whether you want to use account segmentation or not. After accounts with segments are created, you are not able to change back. Choose Administration System Initialization Company Details and then select the Use Segmentation Accounts indicator on the Basic Initialization tab to switch on the account segmentation. The system displays an account segment separator between the characteristics of a segment. You can specify the account segment separator under Administration System Initialization General Settings in the Account Segment Separator field on the Display tab. This field is available only if the account segmentation is switched on in the company details. If you want to use account segmentation, you must define how many and which segment dimensions you need. Up to nine dimensions are possible. You can freely choose the names of the segment dimensions, for example, division, region, department, cost center, business area, functional area, and so on. You also define the length and the type (numeric or alphanumeric) of the segment characteristics. The first segment is always the natural account. By default, upon creation of a new database, 4 segments are created, including the natural account, but you can remove, add or change its name and number of characters. For every segment dimension, you define the possible segment characteristics, for example, clothing and equipment as segment characteristics for the segment dimension division. To define the segment dimensions and the segment characteristics, choose Administration Setup Financials Define Account Segmentation. This path is available only if the account segmentation is switched on in the company details. When defining the segment dimensions and segment characteristics, keep in mind that the number of segments increases dramatically with every segment dimension and every segment characteristic. If you import your chart of account, make sure you define the different segments first.

Account Code Generator

Natural Account 10000000 Division Clothing Equipment Region North South West Department Sales Purchasing Production

Natural account: 10000000 with three segments

North Sout h West

Equipment

Clothing

Account Code Generator

les Sa g sin ha rc Pu on cti u od Pr

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You can use the account code generator to create the segments. In the account code generator, you specify the natural account and its properties, as well as the segment characteristics for which you want the system to generate segments. You must enter the codes of the segment characteristics to specify a segment. The system displays the short names of the segment characteristics in the description of the segment. You find the account code generator under Financials Account Code Generator. This path is available only if the account segmentation is switched on in the company details.

Food

Journal Entries: Topic Objectives

At the conclusion of this topic, you will be able to: Post journal entries manually Use the functions for displaying documents Explain how journal entries and original documents are related Post journal entries in foreign currencies

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Journal Entry
Form Settings
Journal Entry

Document Header Data

Expanded Editing Mode for a Line Item

G/L Acc./BP No Name Debit Credit Tax Group Tax Amount

1000 1775

Expenses VAT

100,00 16,00

A2

16,00

Line Items Table

Add

Cancel

Cancel Template

Display FC

Display SC

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To enter a journal entry, choose Financials Journal Entry. The screen for entering journal entries manually is divided into three areas: document header data, extended editing mode for an item, and the items table. The system automatically enters a number in the document header. This number is incremented with every transaction. You can define numbering series for journal entries on the Document Numbering screen, under the Administration system initialization The system proposes the current date as the Due Date, Posting date, and document date. The posting date must always fall into the posting period set as current. The current period is determined by the posting date range of SAP Business One the server. If you want to post into another period than the current one, you can set the other period as current for your own user by double-clicking that period on the Posting Periods tab under Administration System Initialization General Settings. The Ref. 1 and Ref. 2 fields can contain references to associated actual documents. You can also classify the document using a transaction code, for example, as an accrual/deferral document, depreciation document, or value adjustment document. Choose Administration Setup Financials Transaction Codes to maintain the transaction codes. The system copies the description of the transaction code to the Details field. You can show or hide the expand editing mode. The mode always refers to the item that is currently selected and displays all the item fields for you to enter the relevant data. The Ref. 1, Ref. 2, Project, and Details fields are usually filled with the content of the fields with the same name in the header. In the settings, you can define which columns are displayed in the items table. Furthermore, you can store values in the settings that the system uses as default values when you enter a journal entry.

Automatic Tax Line Items

Defaulted from G/L Account (or entered manually)

Calculated based on tax group

Debit G/L Account Tax Account 100 16

Credit

Tax Group V2 V2 Based on each other

Tax Amount 16

Gross Value 116

Base Amount

100

Line added automatically

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You can enter a tax group in any G/L account line item. The system then automatically calculates the tax for this line item and creates an additional line item which posts the tax to the correct account. You cannot change or delete this tax line item manually. It is purely based on the G/L account line through which it was created. It automatically gets deleted if you delete the G/L account line. In the G/L account line item you can either enter the net amount in the normal Debit or Credit fields or the gross amount in the Gross Value field. Either way, the system calculates the other value and the tax amount based on the definition of the tax group. You can also enter a Default VAT Group in the G/L account master record and specify whether the user is allowed to change the tax group when entering a manual journal entry or not by selecting the Permit Other VAT Group indicator in the G/L Account Details. You cannot manually post to a tax account.

Origin Documents

oices A/R Inv IN

l Journa Entries

Reference to Origin Document Type and Origin Document Number

l Journa tries En JE

oices A/P Inv PU

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All journal entries refer to the type and number of the origin document (for example, IN for customer invoices) in case it was created as a result of adding another document. The origin documents of manual journal entries are the journal entries themselves. For this reason, they refer to themselves and are of type JE (journal entry). Most journal entries refers to other document types (for example, IN for customer invoices or PU for AP invoices). The Transaction Journal Report shows all the journal entries of a certain origin type in chronological order, sorted by transaction number. From here, you can go directly to the origin document for the posting. To run the Transaction Journal Report, choose Financials Financial Reports Accounting Transaction Journal Report or choose the icon on the upper tool bar. The Document Journal report is a similar report. Here you can use more options to select and tailor the output. To run the Document Journal, choose Financials Financial Reports Accounting Document Journal. The General Ledger report provides a view of the selected general ledger and business partner accounts and lists all line items that you have posted to the account. To run the General Ledger report, choose Financials Financial Reports Accounting General Ledger.

Reverse Transactions
Standard Reverse Transaction Incorrect Posting Account 1 2050 2050 0 0 Account 1 2050 2050 Account 2 2050 2050

2050 2050

2050 2050

Increase in Totals

Account 2 0 0 2050 2050

Reverse Transactions with Negative Amounts Account 1 2050 -2050 0 0 0 Account 2 2050 -2050 0

Reset of Totals
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Users can make input errors. As a result, the journal entry created may contain incorrect information. To provide an audit of the correction, the user must first reverse the journal entry in error, and then capture the document correctly. You can specify whether reversal transactions are performed: As standard reverse transactions As reverse transactions with negative amounts The standard reverse transaction causes the system to post the debit in error as a credit and the credit in error as a debit. This corrects the balance of the accounts. However, the standard reverse transaction causes an additional increase in the totals on the debit and credit sides, which might be misleading. The reverse transaction with negative amounts causes the system to post the debit in error as a negative debit and the credit in error as a negative credit. This not only corrects the balance of the accounts but also the totals. It depends on the country whether standard reverse transactions or reverse transactions with negative amounts are required. Choose Administration System Initialization Company Details and select the Use Negative Amount for Reverse Transaction field on the Basic Initialization tab to switch on the reverse transaction with negative amounts.

Display of Debit and Credit

Account with Debit Balance

Account with Credit Balance

Debit Postings 130.00

Credit Postings (100.00)

Debit Postings 100.00

Credit Postings (130.00)

Debit Balance 30.00

Credit Balance -30.00

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When you enter the line item display of any account (G/L account or business partner), the system displays the debit and credit amounts the following way: Debit Postings: Credit Postings: Black amount, for example, 130.00 Green amount in parentheses, for example, (100.00)

The amounts are usually positive. There may be negative amounts if you selected the Use Negative Amount for Reverse Transaction indicator under Administration System Initialization Company Details on the Basic Initialization tab. These negative amounts indicate reversal postings. The balance is the difference between the sum of all credit postings and the sum of all debit postings. If the sum of the debit postings is greater than the sum of the credit postings, there is a debit balance. If the sum of the credit postings is greater than the sum of the debit postings, there is a credit balance. Usually, the system displays a credit balance with a negative sign because the credit balance represents liabilities in an asset account. If you want this type of display, make sure that the Display Credit Balance with Negative Sign indicator is selected. Choose Administration System Initialization Company Details and the Basic Initialization tab.

Postings in Foreign Currencies

Display FC Foreign Currency Debit (FC) Account in Local Currency (EUR) Account in Foreign Currency (e.g. JPY ) Account in Multiple Currencies 2000 JPY 21,GBP Credit (FC) Local Currency Debit 10,EUR 20,EUR 30,EUR
Entered manually Currency Conversion by Rate from Exchange Rates Table
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Display SC System Currency Debit (SC) 12,USD 24,USD 36,USD Credit (SC)

Credit

The system displays the amounts in the local currency in the items table of the journal entry. You can also display the amounts in the system currency by selecting the Display SC indicator. To enter amounts in foreign currencies you need to activate additional fields by selecting the Display FC indicator. When you make journal entries in foreign currencies to a foreign currency account, you do not need to specify the currency because it is stored in the account and added to the amount by the system. When you make journal entries to an account that is managed in multiple currencies, you must specify the currency codes by entering them manually together with the amount. The system uses the exchange rate in the exchange rates table to convert the amounts from the foreign to the local and then to the system currency. You can modify the foreign and local amounts manually, in case they dont match the rate you have entered. Choose Administration Exchange Rates and indexes to update the exchange rates table. You can also specify exchange rates for certain periods of time by choosing Set Rate for Selection Criteria. You can configure the system so that the entry window is displayed automatically as soon as you log on. Choose Administration System Initialization General Settings and select the Open Exchange Rates Table indicator on the Services tab to activate this service for your user. If the exchange rates table has not been maintained, it is opened automatically when you enter an item in a foreign currency. You can define whether to allow or block un balances Journal Entry in FC and whether to allow multi currency journal entry. This can be done on the Administration System Initialization Document Settings Per document Journal Entry

Posting Tools: Topic Objectives

At the conclusion of this topic, you will be able to: Use journal vouchers Use posting templates Use recurring postings

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Journal Vouchers

Entries in Journal Voucher

Create Journal Voucher

Correct and Update

Journal Voucher (Folder of Journal Entry Drafts)

Journal Entries

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SAP Business One offers a two-stage procedure for creating journal entries. You can create the journal entries as drafts first, correct and post them later. When you are creating a journal voucher it is used for storing several journal entry drafts. You can change journal voucher as long as they have not been posted yet. Your colleague, for example, can then access the journal voucher, make any necessary corrections, and then post the entire journal voucher. You do not have to post each journal entry individually. If you do want to post the journal entries individually, however, you must create a separate journal voucher for each journal entry draft. You can save journal vouchers as not balanced as long as it is in the draft mode. To create, change, and post journal vouchers, choose Financials Journal Vouchers.

Posting Template with Percentages

Journal Entry

Template Type: Template:

Percentage Bonus

Code: Bonus G/L Account/BP No.

Description: Annual Bonus G/L Account/BP Name Employee Account (BP) Debit%
Add Cance Add Cance ll Cancel Template

Credit% 120

4100 4200

Salaries and Wages Annual Bonus

100 20

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You can create posting templates for journal entries that have a very similar structure. These templates can contain account numbers but you can also just specify an account description in a line item if you do not yet know which exact account will be used for this line item. Instead of fixed amounts, only percentages are entered here. These percentages indicate how the total amount is distributed among the line items. The illustration shows a simplified example of how you can add an annual bonus of 20% to the last salary posting for an employee. In the posting template shown, the business partner account for the employee, for example, is not known yet because you want to use this posting template for different employees. The posting template is stored under a code and with a description. Choose Financials Posting Templates to enter and maintain posting templates. When you enter a journal entry manually, choose Percentage in the Template Type field and enter the template code in the Template field or press tab and choose it from a list.

Recurring Postings
Code: Rent G/L Account/BP No. 620000 161000 Description: Rental Payment G/L Account/BP Name Property Rent Girobank Account Monthly On 1 10/01/04 Debit 1000 1000 Credit

Frequency:

Valid to 09/30/05

Next Execution:

Daily Weekly Monthly Quarterly Half Yearly Annually One Time

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Template Frequency List For Manual Journal Entries Template Type: Recurring Posting

Not Executed Yet

Inactive

SAP Business One features a recurring postings function for journal entries created on a regular basis. Choose Financials Recurring Postings to enter and maintain recurring postings. Recurring postings use a template that is stored with a code and a description. In this template, you define (among other things) the frequency in which the journal entry is supposed to be created and until when the recurring posting is valid. The possible entries in the Frequency field include: Daily, Weekly, Monthly, Quarterly, Half Yearly, Annually: You must also specify the next execution date for these entries. One time: Although a one-time recurring posting seems a bit odd, it serves a special purpose. With this you can schedule a journal entry for a specific date. Template: Journal entries that you need repeatedly but not on a regular basis can be created as this type. You can access these templates from the manual journal entry. To do so, you must specify Recurring Posting in the Template Type field. Not executed yet: If you do not need the recurring posting at present, you can turn it off with this entry. In the Valid To field, you can enter a date until which the recurring posting is valid and will be executed by the system. The system duplicates the original recurring posting (instance 0) every time the execution date arrives. Once you use this instance and add it to the system, it will be deleted. You can display a list of all the recurring postings in the system. You can then adjust these postings and confirm them. You can also configure the system so that the execution list is displayed automatically as soon as you log on. Choose Administration System Initialization General Settings and select the Display Recurring Postings on Execution indicator on the Services tab to activate this service for your user.

Budgeting: Topic Objectives

At the conclusion of this topic, you will be able to: Define budget scenarios Define budget distribution methods Define budgets Run the budget report

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Budget Scenarios
Budget

Optimistic Budget

Main Budget

Pessimistic Budget

Account Account Account Account Account 100000 200000 300000 400000 500000
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In SAP Business One, you can decide if you want to use a budget restriction that does not allow any exceeding over budget or if you want to just get an alert if there is a deviation. In this case, you need to have certain authorizations to confirm the deviation before you can go on. You must also specify at which point in the process the system performs the budget check (when entering purchase orders, goods receipts PO, or A/P invoices and Journal Entries). Choose Administration System Initialization General Settings and then the Budget tab define when and how the system is performing the validation for any budget deviations. Using SAP Business One, you can use several budget scenarios, which can be independent or may be based on one another. Choose Financials Budget Budget Scenarios to define your budget scenarios. The system however will only perform the validation against the main budget scenario, and all the others are for reporting purposes only. An example for an additional scenario could be an optimistic one that would be relevant when your business runs better than expected and you have more money to spend. Another example could be a pessimistic scenario that would be relevant when your business runs worse than expected and you have less money to spend.

Definition of Budgets

monthly distribution

Accounts must be marked as Relevant to Budget

Budget may be calculated as percentage of other budget

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Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.

Equal 1 1 1 1 1 1 1 1 1 1 1 1

Asc. 1 2 3 4 5 6 7 8 9 10 11 12

Desc. 12 11 10 9 8 7 6 5 4 3 2 1

any x x x x x x x x x x x x

Budget is entered on debit side for expenses Actual: current balance Actual Future: open purchase orders plus open good receipts PO

If you want to use the budget functionality, you must switch it on in the general settings. The system then automatically marks all profit or loss accounts as Relevant to Budget. You can manually remove the selection or set it also for balance sheet accounts. Choose Financials Budget Define Budget to manually enter an annual budget for every account marked as Relevant to Budget. The budget is entered on the debit side (expense side). Only a debit budget is checked by the system. The system breaks down the annual budget into monthly budgets by using a Budget Distribution Method. Three budget distribution methods are preconfigured: Equal: Ascending: Descending: Every month receives an equal share of the annual budget. The annual budget is distributed by using ascending weights from 1 to 12. The annual budget is distributed by using descending weights from 12 to 1.

Of course, you can define additional methods, for example, a seasonal distribution method. Choose Financials Budget Define Budget Distribution Method. You can manually change the monthly distribution if you double-click an account row number when you define the budget. Instead of manually entering an annual budget, you can enter a parent account and a percentage. The system then derives the budget of the child account as the percentage of the annual budget of the parent account. Note that the child amount is added in addition to the parent one. The system also displays the current balances of the accounts.

Fixed Assets: Topic Objectives

At the conclusion of this topic, you will be able to: Create fixed asset master records and asset classes Describe the purpose of depreciation areas, create and maintain them Post acquisitions, retirements, and transfers for fixed assets Post manual and automatic depreciations Perform the period-end preparations for fixed assets

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Asset Classes and Fixed Asset Master Data

Fixed Asset Master Data

Asset 001111

1000
000000-099999

t Asse ss Cla

1000
000000-099999

Real Estate

Fixed Assets

C
100000-199999

2000
200000-299999

Machines Fixtures Fittings

normal Assets

3000
300000-399999

4000
400000-499999

5000
500000-599999

Low Value Assets (LVA)

...
600000-699999

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In SAP Business One, various asset classes are available for classifying fixed assets according to business and legal requirements. Each asset is assigned to exactly one asset class. In every asset class you can define various control parameters and default values. The asset classes are defined as items and appear in the item master data. Consequently, some items in your system represent asset classes. Edit asset classes solely in the definitions of Fixed Assets. Do not change the asset classes in the item master data. There are two types of asset classes: General Low Value asset For low value assets you can enter an upper value limit for the acquisition value. You must assign a number range to every asset class. The system automatically assigns a number from that number range if you create a fixed asset master record with this asset class. Choose Administration Definitions Fixed Assets Define Asset Classes to define and maintain asset classes. Choose Administration Definitions Fixed Assets Numbering to define and maintain number ranges that you can assign to the asset classes. Choose Financials Fixed Assets Fixed Assets Master Data to define and maintain master data for fixed assets. You can also import fixed assets master data by choosing Administration Definitions Fixed Assets Import Fixed Assets Master Data. Before you can import fixed assets master data, you need to switch the Fixed Asset Mode to Transfer in the basic initialization.

Depreciation Areas
Depreciation Areas Posting to G/L
Depreciation Type Ordinary and special depreciation

Asset X Asset Class

Account Determination

Derived Area

No special depreciation

Additional Area Additional Area Additional Area

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Depreciation Type Depreciation Type Depreciation Type

In Fixed Assets for SAP Business One, you can use different depreciation areas for showing the value of fixed assets for a specific purpose (e.g. balances for tax purposes or management accounting values). The system distinguished the following depreciation area types: Posting to G/L: A depreciation area of this type forwards its values as postings to the general ledger and is also called the leading depreciation area. Only one leading depreciation area is possible. In the asset class definition, you must assign a G/L account determination to this depreciation area. Derived Area: The system automatically creates this derived depreciation area that you can use in case of a special depreciation. If a special depreciation is calculated, the derived area will not reflect it so that it allows you to monitor the values for ordinary depreciation without special depreciation. This area is only used for information purposes; no asset postings are carried out in general ledger. Only one derived depreciation area is possible. Additional Area: This area is only used for information purposes; no asset postings are carried out in general ledger. You can create unlimited additional areas. In the asset class definition, you must assign a depreciation type to each depreciation area. This depreciation type defines the depreciation method (straight line, declining balance, multilevel, immediate write-off, special depreciation) and the depreciation begin. For each asset, you can assign a leading depreciation area and a derived area. The parameters for the derived depreciation area are copied from the leading area. You cannot modify these parameters. SAP Business One stores the asset values separately for every depreciation area and different transaction types, like acquisition, retirement, transfer, and so on. Choose Administration Definitions Fixed Assets Define Depreciation Areas to define and maintain depreciation areas.

Depreciation Types
Manual Depreciation Ordinary Depreciation X Automatic Depreciation

Straight-Line Depreciation

Declining-Balance Method

Multilevel Method

Unplanned Depreciation

--

Special Depreciation

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Fixed Assets for SAP Business One offers a number of depreciation types to classify depreciation based on the reason for the value adjustment. The system supports the following forms of depreciation: Ordinary Depreciation Ordinary depreciation refers to planned depreciation for ordinary use of a fixed asset. Unplanned Depreciation Unplanned influences or incidents, such as damages, that lead to a lasting decrease in value of the fixed asset are entered in the system using an unplanned depreciation. Special Depreciation In Fixed Assets for SAP Business One, special depreciation is always calculated in addition to ordinary depreciation. Ordinary and special depreciations can be calculated, planned and posted automatically. To calculate the depreciation, you need to create depreciation types first. The depreciation types can use the following methods: Straight-line: The periodic depreciation amounts are equal to the acquisition and production costs (APC) divided by the entire useful life. Declining-balance: Each year, depreciation is calculated using the same constant percentage rate of the remaining net book value. Multilevel: You can specify the rate of depreciation and the validity period to determine a course of depreciation that changes in levels over time (usually decreasing). All three forms of depreciation can be done manually by choosing Financials Fixed Assets Manual Depreciation. To do a manual special depreciation, you need to create a depreciation type with the Manual depreciation method first.

Acquisitions

Vendor 1000

Acquisition with vendor

Asset Account 1000

Clearing Account Asset Acquisition* 1000

Acquisition without vendor

Asset Account 1000

* For example, opening balance account

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You need an asset master data before you can book an acquisition. You can create this asset master data directly within the acquisition transaction. You can also copy an existing one. Choose Financials Fixed Assets Acquisition to post an acquisition. You can enter acquisitions of several fixed assets into one acquisition document provided that you have bought them from the same vendor. You also can include invoice lines that you post to an expense account. You can choose between Acquisition with Vendor and Acquisition Without Vendor. In both cases, the system posts the net price to the debit side of the asset account that you have entered in the Balance Sheet of Asset Account field in the G/L account determination. If you have selected Acquisition with Vendor the system posts the offsetting entry to the credit side of the vendor account. If you have selected Acquisition without Vendor the system posts the offsetting entry to the credit side of the clearing account that you have entered in the Clearing Account Asset Acquisition field in the G/L account determination. This document type is useful if you want to post asset values for asset that you already own. The offsetting account is this case is the opening balances account. Optionally, you can enter a quantity for the items. Maintaining items by quantity can be useful for lowvalue assets or gifts. You can enter additional asset information in the Reference field. This information will be transferred to the Reference 2 (Ref. 2) field of the journal entry. A credit memo, which reduces the acquisition and production costs of an asset, essentially represents the opposite of an invoice for a purchased asset. Choose Financials Fixed Assets Credit Memo to post a credit memo. In the Credit Memo transaction, you can enter a partial credit memo for an existing invoice. The system corrects the value of the corresponding fixed asset automatically.

Retirement (Gross Procedure)

Asset Account 1000 1000 Retirement Scrapping Sales with Customer

Leave with Expense Net Book Value* 1000

Revenue 800 Additional posting for Sale with Customer

Customer 800

* Or Leave with Revenue Net Book Value if asset was sold with a gain
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An asset retirement is a reduction of an object from fixed assets. In the definition of the depreciation area, you decide if the system shall post the retirement with the gross procedure or the net procedure. The figure displays the postings according to the gross procedure. You can choose between Sale with Customer and Scrapping. In both cases, the system posts the retirement amount to the debit side of an expense account and the credit side of the asset account. The system retrieves the expense account from the G/L account determination from the Leave with Expense Net Book Value account field (if you scrapped the asset or sold it with a loss) or from the Leave with Revenue Net Book Value account field (if you sold the asset with a gain). If you post the retirement as a sale, the system also posts receivables to the customer account and revenues to a revenue account. Choose Financials Fixed Assets Retirement to post a retirement. A retirement can refer to an entire asset (complete retirement) or part of an asset (partial retirement). You can trigger the partial retirement of an asset by the following ways: You can enter deductible acquisition and production costs (APCs). When you enter deductible acquisition and production costs, the system determines the percentage that is deducted from the asset. From the entered APCs, the system calculates a percentage for the leading depreciation area. For each depreciation area, it calculates the amounts to be written off with this percentage. If an asset is maintained by quantity, you can enter the quantity that retires. The percentage to be written off is calculated from the entered quantity. The reference date for the retirement is marked in the asset master record. After the retirement of an asset, subsequent postings with a reference date before the last retirement can no longer be posted.

Retirement (Net Procedure)

Sale with loss of 200 Asset Account 1000 1000 Sales Revenue for Asset Sales Net 1000 200 Asset Retirement with Exp. Net 200

Sale with gain of 200 Asset Account 1000 1000 Sales Revenue for Asset Sales Net 1200 Revenue for Asset Retirement Net 200

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The figure displays the postings according to the net procedure. If you scrap the asset or sell it with a loss, the system posts the retirement amount to a Sales Revenue for Asset Sales Net account. It posts the loss to an Asset Retirement with Expense Net account. If you sell the asset with a gain, the system also posts the retirement amount to a Sales Revenue for Asset Sales Net account. It posts the gain to a Revenue for Asset Retirement Net account. The accounts are retrieved from the G/L account determination.

Transfers

Asset Account (sending) 1000 1000

Asset Account (receiving) 1000

Transfer

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Fixed Assets allows you to transfer a fixed asset or part of a fixed asset to a different asset master record. This may be necessary if you want to Assign a different asset account to an asset If you need to change the G/L accounts for a certain asset, transferring the asset to an asset with a different G/L account determination offers an easy alternative to creating a completely new asset. Create several different asset master records for the same asset If you use a certain type of asset in different locations, it may be necessary to maintain different master data for this asset. Transferring the asset enables you to move the asset data from one master record to the other. Change the asset class for an asset for which bookings have already be carried out Choose Financials Fixed Assets Transfer to post an asset transfer. As a result, all depreciation data are copied to the new asset. For assets that are assigned to different G/L accounts, the system creates the respective posting documents in the general ledger. If bookings have been made for the old asset, the system will use the depreciation type and start date of the new asset during the next depreciation run. Planned depreciations for the current year will be cancelled for the old asset and added for the new one. If no bookings exist, the system will copy the deprecation parameter of the old asset. Transfers are booked as total transfer per beginning of the fiscal year. You can transfer the complete asset value or only a part of it. Transferring a part may be useful if equipment parts of an asset are moved to another asset. If you want to transfer only part of the asset value, select Yes in the Partial column. Enter the amount or the quantity that should be transferred.

Manual Depreciation (Direct)

Asset Account 1000 100 100 100

Manual unplanned depreciation Manual ordinary depreciation

Ordinary Depreciation 100

Unplanned Depreciation 100

Manual special depreciation

Special Depreciation 100

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Usually the system uses the saved depreciation types to automatically determine the planned depreciation for the current fiscal year. In some cases however, you may want to manually depreciate certain assets, for example, if there is an unexpected permanent reduction in the value of the asset, for example caused by an accident or if there are special depreciations that you only want to use partially. Choose Financials Fixed Assets Manual Depreciation to post a manual depreciation. In contrast to the automatic depreciation that is not posted before you do the depreciation run, the manual depreciations are posted immediately. The following document types are available: Ordinary Depreciation If you use this document type the system posts the depreciation to the account that you have entered in the Ordinary Depreciation Account field in the G/L account determination. Unplanned Depreciation If you use this document type the system posts the depreciation to the account that you have entered in the Unplanned Depreciation Account field in the G/L account determination. Special Depreciations You can define document types for special depreciations by defining depreciation types with the method manual depreciation. If you use this document type the system posts the depreciation to the account that you have entered in the Special Depreciation Account field in the G/L account determination. These depreciations also show up as special depreciations in the fixed assets master data. The figure shows the direct depreciation method which means that the depreciations are posted directly to the credit side of the asset account.

Manual Depreciation (Indirect)

Acc. Ordinary Depreciation 100

Manual ordinary depreciation

Ordinary Depreciation 100

Acc. Unplanned Depreciation 100

Manual unplanned depreciation

Unplanned Depreciation 100

Acc. Special Depreciation 100

Manual special depreciation

Special Depreciation 100

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If you are using the indirect depreciation method the system posts the depreciations not directly to the asset account but instead to an account for accumulated depreciations. In the balance sheet you must put this account under the same title with the asset account so that its balance is subtracted from the asset accounts balance. You can decide in the definition of the leading depreciation area, if you want to use direct or indirect depreciation.

Depreciation Run
Period 1 2 3 4 5 6 7 8 9 10 11 12 Planned Depreciation 50 50 50 50 50 50 50 50 50 50 50 50
1 journal entry per asset class Date: 06/30 Depreciation Run

Period 1 2 3 4 5 6 7 8 9 10 11 12

Posted Depreciation 0 0 0 0 0 300 0 0 0 0 0 0

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Each single asset transaction leads to a change in planned depreciation, but not to a depreciation posting to the relevant general ledger accounts. Only when you execute a depreciation run does the system carry out all depreciations planned up to the specified date and posts them in Financial Accounting. The depreciation run only covers automatic depreciation. When using manual depreciation, the associated values are immediately posted in Financial Accounting. A depreciation run can be repeated as often as necessary, provided no depreciation run has been executed for the following periods. A repeat depreciation run may be necessary, if the asset values have changed once again after posting planned or if the depreciation terms were changed for individual assets. When repeating a depreciation run, only the value differences to the postings of the last depreciation run are considered. In depreciation runs, unposted planned depreciation is always posted using the catch-up method. In the catch-up method, the system gathers any planned depreciation that has not been posted yet for the entire depreciation period and then creates a collective posting. Therefore, the resulting posting can also include planned depreciation from several periods. In order to keep the number of Financials documents to a minimum, we recommend that you carry out only one depreciation run per fiscal year. Choose Financials Fixed Assets Depreciation Run to start a depreciation run. You can view a depreciation forecast for every fixed asset and every depreciation area by choosing Financials Fixed Assets Depreciation Forecast.

Period-End Preparations for Fixed Assets

1. Create new posting periods in SAP Business One. 2. Refresh fiscal year in Fixed Assets. 3. Ensure all postings are made (including depreciations). 4. Perform fiscal year change. 5. Create asset history sheet for old year.

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Fixed Assets uses the fiscal years defined in SAP Business One together with the corresponding posting periods. However, unlike in the general ledger you need to do a fiscal year change in the fixed assets add-on to open a new fiscal year. Proceed as follows:

System Initialization General Settings and select the Posting Periods tab. Choose New Period
and add the desired fiscal year. Choose Administration Definitions Fixed Assets Fiscal Years and choose Refresh to match the fiscal year in SAP Business One with the fiscal year in Fixed Assets. Ensure that all postings have been made in the old year including the depreciation run postings. Choose Financials Fixed Assets Fiscal Year Change to perform a fiscal year change and to close the old year in Fixed Assets. When changing a fiscal year, the system performs the following calculations: For each asset the system calculates the year-end values of all asset transactions. These values are saved in the asset data and serve as start values for the new fiscal year. For each asset the system recalculates the planned depreciation for the new fiscal year. Finally, you can create the asset history sheet and export it to Microsoft Excel to add it to you balance sheet. Choose Financials Fixed Assets Asset History Sheet to create an asset history sheet.

You first have to define the next fiscal year in SAP Business One. To do so, choose Administration

Cost Accounting: Topic Objectives

At the conclusion of this topic, you will be able to: Create and group profit centers Define distribution rules and assign them to accounts Run the profit center report Define and evaluate projects

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Profit Centers and Sort Codes

Center_z Summer Sports

Golfing

Hiking

Biking

Paragliding
Sort Code

Winter Sports

Profit Center

Alpine skiing

Ice skating

Cross-country skiing

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To use the cost accounting functions in SAP Business One, you must define the cost centers or departments in your company as profit centers. You can then compile a profit and loss statement for each profit center in every period. You can combine your profit centers into groups by using a sort code. Choose Financials Cost Accounting Profit Centers to define and maintain profit centers. The system automatically creates a center zero profit center (Center_z) that collects the costs and revenues that cannot be clearly distributed to other profit centers because not enough information is available. The Center_z profit center can also record costs that are not to be reported in internal cost accounting. For example, if you want to show only 80% of your rental expenses as costs, you can assign the remaining 20% to Center_z. The Center_Z is used when defining distribution rules

Distribution Rules

Profit Center Total Dist. Rule 100 PC 1 Distribution Rules for DIRECT Costs and Revenues 100 PC 2 100 PC 3 Distribution Rules for INDIRECT Costs and Revenues 500 Area 20 Employees

Center_z PC 1

PC 2

PC 3

100

100

100

100

200

200

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Distribution rules define how the costs or revenues posted for an account are distributed to the profit centers. When you create a profit center, the system automatically creates a distribution rule with the same name. This rule (which cannot be changed) is configured so that the system posts all the costs or revenues to the relevant profit center. In other words, the system does not split the amounts. You can use these distribution rules for direct costs and revenues, which you can assign uniquely and in full to a specific profit center. You cannot assign indirect costs and revenues directly to a specific profit center. Instead, you must distribute them to the profit centers on a cause basis. You must define distribution rules manually for these costs and revenues. For example, you can distribute heating costs to the profit centers in accordance with the size of the heated areas. Similarly, you can distribute voluntary employee benefits among the number of employees. If you cannot define a distribution rule precisely (because you do not have enough information on the distribution keys), any costs or revenues that cannot be assigned are allocated to the Center_z profit center. When you finally have the information you need, you can change the distribution rule so that the system corrects the distribution accordingly. Choose Financials Cost Accounting Distribution Rules to define and maintain distribution rules. Choose Financials Cost Accounting Table of Profit Centers and Distribution Rules to get a table display on all distribution rules.

Link Between General Ledger and Cost Accounting

Heating Costs X Distribution Rule area

Journal Entry Heating Costs 1000 Distr. Rule area

Profit Center 1

Profit Center 2

Profit Center 3

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For costs to be included in cost accounting, you must enter a distribution rule into the journal entry for every line item that posts to a revenue or expense account. As soon as you make a posting to an account with a distribution rule, the system distributes the costs or revenues to the profit centers as described in the rule. To avoid having to enter the distribution rule manually, you can enter a distribution rule into the accounts master record. This distribution rule will then be used as a default value. As well when you create any type of marketing document, you can assign a distribution rule in the row level. This rule will be recorded in the journal entry You can use the Profit Center report to display an overview of the posted costs and revenues. Choose Financials Cost Accounting Profit Center Report.

Projects
Project A
Trial Report Budget Report P&L Budget Report Transaction Report

Original Documents

Project B
Trial Report Budget Report

Project: ....

P&L Budget Report

Transaction Report

P&L

Accounting Documents

P&L

General Ledger

Trial Report Budget Report

Project: ....

Trial Report Budget Report

General Ledger

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You can use projects in SAP Business One to monitor your company's larger key projects and their economic success. To do so, you first define projects in the system. Choose Administration Setup Financials Projects. You can then enter these directly in the relevant line items or the journal entry or marketing document. You can also enter projects in general ledger accounts or business partners. The relevant project is then automatically entered in the documents you post to these accounts. The Transaction Report by Projects lists all postings that you have made for a selected project. Choose Financials Financial Reports Accounting Transaction Report by Projects. You can often limit your reports to a specific project, for example, to generate a profit & loss statement for the project.

Purchase Accounts Posting System

Purchase Order
Use Purchase Accounts Posting Systems

Purchase Account

Goods Receipt PO

Stock Account

Allocation Costs Account

100

100

100

PA Offset Account 100

A/P Invoice

Allocation Costs Account 100

Vendor 100

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To allow better budget and cost controlling, you can activate the purchase accounts posting system. You do this before any inventory postings have been made by choosing Administration System Initialization Company Details. Then, select the Use Purchase Accounts Posting System indicator on the Basic Initialization tab. After you activate the purchase accounts posting system, the G/L account determination contains three additional accounts: purchase account, PA offset account, and PA return account. Whenever you post a document that is an inventory receipt result in a purchase document, (goods receipts PO and A/P invoice not based on a goods receipt PO), and the system adds two additional line items. One line item posts the stock posting amount to the debit side of the purchase account. The system posts the offsetting line item to the credit side of the PA offset account. When you post a goods return or a credit memo, the system also adds two additional line items. The system posts the stock posting to the credit side of the PA return account and the offsetting line item to the debit side of the PA offset account. Purchase accounts offer these advantages: The purchase account allows you to control the purchasing budget. Goods receipts to a warehouse are usually not posted to an expense account, therefore, you cannot enter a purchasing budget. If you make the purchase account an expense account, you can create a budget for it. This is relevant when perpetual inventory is used. If items, item groups, or warehouses belong to special profit centers, you can assign special purchase accounts to their G/L account determination and enter the distribution rule (direct distribution to the profit center) in the definition of the purchase account. This automatically assigns the purchasing expenses to the correct profit center.

Financials: Unit Summary

You are now able to: Create your Chart of Accounts Post Journal Entries and Journal Vouchers Use the Posting Tools Activate and use the Budget Use the Fixed Assets Add-on Monitor your projects and profit centers

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