Inventory Accounting Entries

All the Inventory transactions will look for the valuation class and the corresponding G.L. Accounts and
post 
the values in the G.L accounts. 
  
            For Example: during Goods Receipt

            Stock Account - Dr

            G/R I/R Account  -  Cr
            Freight Clearing account - Cr
            Other expenses payable - Cr
 
            During Invoice Verification

                  G/R I/R Account - Dr

                  Vendor - Cr

When the Goods are issued to the Production Order the following transactions takes place:

             Consumption of Raw Materials - Dr

             Stock A/c - Cr

When the Goods are received from the Production Order the following transactions takes place:

              Inventory A/c - Dr

              Cost of Goods Produced - Cr                     
              Price difference - Dr/Cr
             (depending on the difference between standard cost and actual cost)

When the Goods are dispatched to customer through delivery the following transactions takes place:

               Cost of Goods Sold - Dr

               Inventory A/c - Cr

When the Goods are issued to a Cost Center or charged off against expenses the following transactions
takes place:

               Repairs and Maintenance - Dr

               Inventory A/c - Cr

When the Goods are stock transferred from one plant  to another, the following transactions takes place:

                Stock A/c - Dr (Receiving location)

                Stock A/c -  Cr (Sending location)
                Price difference - Dr/Cr 
               (due to any difference between the standard costs between the two locations)
When the stocks are revalued, the following transactions take place:

                 Stock A/c - Dr/Cr        

                 Inventory Revaluation A/c - Cr / Dr

When the Work in Progress is calculated the following transaction takes place:

                 Work in Progress A/c - Dr

                  Change WIP A/c - Cr

Physical verification /shortages and excesses :  Shortages/excesses on authorizations shall be adjusted

using the physical inventory count transaction.   

Sales and Distribution Accounting Entries

INVOICE GENERATION
Invoices will be generated at the Smelters  and stock points. The accounting entries for the sale of goods
despatched will flow from the Sales invoice generated in SAP Sales and Distribution module. The following
entries shall be passed 
    Customer Account      Dr
    Revenue                                                 Cr
    Excise Duty Payable                               Cr
    Sales Tax Payable (local or central)         Cr 

Note: As mentioned above in the FI document, which is created in the background, the SD invoice number shall
be captured. However as per the current accounting procedure the accounting entry passed is as follows :-
     Customer Account      Dr
     Revenue                                                 Cr
     Excise Duty Billed                                  Cr
     Sales Tax Payable (local or central)        Cr

     Excise duty paid a/c     Dr

     Excise duty payable a/c                          Cr 

EXPORT SALES
There have been very few export transactions in the past. SAP system will be designed to handle export
business. Exports are mainly from the mines and will be handled at the mines, however the documentation part
will be taken care at the Head Office. The accounting entry is:
     Customer Account        Dr 
     Revenue (Exports)                                  Cr 

The realisation of export sales will be directly credited to the bank.  The accounting entries will be as follow:
     Bank                            Dr
     Customer                                               Cr
     Exchange Fluctuation    Dr/ Cr

The accounting entries will be:

      Rebates/Discounts        Dr
      Customer                                               Cr
                                           
DEBIT MEMOS
Debit Memos shall be issued in case of price difference, sale tax difference and interest on usance period and 
overdue payments.

The accounting entries for two possible scenarios are as follows:

      Price Undercharged:
      Customer Account        Dr.
      Revenue                                                 Cr.
      Sales tax payable                                    Cr.
      Sales tax undercharged
      Customer Account         Dr.
      Sales tax adjustment                                Cr.

Interest on delayed payments/usance period and other charges

      Customer Account         Dr.
      Interest Others                                        Cr.

In case of HZL  a complete retirement or a partial retirement of asset is done. The system uses the asset
retirement date to determine the amount to be charged off for each depreciation area. The existing accounting
policy is to provide depreciation for the full quarter in which the asset is sold/discarded, recommended that the
depreciation be provided from the date of acquisition on prorata basis .

Accounting entry for sale of Asset to customers:

        Customer Account               Dr
        Asset Sale                                              Cr
        Accumulated Depreciation   Dr
        Loss on Sale (if applicable)  Dr
        Asset Sale account              Dr
        Asset account                                         Cr
         Profit on sale (if applicable)                    Cr

Note: In case of any Sales Tax /Excise duty applicable for this transaction, SAP will calculate the Sales
Tax/Excise Duty based on the Tax Code selected  the entry is posted to the GL Account (Sales Tax Payable)

Accounting entry for sale without a customer:

          Accumulated Depreciation    Dr
          Loss on Sale (if applicable)   Dr
          Asset Sale account               Dr
          Asset account                                      Cr
           Profit on sale (if applicable)                 Cr

Accounting entry for scrap

           Accumulated Depreciation    Dr
           Loss on Sale of Assets         Dr
           Asset account                                      Cr
SALE OF SCRAP
The sale of scrap (non-stock) shall be mapped as a direct manual FI entry. The customer will be created as a FI
customer. No Logistics module will be involved in the process.

A FI Invoice will be prepared for the sale of scrap with the following entries:
              Customer                           Dr
              Sale of Scrap                                    Cr
              Excise Duty Payable                         Cr

ADVANCES FROM CUSTOMERS

Advances are received from the customers against delivery. These advances will be recorded in a special
general ledger account. The accounting entry for the same will be:  
              Bank Account                      Dr
              Advance Customer Payments            Cr

These advances will be later on adjusted against the invoices raised on the customers. Advances can be adjusted
against more than one invoice at the time of clearing of the invoices against advances.

              Adjustment of Advances

              Customer Account                             Cr
              Advance Customer Payments  Dr

A financial document would be created for each Bank Guarantee received and this document number will be
referred to in the Sales Order which would then monitor the value and the validity of the of the Bank Guarantee
instrument wise while doing the billing.The letter of credit /Bank guarantee given will be recorded as a noted
item.

Accounting Entry for Goods receipt

                Stock/Inventory account         Dr
                GR/IR account                                   Cr
                Freight clearing account                      Cr

Accounting Entry on invoice verification of supplier

                GR/IR                                    Dr
                Vendor account                                  Cr

Accounting Entry on invoice verification of freight vendor

                Freight clearing account          Dr
                Freight Vendor account                       Cr 

GOODS RECEIPT
Based on the Purchase order and the Quantity actually received Goods Receipts (GR) will be done. Based on
the GR done the following accounting entry will be passed in the Financial Accounts
                  RM/PM Stock Account       Dr
                  GR/IR Account                                 Cr
                  Freight Clearing Account                   Cr

EXCISE INVOICE VERIFICATION

On receipt of the excise invoice cum gate pass the following entry will be passed
                   RG 23 A / RG 23 C Part 2 Account    Dr 
                   Cenvat Clearing Account                             
Vendor Invoice Verification Accounting Entries
VENDOR INVOICE VERIFICATION

The detail process related to invoice verification is documented in Materials Management Document.
On receipt of vendor bill the following entry will be passed:

  GR/IR Account     DR
  Freight Clearing Account   DR
  Cenvat Clearing Account   DR
  Vendor Account    CR

Invoice Verification for Foreign Vendor 

On receipt of vendor bill the following entry will be passed:

  GR/IR Account      DR
  Vendor Account     CR

Invoice Verification for Custom vendor

On receipt of Vendor bill the follo wing entry will be passed:
1)  RG 23A/RG 23C Part 2 A/c (CVD) A/c  DR
     Cenvat Clearing A/c     CR
2)  G/R I/R A/c     DR
     Cenvat Clearing A/c    DR
     Vendor A/c                          CR
3)  Cost of Material A/c    DR
     Vendor A/c (Customs)   CR

Invoice Verification for Freight / Clearing Agent

  Cost of Material A/c    DR
  Vendor A/c (Clearing Agent)  CR

Invoice Verification for Octroi Expenses

   Cost of Material    DR
   Vendor A/c (Octroi)    CR

TDS (Work Contract Tax) for Service Orders shall be calculated and deducted accordingly. 
The following entry will be passed on bill passing:

  Expenses Account    DR
  Vendor Account     CR
  TDS Account    CR

The material shall be returned to the vendor using the 

  Return to vendor movement type in SAP
  Creating a Return PO 

These transactions will be processed in the MM module.

The accounting entries will be :
Returns after GRN
  GR/IR A/c   Dr
  Stock A/c   Cr

The accounting in respect of debit / credit memos for FI vendors, the process will be similar to that of invoice
processing.  The accounting entries will be:
  On issue of debit note
  Vendor Account    DR
  Expenses Account   CR

In respect of import vendor - capital goods exchange differences are to be accounted manually through a
Journal Voucher for capitalization. 
Exchange rate differences will be accounted at HO. An example of the accounting entry in this case shall be:
Invoice entry @ 40 INR: 1 USD 

  Asset / Expense A/c   DR  100 

  Vendor A/c    CR  100 

Payment Entry @ 41 INR: 1 USD 

  Vendor A/c    DR  100 
  Bank A/c    CR  110 
  Exchange rate loss Capital A/c DR    10 

  Asset A/c    DR   10

  Exchange rate loss Capital A/c     CR   10

A new G/L account shall be created for the special G/L transactions. 
The accounting entry for making the down payment shall be:
  Advance to supplier  account    Debit
  Bank A/c      Credit 

When the invoice is booked the following entry is passed

  GR/IR account      Debit 
  Vendor account     Credit 
  Clearing of Invoice against Down Payment
  Vendor A/c       Debit 
  Vendor down payment account   Credit 

Wherever, TDS is applicable, the TDS will be deducted at the time of down-payment to the vendor. 
Down Payment for Capital (tangible) Assets

Down payment to vendors for capital acquisitions is to be reported separately in the Balance Sheet under the
head Capital Work in Progress.   Hence down payment for capital goods would be tracked through a separate
special general ledger indicator. 

The procedure to be followed is:

Definition of alternative reconciliation accounts for Accounts Payable for posting down payments made for
Capital assets
Clearing the down payment in Accounts Payable with the closing invoice.
A new G/L account shall be created for the special G/L transactions. 
The accounting entry for making the down payment shall be:
Vendor Advance for Capital Goods Account Debit 
  Bank A/c      Credit 
When the invoice is booked the following entry is passed
  Asset A/c /  Asset WIP    Debit 
  Vendor A/c      Credit 
Clearing of Invoice against Down Payment
  Vendor A/c       Debit 
  Vendor Advance for Capital Goods Account Credit

The Following are the TDS Rates (to be confirmed with the recent changes)
  Particulars Tax Rate Surcharge Rate Total
  Contractors – 194 C 2% 5% 2.10%
  Advertising – 194 C 1% 5% 1.05%
  Prof. Fees – 194 J 5% 5% 5.25%
  Rent – Others – 194 I 15% 5% 15.75%
  Rent – Company – 194 I 20% 5% 21%
  Commission – 194H 5% 5% 5.25%
  Interest  - Others – 194 A 10% 5% 10.50%
  Interest – Company – 194 A 20% 5% 21%
  Special Concessional Tax 
  Works Contract Tax 

SECURITY DEPOSITS /EARNEST MONEY DEPOSIT RECEIVED FROM  VENDORS 

  Bank A/c                              DR
  Security Deposit Vendor   CR

EMD to give the age so as to enable the same to be transferred to unclaimed EMD account.
PAYMENT OF TOUR ADVANCE DOMESTIC TOURS

Employee Advances will be paid by the Accounts Department unit wise based on the requisition or
recommendation of the respective departmental head. 
  Employee Travel Advance A/c  DR 
  Cash / Bank Account   CR 

Reversal Entry In Accounting

Why do we pass reversal enteries?

At times some incorrect documents might have been entered in the systems.
   
If you have entered an incorrect document, you can reverse it.  Note that R/3 can reverse a document only if the
following conditions are met:
   
- Contains no cleared items
- Contains only vendor, customer, or G/L line items
- Was posted within the FI system
- Contains only valid values, such as business areas, cost centers, and tax codes
   
Ordinarily, you post a reversing document in the same period you posted the original document.  The period of
the original document must be open to post a reversing document. If the period is not open, you can overwrite
the posting date field with a date in an open period, such as the current period.
   
Reversal can be done individually - FB08 or Mass F.80.
   
If the document to be reversed contains cleared items, then cleared item must be reset before the reversal of
document.

What Are The Posting Keys For AP, AR & GL

Below given is the recommended posting key to be used for particular transaction by SAP. If we use posting
key according to this then standard reports set /given by SAP will come with accuracy. This is for information

1-19 customer
20-39 Vendor
40 & 50 GL
70 debit Asset
75 credit Asset

Posting key    Name                           Credit /Debit Account type               

    21             Credit memo                  Debit    Vendor   
    22             Reverse invoice              Debit    Vendor     
    24             Other receivables           Debit     Vendor     
    25             Outgoing payment          Debit     Vendor     
    26             Payment difference        Debit     Vendor     
    27             Clearing                        Debit     Vendor     
    28             Payment clearing           Debit     Vendor     
    29             Special G/L debit           Debit     Vendor     
    31             Invoice                                            Credit  Vendor     
    32             Reverse credit memo                        Credit  Vendor     
    34             Other payables                                 Credit  Vendor     
    35             Incoming payment                            Credit  Vendor     
    36             Payment difference                           Credit  Vendor     
    37             Other clearing                                   Credit  Vendor     
    38             Payment clearing                              Credit  Vendor     
    39             Special G/L credit                             Credit  Vendor     

Posting key    Name                           Account type  

    01             Invoice                           Debit     Customer   
    02             Reverse credit memo       Debit     Customer    
    03             Bank charges                  Debit     Customer                 
    04             Other receivables            Debit     Customer                    
    05             Outgoing payment           Debit     Customer                    
    06             Payment difference         Debit     Customer                    
    07             Other clearing                 Debit     Customer              
    08             Payment clearing            Debit     Customer                    
    09             Special G/L debit            Debit     Customer                    
    11             Credit memo                                   Credit    Customer                    
    12             Reverse invoice                               Credit    Customer                    
    13             Reverse charges                               Credit    Customer                    
    14             Other payables                                Credit    Customer                    
    15             Incoming payment                           Credit    Customer                    
    16             Payment difference                          Credit    Customer                    
    17             Other clearing                                  Credit    Customer                    
    18             Payment clearing                             Credit    Customer                    
    19             Special G/L credit                            Credit    Customer                    

Posting key    Name                           Credit /Debit Account type               

    40             Debit entry                     Debit      G/L account     
    50             Credit entry                                     Credit     G/L account   

Transfer of Balance of Vendor Customer and Ledger

How can I transfer balance of customer, vendor and ledger from previous accounting system to sap r/3
envioroment?

1. Prepare the Balance Sheet at one cut off date.

2. Classify the Accounts into Group.

3. Create Group wise clearing GL (You should create clearing account through OBD4)
      for eg.  Capital General Clearing A/c
                 Capital Initial Clearing A/c
 
                 Expenditure General Clearing A/c
                 Expenditure initial clearing A/c
 
                 Customer General Clearing A/c
                 Customer initial Clearing A/c
  
                 Create the GL each Account Group.
 
4. Create one Doc.Type "LD"  for upload Legacy Data.

5. Post the Balance Sheet Figures through T.Code F-02 use Doc.Type "LD"
      for eg.  Sundry Debtors Balance Rs,5 lac in Balance Sheet. This fig was arrived from 5     
                  customers   Mr.A - Rs.75,000 Mr.B Rs.25,000 Mr.C Rs. 400000
 
                  Post
 
                  Customer General Clg A/c   Cr.5,00,000
                  Customer Initial Clg A/c        Dr.5,00,000
 
                 Like that post all the Balance Figures in SAP group wise. Maintain one XL Sheet. Carefully maintain
this sheet.
 
                 All the General Clg GL figures are opposit to BS, only for controlling
 
                 Then post
 
                  Customer Inital Clg A/c Cr.                                   5,00,000
 
                   Mr.A                    A/c     Dr.      75,000 
                   Mr.B                    A/c     Dr.       25,000
                   Mr.C                    A/c     Dr.    4,00,000
 
After completed the posting all the inital accounts are "0" Value and all the General Clg A/c are "0".
 
If you want to post the Customer open item line by line, prepare the XL sheet upload through LSMW.
 
If you want to check the TB in SAP to Tally, select all the document and filter the Doc.Type "LD" the debit
balance and credit balance are "Zero".

IMG Transaction code OBYC Integration

Through T.code Obyc, I configure the BSX Key for Inventory Material.  Configure Valutiaon Class, and
Valuation Modifier and Given G.L. Account Number and save.
After configuration all these, what are step to configure because I have been Interviwed by this question
and I don't know what are next step.

Transaction code : OBYC (in easy access) 

In this transcation we have to specify GL account codes for material valuation created by MM consultants. 

The process in MM is here below:

1) Purchase Order : Tr code ME21N - here no integration required with FI 
2) Goods Issue : Tr Code MIGO - here no integratinwith FI 
3) Invoice Reciept - Tr Code MIRO - here when the invoice is recieved & MM process the transaction based on
OBYC configuration system will generate FI document. System also generates Material document as well 
4) Payment : Tr code F110 - Here also the the transcation affects FI 

FI-SD integation: 
This integration done using Tr Code VKOA. here we have to define GL account codes to Condition types. 

Process :
1) SD Raises Sales Order - No implication in FI 
2) SD raises Delivery doc - No implication in FI 
3) SD processes billing - no implication in FI 
4) SD releases billing doc to FI - FI document gets generated (Tr Code VFX3) 
 

The theory of how MM activity triggers A/c posting is:

Each movement type has quantity and value string, which decides what to update. Also each movement type
has transaction event key (account modifier) which in turn depending upon valuation grouping code and
valuation class decides which G/L account to post.

The flow is as follows:

Material type --> Account Category reference --> Valuation class -->Material.
Movement type -->Transaction event key-->Account modifier.

You have to do the configuration settings using Tr. code OBYC.

Try with Tr.code OMBW to check which G/L accounts are being hit on Plant, Material and movement type.
 OBYC Different transaction like BSX, GBB
Stock posting (BSX) - This transaction is used for all postings to stock accounts. Such postings are effected, for
example: 
In inventory management in the case of goods receipts to own stock and goods issues from own stock.
In invoice verification, if price differences occur in connection with incoming invoices for materials valuated at
moving average price and there is adequate stock coverage.
In order settlement, if the order is assigned to a material with moving average price and the actual costs at the
time of settlement vary from the actual costs at the time of goods receiptBecause this transaction is dependent
on the valuation class, it is possible to manage materials with different valuation classes in separate stock
accounts. 

Caution:
Take care to ensure that:
A stock account is not used for any transaction other than BSX.
Postings are not made to the account manually.
The account is not changed in the productive system before all stock has been booked out of it.

Otherwise differences would arise between the total stock value of the material master records and the balance
on the stock account.

Offsetting entry for stock posting (GBB) - Offsetting entries for stock postings are used in Inventory
Management. They are dependent on the account grouping to which each movement type is assigned. The
following account groupings are defined in the standard system: 

 AUA: for order settlement

 AUF: for goods receipts for orders (without account assignment) and for order settlement if AUA is not
maintained
 AUI: Subsequent adjustment of actual price from cost center directly to material (with account
assignment)
 BSA: for initial entry of stock balances
 INV: for expenditure/income from inventory differences
 VAX: for goods issues for sales orders without account assignment object (the account is not a cost
element) 
 VAY: for goods issues for sales orders with account assignment object (account is a cost element)
 VBO: for consumption from stock of material provided to vendor
 VBR: for internal goods issues (for example, for cost center) 
 VKA: for sales order account assignment (for example, for individual purchase order)
 VKP: for project account assignment (for example, for individual PO)
 VNG: for scrapping/destruction
 VQP: for sample withdrawals without account assignment 
 VQY: for sample withdrawals with account assignment
 ZOB: for goods receipts without purchase orders (mvt type 501)
 ZOF: for goods receipts without production orders (mvt types 521 and 531)

You can also define your own account groupings. If you intend to post goods issues for cost centers (mvt type
201) and goods issues for orders (mvt type 261) to separate consumption accounts, you can assign the account
grouping ZZZ to movement type 201 and account grouping YYY to movement type 261. 

Caution:
If you use goods receipts without a purchase order in your system (movement type 501), you have to check to
which accounts the account groupings are assigned ZOB.
If you expect invoices for the goods receipts, and these invoices can only be posted in Accounting, you can
enter a clearing account (similar to a GR/IR clearing account though without open item management), which is
cleared in Accounting when you post the vendor invoice. 
Note that the goods movement is valuated with the valuation price of the material if no external amount has
been entered.
As no account assignment has been entered in the standard system, the assigned account is not defined as a cost
element. If you assign a cost element, you have to enter an account assignment via the field selection or
maintain an automatic account assignment for the cost element. 

GR/IR clearing (WRX) - Postings to the GR/IR clearing account occur in the case of goods and invoice
receipts against purchase orders. 
Caution:
You must set the Balances in local currency only indicator for the GR/IR clearing account to enable the open
items to be cleared. 

Price differences (PRD) - Price differences arise for materials valuated at standard price in the case of all
movements and invoices with a value that differs from the standard price. Examples: goods receipts against
purchase orders (if the PO price differs from the standard pricedardpreis), goods issues in respect of which an
external amount is entered, invoices (if the invoice price differs from the PO price and the standard price).

Price differences can also arise in the case of materials with moving average price if there is not enough stock to
cover the invoiced quantity. In the case of goods movements in the negative range, the moving average price is
not changed. Instead, any price differences arising are posted to a price difference account. 
Depending on the settings for the posting rules for transaction/event key PRD, it is possible to work with or
without account modification. If you use account modification, the following modifications are available in the
standard system: 
None for goods and invoice receipts against purchase orders.

Purchase account(EIN), purchase offsetting account (EKG), freight purchase account (FRE) 
These transactions are used only if Purchase Account Management is active in the company code.

Note
Due to special legal requirements, this function was developed specially for certain countries (Belgium, Spain ,
Portugal, France, Italy, and Finland).
Before you use this function, check whether you need to use it in your country.
 Journal Entry Vs Journal Voucher
What is the difference between Journal Entry and Journal Voucher?
Explain briefly? 
 
Answer:
 
Journal Voucher is a draft which needs to be approved before it is posted to the General Ledger - bottom line is
it does not affect General Ledger dollars until it is approved and posted.
 
Journal Entry is a real live document which updates the General Ledger dollars as soon as it is created.
 
Journal Entry is the final Account Posting and Journal Voucher is just a Save as draft in which Journal Entries
are saved as draft.
 
When you post Journal Entries from Journal Voucher it gets finalize for accounting.
 
Basically, a clerk will create a Journal Voucher where they believe the dollars should be posted to specific GL
Accounts. At this point no dollars are posted to GL. Then a supervisor or manager goes in to review the Journal
Vouchers which were created and either approves those vouchers so they become Journal Entries and,
therefore, post the actual dollars - OR - the supervisor can change the Journal Voucher with different
accounts/amounts - OR - the supervisor can delete the Journal Voucher and have a new one created by the
clerk.
 
The whole reason for the Journal Voucher is to give some control to the process so the dollars which are posted
are accurate. Think of it basically as a double check to make sure things are going correctly.
 
Now having said that, SAP B1 creates Journal Entries automatically when a document is created - for example,
posting dollars to Business Partner and Sales GL Account when an AR Invoice is created. There are many
Journal Entries created by SAP B1 in this way.
 
If you encoded directly in Journal Entry, the entry is automatically posted in the General Ledger. On the other
hand, if you encoded in the Journal Voucher, which consists of one or more journal entries, the entries will not
be posted to GL not unless the Journal Voucher is approved.
 
You may use the Journal Voucher to group similar journal entries. 
 

To get all journal entries posted:

 
Usually we pass journal entry vide SA document type.
 
- Go to FB03 and enter company code and year and click document list.
- Enter Fiscal year and Document type as SA ( You can enter other document type as well if you need)
- Execute
- You get all SA documents
- Go to Change layout and select username / session / transaction etc., and other fields and move it to left and
save
 Integration of FICO with Other Modules
What are the steps for integration of FICO with other modules SD, MM etc. ?

Some basic information :

FI-MM: The integration between FI-MM happens in T-code OBYC. 

  1. When PO is created :

       ---- No Entry -----

  2. When GR is posted 

      Inventory Account dr (Transaction Key BSX in OBYC)

            To GRIR account (T.Key WRX in T-code OBYC)

  3. When Invoice is posted

      GRIR account Dr.

      Vendor account  Cr.

  4. Payment made to Vendor

      Vendor A/c Dr

            To Bank Clearing A/c Cr.

Points to know : Movement Types, Assignment of Movement types to T-keys (T-code OMJJ), Value string (I
also need some information on this) , OMWN and OMWB transactions. 

---

There is a close integration b/w FI & MM, actually document flows from MM to FI in the following areas such
as,

 1. Movement Types:

Used to enable the system to find the predefined posting rules determining how the accounts of financial
accounting system are to be posted & to update the stock fields in the matrl master data.(Goods Receipt, Goods
Issue, etc)

 2. Valuation Class:

Assignment of material to grp of gl account, used to determine the gl accounts that are updated as a result of
goods movement.

 3. Transaction/Event key:

Used to control the storage or filing of documents & assignment of documents.Used to differeniate b/w various
transactions such as goods movement tht occur in inventory.
 4. Material Type:

Each material should assign mtrl type in mtrl master record used to update whether changes made in qty are
updated in material master record & change in value also updated in stock account.

 FI-SD Integration: The integration is done in T-code VKOA

  1. Sales Order Created 

        ---No Entry---

  2. PGI done (Goods issue)

      Cost of Goods Sold     Dr (Configured in OBYC GBB T-Key)

           To Inventory Account

  3. Billing document released to Accounting

        Customer Account Dr.

              To Sales Revenue Account (ERL T-key in Pricing procedure)

  Note : The GL account is assigned to this ERL in VKOA

  4. Payment Received

        Bank Clearing A/c Dr

                       Customer A/c Cr. 

Points to Know : Good to understand the pricing procedure and how the different transaction keys are used like
ERL, ERS etc.