Global bike inc case study journal entries

SAP ERP: S/4HANA

Finance

MOTIVATION
This material is an introduction to SAP S/4HANA financial functionality. It is aimed at students at universities and other educational institutions with limited experience with accounting

It can be used in the classroom or for self-study.

On completion of the course, students will be able to understand the basic concepts general ledger accounting.

The material also serves as a reference for occasional users of SAP systems.

LEARNING METHOD
The learning method used is “guided learning.” The benefit of this method is that knowledge is imparted quickly. Students also acquire practical skills and competencies. As with an exercise, this method explains a process or procedure in detail using the GBI case study

Exercises at the end enable students to put their knowledge into practice.
Product
SAP S/4HANA

Level
Introductory

Focus
ERP Systems- Finance

Author
Dr. Paul Hawking Dr. Susan Foster

Reviewed by
Urooj R. Khan

Version 1.2019

Table of Contents

Introduction 3

Accounting 3

Financial Accounting 3

Process Overview 4

General Ledger Master Records 5

Task 1: Display the Chart of Accounts 6

Task 2: The Chart of Accounts Applied to the General Ledger 9

Task 3: Display General Ledger Account 11

Task 4: Post Transfer of Funds to Alternate Bank Account 13

Task 5: Display G/L Account Balance 17

(a) Adding a Fiori Tile: 17

(b) Displaying Account Balances: 18

(c) Displaying Accounting Documents 21

Task 6: Displaying Journal Entries 22

Task 7: Post Purchase of Office Supplies 24

Task 8: Display General Ledger Account Balances 27

Introduction
Scenario
Global Bikes Inc (GBI) was founded in 2001 following the merger of two bicycle manufacturers, one based in the US and the other in Germany. GBI has three lines of business: deluxe and professional touring bikes, men’s and women’s off-road bikes, and bike accessories. GBI sells its bikes to a network of specialized dealers throughout the world, and it procures its raw materials from a variety of suppliers globally.

GBI has two manufacturing facilities, one in the US and one in Germany. It also has three additional warehouses, two in the US and one in Germany. GBI has more than 100 employees globally. The organization uses SAP ERP to support its processes. The company has a new bicycle for sale- Mongoose Mountain Bike.

Accounting
The function of accounting is to provide financial documentation and information for an enterprise and other interested parties that are associated with it. There are basically two types of accounting:

· External accounting is oriented more towards satisfying the information requirements of external parties. This is referred to as Financial Accounting (FI).

· Internal accounting meets the reporting demands of internal enterprise groups. This is referred to as Cost Accounting (CO).

External Reporting

External Accounting

Internal Accounting

Product Cost s

Internal Reporting

Cost Centres

Profit Centres

Profit Margins

Retained Earnings

Liquidity Calc’n

Profit & Loss

Balance Sheet

Financial Accounting
The payment of vendor invoices and the receipt of customer payments is handled by the Financial Accounting (FI) module. The major components of this module are the general ledger(G/L) and sub ledger accounting (accounts payable, accounts receivable, and asset accounting), and consolidation.

· Accounts Payable records all accounting transactions for dealings with suppliers. Much of its data is obtained from procurement (Materials Management).

· Accounts Receivable records all accounting transactions for dealings with customers. Much of its data is obtained from Sales and Distribution.

· Asset Accounting records all accounting transactions relating to the management of assets.

· Travel Management manages and calculates travel costs and supports travel planning and travel expenses

· Bank ledger supports the posting of cash flows.

The General Ledger (G/L) is the foundation of the accounting function. It serves as a complete record of all business transactions. It is the centralized, up-to-date reference for the rendering of accounts. Actual individual transactions can be checked at any time in real-time processing by displaying the original documents, line items, and transaction figures at various levels such as:

· Account information

· Journals

· Totals/transaction figures

· Balance sheet/profit and loss evaluations

Process Overview
Image46

General Ledger Master Records
G/L account master records contain the data that is always needed by the general ledger to determine the account's function. The G/L account master records control the posting of accounting transactions to G/L accounts and the processing of the posting data. Before you can make postings to a G/L account, you have to create a master record in the system for that account.

G/L account master records are divided into two areas so that company codes with the same chart of accounts can use the same G/L accounts.

· Chart of accounts area

The chart of accounts area contains the data that is valid for all company codes, such as the account number. It is a list of all G/L account master records which are used in one or several company codes. For every G/L account master record, the chart of accounts contains the account number, the account name and controlling information.

· Company code specific area

The company code specific area contains data that may vary from one company code to another, such as the currency in which the account may be posted.

The G/L account master record in the company code contains company code-specific information which controls the entry of data to this account and the management of the account.

Task 1: Display the Chart of Accounts
A chart of accounts may be shared by many company codes. Each company code must be assigned a chart of accounts. Once a chart of accounts is assigned to a company code, it becomes the operative chart of accounts for that company code and it is used to capture information for both Financial Accounting (FI) and Cost Accounting (CO). For each G/L account, the chart of accounts contains the account number, the account name, and additional technical information

You want to view the Chart of Accounts to get a better understanding of the structure of the General Ledger.

1. Logon to SAP S/4HANA if not already logged on.

2.

Click on the Group Selection Bar to display this Group.
However, you will notice that a Fiori tile to display the Chart of Accounts has not been included. You will need to search for this function using .
3.

Click to display the Search text field.
4. Type Chart of Accounts in the text box.

After a short while a screen appears with suggested results.

5.

Click to select this function.
A large list of Chart of Accounts appears:

6.

Click on the toolbar to display the Chart of Accounts.
7. Click GL00 Global GBI to select this Chart of Accounts.

You will notice the Chart of Accounts includes a structure for Account codes, Descriptions and Account types.

8. Scroll to review the various accounts contained in the Chart of Accounts for GBI.

Record information on your chart of accounts in the table below:

G/L Account Number

G/L Account Name

100000

200100

300000

310000

600000

700000

9.

Click to return to the launchpad.
Task 2: The Chart of Accounts Applied to the General Ledger
You are going to review a listing of the General Ledger (G/L) accounts that are part of your chart of accounts and that have been made operative for your company code. Each G/L account being used by a company code has both chart of account and company code specific information. In this way, a chart of accounts may be used by several company codes with each having their own unique information and settings but at the same time facilitating the integration accounting information.

10.

Click on the Group Selection Bar to display this Group.
11.

Click to display the General Ledger selection screen.
You will notice that there are three fields (Company Code, Chart of Accounts, View) that require information before you can display any data. From the previous exercise we looked at the Global Bike Chart of Account (GL00).

12. Type GL00 in the Chart of Accounts field.

You now need to change the View to display the General Ledger.

13.

Click of the View field to display the available options.
14.

Click .
15. Type US00 in Company Code field.

16.

Click to display the General Ledger Accounts.
How does this information differ from the information in the figure after step 7?

What are the company codes this chart of accounts is assigned to? Hint: Use the Company Code search field options

You will notice that the General Ledger has a similar structure to the previous Chart of Accounts in terms of Account Codes and Descriptions. But now at the Company Code level the default currency has been added. When the GL00 Chart of Accounts was used in the German GBI Company General Ledger the currency was set to Euro.

17.

Click to return to the launchpad.
Task 3: Display General Ledger Account
Businesses commonly maintain several bank accounts (e.g. payroll, general checking and money market) that are listed on their balance sheet. Often you need to display a General Ledger account in your chart of accounts. The account you need to display is the alternative bank account (101000) in the GBI US company (US00).

You can display account details through the Manage G/L Account Master Data Fiori tile.

18.

Click to display the General Ledger selection screen.
19. Type GL00 in the Chart of Accounts field.

You now need to change the View to display the General Ledger.

20.

Click of the View field to display the available options.
21.

Click .
22. Type US00 in Company Code field.

23.

Click to display the General Ledger Accounts.
All the accounts for GBI US are listed. The account you want to review is the Alternate Bank Account (10100). You now need to specify the account you want to display.

24. Click 101000 to drill down to further details for this account.

What Account Group is this G/L account assigned to?

Is this account a Profit and Loss Statement account or a Balance Sheet account?

What is the account currency?

25. Repeat the same procedure for the same G/L account, but for the German GBI Company Code (DE00).

What differences did you find?

You may look at other G/L account details if you would like.

26.

Click to return to the launchpad.
Task 4: Post Transfer of Funds to Alternate Bank Account
The General Ledger contains a number of accounts. In some scenarios funds may need to be transferred between accounts. In this exercise you are going to generate a journal entry for the US GBI company to transfer funds ($US5,000) from the current bank account to the alternate bank account.

To create a journal entry you use the Park Journal Entry (G/L) Fiori tile.

27.

Click to display the Park G/L Account screen.
A dialog screen appears request details about which Company the document refers to.

28. Type US00 in the Company Code field.

29.

Press to proceed to the document entry screen.
You now need to entre some details regarding the transfer of funds. Some data has been inserted by default. For example as you selected GBI US the system knows the default currency is USD, The first data to be entered is the Document Date.

30.

Click in the Document Date field to display a calendar.
You will notice that today’s date is highlighted.

31.

Click to transfer today’s date to the Document Date field.
32. Type ### (your id) in the Reference field.

33. Type Transfer of Funds in the Doc. Header Text field.

You now need to provide the sending account details, the type of transfer, and the amount.

34. Type 101000 (Alternate Bank Account) in the G/L acct field on the first line.

35. Choose Debit in the D/C field.

36. Type 5000 in the Amount in doc.curr field.

You now need to indicate the receiving account details, the type of transfer, and the amount.

37. Type 100000 (Bank Account) in the G/L acct field on the first line.

38. Choose Credit in the D/C field.

39. Type 5000 in the Amount in doc.curr field.account

40. Press .

Your screen should look similar to below:

You can test if the postings are correct by simulating the posting.

41.

Click to test the postings.
The following screen appears:

Do Debits equal Credits?

What kind of accounts make up this transaction?

As the simulation appears to be correct you can now post (save) the journal entry.

42.

Click on the toolbar.
A dialog box appears to indicate that the posting has been successful and the accounting document number is provided.

Record your Accounting Document Number:

43.

Click to return to the launchpad.
Task 5: Display G/L Account Balance
It is important to be able to quickly view the balance of different accounts. This exercise you will add a new Fiori tile to your launchpad which will enable you to quickly review account balances.

The accounting function underpins all businesses process in a company. The general Ledger and its accounts is the area where accounting activity is recorded. Throughout the exercises you will be continually reviewing the general ledger accounts to get an understanding how the various business processes and their associated transactions impact on the accounting function. At the moment the Fiori tile to perform this function has not been included on your launchpad. As this will be a regular activity you need to add the relevant Fiori tile to make this function easier to perform.

(a) Adding a Fiori Tile:
The first step in adding a tile is to find the relevant application and its associated tile. These applications can be accessed through the App Finder in the Me area .
44.

Click to access the Me area.
45.

Click to display the various applications.
You will notice that the Apps are grouped in functional areas.

46.

Click to display the Apps associated with this functional area.
On the left of the screen a number of Fiori tiles are displayed.

There is a pin icon on each tile which allows you to include or exclude a particular tile in the Launchpad. You will notice that one of the tiles pin icon is highlighted.

This indicates that the Fiori tile has been included on the Launchpad.

47.

Click on the Display G/L Account Balances tile.
A dialog screen appears allowing you to specify which group you want to include the tile.

48. Click Financial Accounting to select this group.

49.

Click to add the selected tile to your Launchpad.
A message appears to confirm the addition and pin icon on tile becomes highlighted.

50.

Click to return to the launchpad and confirm the tile has been added.
Adding and deleting tiles allows a user to customize their Launchpad to suit their needs. Changes made to one launchpad does not affect other users.

(b) Displaying Account Balances:
51.

Click tile to start this application.
The following screen appears:

You will notice that there are a number of fields in the Selection area which require data.

52. Type US00 in the Company Code field.

As you type the relevant data for US GBI Bike is displayed.

53. Click US00 to select it and transfer the details to the Company Code field.

54. Type 101000 in the Account field.

Again, notice that as you type the available accounts are being searched automatically and those which match are being displayed

55. Click 10100 Alternate Bank Account to select it.

56. Ensure that the Ledger Fiscal Year matches the current year.

57.

Click to display the details.
A screen similar to below appears:

If your numbers are different, can you explain why?

(c) Displaying Accounting Documents
The screen displays the balance for the Alternate Bank Account (101000). Sometimes a balance is not enough information and you want to review the accounting documents associated with this balance. This can be easily achieved by using the system’s drill down feature.

58. Click the balance for the current period to drill down to the associated documents.

A screen appears similar to below but may have many more documents.

Previously you recorded the Accounting Document Number when the journal entry occurred.

59. Click your to drill down to further details.

A screen similar to below appears:

The screen identifies who performed the Journal Entry and what time. This can help auditors trace financial transactions

60.

Click to return to the launchpad.
Task 6: Displaying Journal Entries
You can also display the details of the Journal Entry and the associated Accounting Document. This enables you to review the transaction.

61.

Click tile to start this application.
The Manage Journal Entry scree appears.

62. Type US00 in the Company Code field.

63. Type the your previously recorded in the Journal Entry: field.

64.

Click to display the journal entry.
Your screen appears similar to:

You can drilldown to display more details of the entry.

65. Click the Journal Entry number on the first row of the detail area.

A dialog screen appears with a number of options.

66.

Click .
A screen appears with the Journal Entry details

Notice the details indicates what occurred, who created it and when.

67.

Click to return to the launchpad.
Task 7: Post Purchase of Office Supplies
The business scenario is that you need some office supplies immediately. You drive down to OfficeWorks and buy $175 of supplies (paper, folders, and a software package) and pay for the purchase with a company check drawn on your alternate bank account. Two Cost Center’s budgets (Internal Services-$80, IT Costs-$95) in the company will incur these costs.

68.

Click to display the Park G/L Account screen.
You now need to enter some details regarding the transaction. The first data to be entered is the Document Date.

69.

Click in the Document Date field to display a calendar.
You will notice that today’s date is highlighted.

70.

Click to transfer today’s date to the Document Date field.
71. Type ### (your id) in the Reference field.

72. Type OfficeWorks supplies in the Doc. Header Text field.

You now need to provide the sending account details, the type of transfer, and the amount. However, you are not sure what the account number for the Supplies Expense account. You will need to search for it.

73. Click the first row of the G/L acct field.

You will notice that a search icon appears.
74.

Click to display the search dialog screen
The screen is requesting the G/L Account number but you are unsure what this number is. You need to search by description.

75.

Click to display these search options.
76. Type Supplies* in the G/L Long Text: field.

77.

Click to display the search results.
This is the correct account.

78.

Click to transfer these details.
79. Choose Debit in the D/C field.

80. Type 80 as Amount in doc.curr field.

You now have to indicate which Cost Centre’s budget will be impacted.

81. Type NAIS1000 for (Internal Services).in the Cost center field.

Now you need to repeat the process for the second Cost Center. In the second row:

82. Type 740000 (Supplies Expense)in the G/L Account field.

83. Choose Debit in the D/C field.

84. Type 95 as Amount in doc.curr field.

You now have to indicate which Cost Centre’s budget will be impacted.

85. Type NAIT1000 for (IT costs).in the Cost center field.

In the third row:

86. Type 101000 (Alternate Bank Account) in the G/L acct field on the first line.

87. Choose Credit in the D/C field.

88. Type 175 in the Amount in doc.curr field.

89. Press to check the details.

Your screen should appear similar to below:

To test if the postings are correct simulate the posting.

73.

Click to test the postings.
The following screen appears:

Do Debits equal Credits?

As the simulation appears to be correct you can now post (save) the journal entry.

74.

Click on the toolbar.
A dialog box appears to indicate that the posting has been successful and the accounting document number is provided.

Record your Accounting Document Number:

75.

Click to return to the launchpad.
Task 8: Display General Ledger Account Balances
You now need to display and confirm by individual account number the activity and associated balances for several accounts in the general ledger of the US GBI company.

Previously you displayed account balances in the general ledger (steps 51 to 57)

75. Repeat these steps for each of the accounts involved in the purchase of office supplies.

What is the account balance for:

Alternate Bank Account?

Supplies Expenses?

You have now completed the exercises on Financial Accounting. However, as accounting underpins all other company processes the exercises will continually being referring to accounting functions.