FI Month End Closing Activities
Define the Month End Closing Activities in Finance
1. Recurring Documents.
a) Create Recurring documents
b) Create Batch Input for Posting Recurring Documents
c) Run the Batch Input Session
2. Posting Accruals or Provisions entries at month end
3. Managing the GR/IR Account-Run the GR/Ir Automatic Clearing
4. Foreign Currency Open Item Revaluation-Revalue Open Items in AR.AP
5. Maintain Exchange Rates
6. Run Balance Sheets –Run Financial Statement Version
7. Reclassify Payables and Receivables if necessary
8. Run the Depreciation Calculation
9. Fiscal Year Change of Asset Accounting if it is year end
10. Run the Bank Reconciliation
11. Open Next Accounting Period
Controlling Module
Explain the organizational assignment in the controlling module?
Company codes are assigned to the controlling area. A controlling area is assigned to the operating concern.
Controlling Area is the umbrella under which all controlling activities of Cost Center Accounting, Product costing, Profitability Analysis and Profit Center are stored.
Operating Concern is the highest node in Profitability Analysis
What is primary Cost element and secondary cost element?
Every Profit and Loss GL account that needs to be controlled has to be defined as a cost element in SAP. Just as in FI General Ledger Accounts exist, in Controlling we have Cost element.
Each FI General Ledger Account which is a Profit and Loss Account is also created as a Cost element in SAP
Primary Cost Elements are those which are created from FI general Ledger Accounts and impact the financial accounts eg. Travelling expenses,consumption account infact any Profit and Loss GL account
Secondary Cost Elements are those which are created only in controlling and does not affect the financials of the company. It is used for internal reporting only. The postings to these accounts do not affect the Profit or Loss of the company.
The following categories exist for secondary cost elements:
21 Internal Settlement:
Cost elements of this category is used to settle order costs to objects in controlling such as cost centers, pa segments etc.
31 Order/Results Analysis:
Used to calculate WIP on the order/project
41 Overhead
Used to calculate indirect costs from cost centers to orders
42. Assessment
Used to calculate costs during assessment
43 Internal Activity Allocation
Used to allocate costs during internal activity allocation such as Machine Labour etc
What are cost objects?
A cost object means a cost or a revenue collector wherein all the costs or revenues are collected for a particular cost object. Examples of this could be cost center, production order, internal order, projects, sales order
So whenever you look at any controlling function the basic thing you need to ask yourself is What is the cost element(expense) I want to control and what is the cost object ( ie either the production order,sales order,internal order) I am using to control this cost element. Sounds confusing read it again it is very simple
Controlling is all about knowing the cost element and the cost object. Every time pose this question to yourself what is the cost element what is the cost object.
At the end of the period all costs or revenues in the cost object are settled to their respective receivers which could be a gl account, a cost center , profitability analysis or asset.
Read this couple of times till you are clear if you are not clear write to me as this is the most important thing in Controlling
Cost Center Accounting:
How is cost center accounting related to profit center?
In the master data of the Cost Center there is a provision to enter the profit center. This way all costs which flow to the cost center are also captured in the profit center.
Cost centers are basically created to capture costs eg admin cost center ,canteen cost center etc
Profit centers are created to capture cost and revenue for a particular plant, business unit or product line.
What is a cost element group?
Cost element group is nothing but a group of cost elements which help one to track and control cost more effectively. You can make as many number of cost element groups as you feel necessary by combining various logical cost elements.
What is a cost center group?
In a similar line the cost center group is also a group of cost centers which help one to track and control the cost of a department more effectively. You can make as many number of cost centers as you feel necessary by combining various logical cost centers
Infact you can use various combinations of cost center group with the cost element group to track and control your costs per department or across departments
What is the difference between Distribution and Assessment?
Distribution uses the original cost element for allocating cost to the sender cost center. Thus on receiving cost center we can see the original cost element from the sender cost center. Distribution only allocates primary cost.
Assessment uses assessment cost element No 43 defined above to allocate cost. Thus various costs are summarized under a single
assessment cost element. In receiver cost center the original cost breakup from sender is not available. Assessment allocates both primary as well as secondary cost.
What are the other activities in Cost center?
If you have a manufacturing set up entering of Activity prices per cost center/activity type is an important exercise undertaken in Cost center accounting.
What is a Activity Type?
Examples of Activity Type could be Machine,Labour Utilities
