Chart of Accounts (Part – I)

Definition

A Chart of Accounts represents set of General Ledger (G/L) Accounts in SAP. SAP provides country specific Chart of Accounts in standard configuration. These standard COA’s should be considered while creating your new Chart of Accounts.

Importance

As we are aware the G/L Accounts are the backbone of any accounting system. They are the medium for recording all the transactions to be posted. We can’t even imagine about booking any transactions without G/L Accounts. This is the reason why the COA which carries enterprise structure level configuration of G/L accounts, becomes very important in SAP. Hence, it is imperative to define appropriate structure for Chart of Account from the beginning of a project.

Considering above facts about COA, utmost care should be exercised during finalisation of Chart of Accounts.

Implementation Consideration

Creating Chart of Accounts IMG Path Financial Accounting (New) > General Ledger Accounting (New) > Master Data > G/L Accounts > Preparations > Edit Chart of Accounts List

While creation of Chart of Accounts, following fields need to be configured carefully

Description Enter appropriate Description of your Chart of Accounts. This description will be displayed whenever we opt for search option.

Maint. Language The Maintenance Language is mostly EN i.e. English.

Length of G/L This is very critical part of COA. Here we define the length of G/L Accounts which will become part of this COA. It is better to have 8 digit G/L Accounts, this helps in segregating the G/L Account numbering according to nature of accounts.

Controlling Integration As you must be aware, COA is not just assigned to Company Code, but it is also assigned to Controlling Area. The Revenue/Expense G/L Accounts are known as Revenue/Cost Elements in Controlling Area.

This field contains following options:

Manual Creation of Cost Elements

Cost Element for the G/L Accounts are to be created manually after creating a G/L Account.

Automatic Creation of Cost Elements Cost Element for the G/L Accounts are automatically created upon saving of G/L Account. Group Chart of Accounts In case of companies with Group reporting, this field becomes very useful. The Company Code can be it’s own COA (operating COA) at the same time a Group COA can be assigned to this operating COA.

Once group COA is assigned to any operating COA, the field “Group G/L Account” starts appearing in the G/L Account master data. This field helps us to map the operating G/L account with group G/L account.

Status This section has a radio button “Blocked”. This can be used in case no G/L account to be created.

We will stop here and will continue in next post for discussion on Account Groups…………

Part II

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