ACCOUNTS PAYABLE NOTES

What are Golden Rules of Account?

In Personal Account Debit the Receiver
Credit the Giver
In Real Account Debit what comes in
Credit What goes out
In Nominal Account Debit the Expenses !osses
Credit the incomegain
What is Account Paa!le?
Accounts pa"able is a #ile or account sub$ledger that records amounts that a person or compan"
owes to suppliers% but has not paid "et &a #orm o# debt'% sometimes re#erred as trade pa"ables(
When an invoice is received% it is added to the #ile% and then removed when it is paid( )hus% the
AP is a #orm o# credit that suppliers o##er to their customers b" allowing them to pa" #or a
product or service a#ter it has alread" been received(
Example* Compan" Purchase some materials on credit basis% the Credit period is span o# one
month( +o until made pa"ment to ,endor% it is treated as dues in Accounts Pa"able in balance
sheet(
What are the tea"s in Accounts Paa!le?
#nde$in%& sortin% - +orting team will sort the invoice according .. vendor invoice% #inance
vendor invoice% +ervice vendor invoice% and Emplo"ee vendor invoice% date o# invoice% vendor
Name(
#n'oice (ostin% tea" - invoice posting team Posting the vendor invoices% i# the" #ound an"
wrong &/uantit" mismatch% amount mismatch% or both % an" re/uire #ield is missing or not visible
proper li0e invoice no(% vendor name etc then the" post the invoice as par0 document(
)uer handlin% Tea" - 1uer" handling team release the Par0ing invoice b" solving the /uer"
2 post that Invoice(
Pa"ent Tea" - )his team is responsible #or all t"pes ,endor pa"ment - Normal Pa"ment%
Advance pa"ment% pa"ment re/uest(
*endor Reconciliation tea"* )he team is responsible #or con#irmation the vendor dues b"
reconcile vendor pa"ment histor" in s"stem 2 ,endor +tatement( I# the" #ound an" dues still to
be paid% the" raised supplementar" pa"ment or i# the" #ound an" overpa"ment or duplicate
pa"ment against duplicate invoice posting b" user the" raised credit memo to recover" o# over
pa"ment or the" ad3usted the over pa"ment in next pa"ment once con#irmed #or
superiormanager(
2 another responsible to handle the )D+ transactions #rom top to bottom li0e +ubmitting the tds
amount in the ban0 on line% 4an0 challan receipt number update 2 )D+ raised to vendor
What is Purchase Order?
Purchase order is a commercial document which is issued b" the purchaser to the seller #or
ordering goods or serves( Purchase order creates legal agreement between purchaser and the
seller(
It contains
Name o# the supplier
Description 5 speci#ication o# material
1uantit" ordered
Date 2 place o# deliver"
What are T(es of Purchase Order?
Standard Purchase order* )his P6 is created #or one$time purchase o# material(
Blan+et Purchase Order* In this P6 deliver" schedule are not 0nown clearl"(
Contract Purchase Order* In this P6 material re/uired are not speci#ied(
Planned Purchase Order* It is a long term agreement purchase 6rder( In this P6 it speci#ies
materials% estimated costs% and tentative deliver" schedules
What do ou "ean ! four ,a "atchin%- three Wa .atchin%- and t,o ,a "atchin%?
/0,as0 ,e ,ill co"(are / docu"ents 0 "atch Purchase order ,ith #n'oice
Whatever "ou have ordered #or the P6 we will ma0e the pa"ment #or the suppliers in 7$wa" &we
will compare two documents P6 and Invoice'(
Example* +uppose we had given P6 #or 899 items% #or that we will receive invoice #or 899 items(
+o that we will ma0e pa"ment #or that 899 items(
10Wa "atchin% 0 ,e ,ill co"(are 1 docu"ents 0 Purchase Order 2 Goods recei(t 2#n'oice
Example* +uppose we have ordered 899 items in Purchase 6rder( 4ut we had received onl" :9
items% but we had received invoice #or 899 items( +o% we will ma0e pa"ment #or onl" :9 items
30Wa ,e ,ill co"(are 3 docu"ents 4 Purchase Order 2 #ns(ection 2 Goods Recei(t 2
#n'oice2
Example* +uppose we have 899 items in Purchase 6rder (+uppers send us :9 items we will do
inspection on those items whatever we have received% I; 89 items got damaged( ;inall"% we are
going to ma0e pa"ment to the <9 items onl"(
What is 5o,n (a"ent Process flo,?
)his ;undamental is used to give advance pa"ment to vendor to receive the goods( I# it is
declared that material receives against advance pa"ment in purchase order% in this situation
purchase department Noti#ied that give down pa"ment to vendor b" create down pa"ment
re/uest( )he #inance Department is converted down pa"ment re/uest to down pa"ment made on
respective due date(
+ap process li0e *
Down pa"ment Re/uest #$=< &it man" times created b" purchase department 2 in#irm to #inance
department to pa" the down pa"ment on that due date'
Down pa"ment .ade - #$=: &i# down pa"ment re/uest is exit #irst release that or i# not ma0e
down pa"ment directl"'
Down Pa"ment Cleared - #$>= &Cleared the Down pa"ment Against Invoice number% once
vendor invoice posted in the s"stem'
What +ind of error can !e occurred durin% 5ocu"ent Postin%?
Error o# commission - this is happened when in invoice /uoted amount is >?9 and user entered
?>9 so it is an error o# commission(
Error o# omission - "ou totall" omitted that invoice in s"stem(
Duplicate invoice posting - i# double time invoice posted in the s"stem b" give di##erent
invoicere#erence number(
)o avoid this 0ind o# an error "ou have to create doubt% i# "ou posted same vendor@s invoice
recentl"(
Who is indenter?
Indenter is a person who raised the Re/uirement to procure material(
Example* A manager in #inance department needs 7 Printers to purchase( Ae will in#irm to
Purchase Department regarding printer( In this case indenter is manager(
What is Procure"ent to (a or accounts (aa!le or (urchase Process flo, ,ith 6ournal
entr?
.aterial Re/uisition Planning
)(C6DE
.aterial Re/uisition
.E>8N
Purchaser raised +hortlisted vendors .E78N
Goods Receipts $ Raw .aterial Ac Dr( >99 .IG6
)o GRIR Clearing Ac Cr( >99
Invoice Receipt $ GRIR Clearing Ac Dr( >99 .IR6
)o ,endor Ac Cr( >99
,endor Pa"ment $ ,endor Ac Dr( >99 ;$>B;$>:;889
)o 6utgoing 4an0 Clearing Ac Cr( >99
What are the Su! (arts in Accounts Paa!le in sa(?
,endor invoice Posting
Release Par0 invoice
,endor Pa"ment
Reporting
,endor Reconciliation
What is sa(?
+ap is an ERP &Enterprise Recourse Planning'( )he acron"m o# +AP is +"stem Application 2
Product in Data Process(
What is ERP?
Enterprise Resource Planning s"stem is a #ull" integrated business management s"stem covering
#unctional areas o# an enterprise li0e !ogistics% Production% ;inance% Accounting% +ales and
Auman resources etc( It organiCes and integrates 6peration processes and in#ormation #lows to
ma0e optimum use o# resources such as men% material% mone" and machine( ERP is a global%
tightl" integrated closed loop business solution pac0age and is multi#aceted ERP promises one
database% one application and one user inter#ace #or the entire enterprise( ERP s"stem enhances a
manu#acturer abilit" to accuratel" schedule production% #ull" utiliCe capacit"% reduce inventor"%
and meet promised shipping dates(
What is Co"(an?
Compan" represents a group( .eans it is used #or consolidating individual Compan" codes(
Example* Reliance Group is compan"
Reliance Auto mobile% Reliance Perotrolium % Reliance )elecom% Reliance Insurance% Reliance
.ultimedia are individual Compan" codes(
What is Co"(an code?
It represents b" #our digits alpha numeric 0e"s( It is separate legal entit" #or which all #inancial
+tatements are drawn li0e 4alance +heet% Pro#it 2 loss Accounts% cash #low statements % ;unds
#low statements etc(
What is Business area?
;our digits code &4usiness area' represents a segmentResponsibilit" o# the 6rganiCation #or
Which +eparate #inancial +tatements are Prepared( It can be divided b" !ocation wise% Product
line wise% segment wise(
Example* ;or compan" code 8999 &Reliance Auto' has #ive location Pune% .umbai% Dol0ata%
bang lore% Delhi branches are di##erent business areas(
What is 7iscal ear *ariant?
;iscal#inancial "ear is a combination o# 87 months periods( Which stats #rom April to .arch o#
ever" "ear( In sap s"stem there are two t"pes o# period one is regular posting periods o# 87
months 2 special periods o# = months #or the purpose o# accounts ad3ustment at "ear end(
What is 5ocu"ent t(e?
Document t"pes are used to di##erentiate the business transactions and to manage how document
are stored( Accounts Pa"able Document t"pes are*
DA E ,endor Document
DG E ,endor Credit .emo
DR E ,endor Invoice
RE E .. ,endor Invoice
DF E ,endor pa"ment
+A E G! AC Document
What is Account t(e?
Accounts )"pes are used to identi#ication o# relevant categor" li0e A$ Asset% D$vendor% D$
Debtor% .$.aterial% +$ General ledger
What is (ostin% +es?
)he posting 0e" controls how the line item is entered and processed
Which side o# an account can be posted to whether Dr( +ide or Cr( +ideG
Which t"pe o# account can be posted to A$ Asset% D$vendor% D$Debtor% .$.aterial% and +$
General !edgerG
=9 G! account debit posting
>9 G! account credit posting
98 Customer invoice
88 Customer credit memo
78 ,endor credit memo
7> ,endor pa"ment
B8 ,endor Invoice
PD )ransaction vendor Debit PD )ransaction vendor Credit
78 Credit memo B8 Invoice
77 Reverse invoice B7 Reverse credit memo
7= 6ther receivables B= 6ther pa"ables
7> 6utgoing pa"ment B> Incoming pa"ment
7? Pa"ment di##erence B? Pa"ment di##erence
7< Clearing B< 6ther clearing
7: Pa"ment clearing B: 6ther clearing
7H +pecial G! credit BH +pecial G! credit
What is Reconciliation Account?
Reconciliation Account is ledger account% which is updated through +ub$ledger account( We
could not post directl" into reconciliation( All individual ,endors are +ub$ledger accounts(
Example* ,endor Reconciliation account is a !edger 2 Ram% Aari% Gopals% +udam accounts are
sub ledger accounts( When post the Ram@s invoice( Ram sub$ledger is updated as open item dues
as well as ,endor Reconciliation account is update through RA.( I# post all vendors@ invoice
then re#lection will be as below
,endor Recon( Acct ERam duesI Aari@s dues I Gopals Dues I +udam@s dues
8999 E 899I799I>99I799
What are the S(ecial Gl indicators used in sa(?
+pecial G! indicators are used to identi#" the special transaction( )his re#lects in vendor line
item report under +pecial G! indicator column(
;$ Down Pa"ment Re/uest
J$ +imple Pa"ment Re/uest
A$Down pa"ment made
w$ 4ill o# exchange Pa"ment
G$ 4an0 Guarantee(
! - !etter o# Credit Pa"ment(
What is noted #te"?
When "ou note down something to be paid in #uture that is Called as Noted item( Noted item has
no e##ect in boo0s o# accounts( )ransactions li0e Down pa"ment re/uest% pa"ment re/uest% and
bill o# exchange pa"ment until release% letter o# credit until release(
It is displa"ed in vendor line item report under +pecial G! indicator column(
What are S(ecial Gl transactions?
Apart #rom normal transaction li0e invoice posting 2 simple vendor pa"ment are called special
gl transactions( Example Down pa"ment made(
What is line ite"?
!ine item that provides a detailed in#ormation about the document li0e amounts% posting date%
due date% dues% not dues% over dues% open item or cleared item etc(
What is o(en ite"?
Items are identi#ied b" Red colour which represents as duesnot dues not paid "et to vendor
What is cleared ite"?
Items are indenti#ied b" Green Corlour +/uare button which represents pa"ment has been made
to vendor(
5ifference !et,een (artial 8 Residual (a"ent?
Partial Pa"ent Residual (a"ent
In partial pa"ment% partial amount can be paid
2 this document will re#lect in open item in
vendor line item report until #ull settlement the
dues(
Example * ,endor dues 8999
Partial amount paid =99
+"stem response dues is ?99 but =99 2 8999
will appear "ou in red colour open item(
When "ou paid remain ?99 then total it will be
displa"ed in cleared item(
Aere "ou also ma0e partial pa"ment to vendor
but one thing is that Residual item amount is
generated a new open item with new document
number(
Example * ,endor dues 8999
Partial pa"ment E =99 is paid
Remain Residual item amount E ?99 will be
created as open item automaticall" b" s"stem
+o =99 will be cleared 2 displa"ed in cleared
item( ?99 will be displa"ed in open item(
5ifference !et,een 9old 5ocu"ent 8 Par+ed 5ocu"ent?
9oldin% 5ocu"ent Par+in% 5ocu"ent
Aolding Document is hold b" temporar"
number whatever given b" user(
Par0ing document is created with internal
number range
Aolding document is onl" viewedchanged b"
user
Par0ing document can viewed 2 changed b"
an"one
Aold Document in +AP means It is #or short
term and is being used when +AP transaction
Debit or Credit is uncertain and generall" its is
used #or external purpose #or example Advance
#rom un0nown customer etc(
+AP Par0 Document means #or longer period
and is generall" used #or internal purpose( )ill
approval ta0e place etc( a#ter this +AP par0ed
document posted in +AP(
5ifference !et,een 'endor in'oice (ostin% ! transaction code screen 7B:; 8 7031?
;4?9 +CREEN ;$=B +CREEN
+ingle screen data entr" .ultiple screen date entr"
Automatic document t"pe% posting 0e"
updated b" the s"stem(
.anuall" enter Document t"pe% Posting 0e" in the
s"stem(
5ifference !et,een 'endor Pa"ent (ostin% ! transaction code 70<1 *S 70<= *S APP
;$>B ;$>: ;889 APP
.ultiple pa"ment posting
.anuall"
.ultiple pa"ment posting
manuall" with ;orm print
.ultiple pa"ment
Automaticall" with #orm
printing b" set parameter in
APP(
What do ou "ean ! (ostin% date- 5ocu"ent date- *alue date- clearin% date 8 Base line
5ate?
Postin% date 5oc> 5ate *alue date Clearin% 5ate Base line date
6n which date
document is
posted into
s"stem
invoice /uoted
date is document
Date to be #illed
in document Date
#ield
Kse #ull #or
4an0
Clearing date is
auto updated
once pa"ment
made or cleared
the document(
)o calculate all
Due dates with
re#erence to
pa"ment terms(
What is APP?
APP is nothing but Automatic Pa"ment Program is used to ma0e huge pa"ment to huge number
o# ,endors at a time% where s"stem clears the vendor accounts 2 prints the Chec0% Pa"ment
advice 2 pa"ment summer" automaticall"( )he transaction code to run the APP is ;889(
9o, (a"ent is e$ecuted throu%h APP?
Set the Para"eter ??? Gi'e (ro(osal Edit (ro(osal if an need to edit ??? (a"ent run
???(rint the for"s>
Lou launch transaction ;889 and speci#" parameters #or the selection o# items to be paid( )hen
"ou run Proposal Run which creates Pa"ments Proposal( )his proposal is anal"Ced b" )reasur"
Accountants somebod" else and then it is approved immediatel" or with some corrections(
A#ter that "ou run Productive Run( At this moment postings are done &or not done - see
separatel"'( When Productive Run is #inished% "ou can create pa"ment #ile or paper pa"ment
documents #or the ban0 andor pa"ment recipients(
Ter"inolo% in APP
set the Para"eter 4 set the pa"ment parameter to executed the app where run date%
identi#ication code% compan" code% Pa"ment method% next run date 2 vendor code are
compulsor" to #illed up(
Gi'e (ro(osal to run 4 "ou give Proposal to s"stem to consider invoices #or pa"ment as per
"our set parameter( I# an" invoice with red color those need to be release b" edit proposal(
Edit Pro(osal@ here "ou release the invoice #or pa"ment b" avoid the pa"ment bloc0% assign
pa"ment method% Aouse ban0 b" reallocation #unctionalit"(
Run (a"ent@ at last once clari#ied proposal "ou ma0e pa"ment b" press pa"ment run button(
7ree selection ta!@ it is help #ull i# management wants pa"ment to be made b" document t"pe
wise% posting date wise% pro#it center wise or an" other aspect wise( Lou can speci#" b" assign
respective value in these #ields(
Additional Lo%@ Lou can de#ine criteria #or an additional log( I# "ou call up the log later on% the
s"stem displa"s the processing logic o# the pa"ment program in appropriate detail( 4e#ore doing
an"thing% "ou should read the note under Chec0ing the !og in MCreating the Pa"ment ProposalM(
The follo,in% (rocessin% ste(s can !e lo%%ed>
Due date chec0
Pa"ment method selection in all cases
Pa"ment method selection i# not success#ul
Pa"ment document items
Procedure
;or the additional log% choose the Additional log tab on the Automatic Pa"ment )ransactions
screen( Clic0 next to the corresponding option and enter the account numbers o# the vendors or
customers(
Ne$t (a"ent run date@ )his date is needed in order to chec0 the due date o# pa"ables( I# an
item is alread" overdue on the date o# the next pa"ment run% or would lose cash discount% the
s"stem pa"s the item in this pa"ment run( In real time most o# companies are run app in ever"
#ortnightl"( Run schedule is in$between A
st
and A<
th>
Lou run app on 8
st
date o# the month and
two items has due date on 1
rd
and <
th
o# the month% it will be overdue on next pa"ment run BA<
th
date
C or some item are #alls under cash discount due date 1Ath % then i# "ou 0eep 1A
st
date in
NEDT RUN 5ATE field% s"stem pa"s these item in this pa"ment run and "ou get cash discount
bene#its(
#n'oice under E$ce(tions@
When executing the N automatic pa"ment program &;889 transaction'% a proposal run must
alwa"s be carried out in +AP s"stem N #irst( )he proposal list will sometimes include exceptions
or it is displa"ed with red color error button(
Co""on e$ce(tions are@
+AP Invoice contains pa"ment bloc0( )o pa" this invoice% remove the pa"ment bloc0 when
editing the proposal list &unless the pa"ment bloc0 is one which cannot be edited during pa"ment
proposal' or remove pa"ment bloc0 via ;497 #or each +AP invoice(
Pa"ment method in vendor masterinvoice is di##erent #rom the one speci#ied in the pa"ment
program parameter( )o pa" this invoice% allocate the pa"ment method in the parameter o# the
pa"ment run to this invoice while editing the proposal list(
,endor master does not contain in#ormation speci#ied as mandator" in the pa"ment method in the
parameter o# the +APN pa"ment program( ;or example% depending on the pa"ment method
con#iguration #or the countr"% certain #ields such as cit" or P6 4ox must be populated in the
vendor master( In this case% delete the proposal run% ma0e the necessar" changes in the vendor
master and execute the proposal run again(
)"picall"% N pa"ment program pa"s due invoices in #ull( )o cater #or partial pa"ment via
automatic pa"ment program% pa"ment re/uest will be used &optional'( Down pa"ments to sta##
and vendor can also be made via the automatic pa"ment program i# down pa"ment re/uest was
posted(
I# N #oreign currenc" invoice is paid via N automatic pa"ment run% the relevant exchange rate
t"pe should be selected in the pa"ment run parameter( Exchange rate gainloss on ma0ing the
pa"ment will be automaticall" posted to the relevant pro#it and loss account based on the
reconciliation account o# the vendor(
)he N pa"ment method speci#ied in the parameter o# the pa"ment program determines the ban0
account and the G! account used to ma0e the pa"ment( Also% depending on the pa"ment method%
che/ues% other #orms and pa"ment #iles will be generated(
What is *endor Reconciliation?
It is .onth end activities once ;ull accounts pa"ment process is completed b" pa"ment to
vendor( )he vendor reconciliation team reconciles pa"ment b" matching ,endor statement with
s"stem pa"ment histor"( )he" con#irm whether an" dues to be paid i# an"% the" raise
supplementar" or an" amount to be collect #rom vendor b" raise credit memo(
Countr #ndia 'ersion BC#NC@ #ndian ta$ation 8 ,ithholdin% ta$ BT5SC
What is T5S&,ithholdin% ta$ 8 its (rocess 7lo,?
)D+ &)ax Deducted at +ource' is deducted at source o# vendor@s income( We can Charge )D+
when we receive Govt( speci#ied services #rom vendor 2 that person should eligible as per Govt(
slab incomes()D+ can be deducted at the time o# pa"ment to vendor or vendor invoice
processing which is ever is earlier(
What are the Section codes- (ercenta%e rates 8 Sla! rates in T5S?
;ollow the lin0* http*#inotax(comitaxtds9H89(htm
All for"s related T5S@
;ollow the below lin0* http*taxworr"(comnew$#orm$8?$#orm$8?a$#orm$7=g$#orm$7<d$noti#ied$
download$now
What are due dates for T5S (a"ent
Due Date )able #or )D+ and )C+ /uarterl" returns* 1uarter
;orm 7=1 ;orm 7?1 ;orm 7<1 ;orm 7<E1
;irst Jul" 8>
th
Jul" 8>
th
Jul" 8=
th
Jul" 8>th
+econd 6ctober 8>th 6ctober 8>th 6ctober 8=th 6ctober 8>th
)hird Januar" 8>th Januar" 8>th Januar" 8=th Januar" 8>th
;ourth .a" 8>
th
.a" 8>th .a" 8>th .a" 8>th
)ax deducted b" compan"
)ime to deposit )D+ &due date to deposit tds' Rule B9
8 tax deductible in .arch B9th April o# next "ear
7 other months 2 tax on per/uisites opted to
be deposited b" emplo"er <th o# next month

Note* Assessing o##icer% with prior approval o# Joint commission% ma" permit /uarterl" pa"ment
o# )D+ under #ollowing sections
+ection Description /uarter o# ;inancial
"ear ended on
date o# pa"ment
8H7 salar" B9th June
&8
st
/tr'
<th Jul"
8H=A )D+ on interest other
than securities
Bth +eptember
&7n /tr'
<th 6ctober
8H=D )D+ on insurance
commission
B8st December
&B
rd
/tr'
<th Januar"
8H=A )D+ on commission B8st .arch
&=
th
/tr'
B9th April
Note*)D+ is to be deposited online mode onl" through Debit card or Interenet ban0ing .ode%
except in case o# 4oo0 ad3ustment b" Govt 6##ices
AP STEP BY STEP TRA#N#NG
CREA)E ,END6R .A+)ER DA)A - ;D98 ;KNC)I6NA!!L &;INANCE ,END6R' 2
OD98$ CEN)RA!!L &.A)ERIA! .ANAGE.EN) ,END6R'
7#NANCE RELATE5 TRANSACT#ON
STEP A 4 #N*O#CE POST#NG 8 PAY.ENT
,END6R IN,6ICE P6+)ING ;4?9 6R ;$=B
DI+P!AL D6CK.EN) - ;49B
DI+P!AL ,END6R !INE I)E. - ;4!8N
DI+PAL ,END6R )RAN+AC)I6N ;IGKRE - ;D89N
,END6R PAL.EN) - ;$>B;$>:&WI)A CAECD PRIN)INGPAL.EN)
AD,ICEPAL.EN) +K..ARL'
STEP / 4 PARE #N*O#CE 8 POST PARE #N*O#CE 8 PAY.ENT
,END6R IN,6CE PARDING ;,?9 6R ;$=8
P6+) PARDING ,END6R IN,6CE ;4,9 2 ;,?9
DI+P!AL D6CK.EN) - ;49B
DI+P!AL ,END6R !INE I)E. - ;4!8N
DI+PAL ,END6R )RAN+AC)I6N ;IGKRE - ;D89N
,END6R PAL.EN) - ;$>B;$>:&WI)A CAECD PRIN)INGPAL.EN)
AD,ICEPAL.EN) +K..ARL'
+)EP B$ RE,ER+E 6PEN I)E. D6CK.EN) ;49:
STEP 3 4 RE*ERSE CLEARE5 #TE. 5OCU.ENT 7BRA
STEP <0 5OWN PAYE.ENT
CREA) D6WN PAL.EN) RE1KE+) - ;$=< ;4!8N WI)A N6)ED I)E.
RE!EA+E D6WN PALE.N) RE;ERENCE )6 D6WN PALE.N) RE1KE+) - ;$=:
;4!8N WI)A +PECIA! G! )RAN+AC)I6N
P6+)ING ,END6R IN,6ICE - ;4?9 ;4!8N WI)A N6)ED I)E.%+PECIA! G!
)RAN+AC)I6N% N6R.A! I)E.
ADJK+) D6WN PALE.N) WI)A ,END6R IN,6ICE - ;$>= &GI,E ,END6R IN,6ICE
&DR' NK.4ER' - ;4!8N WI)A A!! I)E.+(
RE+) A.6KN) PAID &,END6R PAL.EN)' - ;$>B;$>: ;4!8N WI)A A!! I)E.
CRI)A)IA(
STEP : 0 PAY.ENT W#T9 CAS9 5#SCOUNT RECE#*E5>
CREA) D6WN PAL.EN) RE1KE+) - ;$=< ;4!8N WI)A N6)ED I)E.
RE!EA+E D6WN PALE.N) RE;ERENCE )6 D6WN PALE.N) RE1KE+) - ;$=:
;4!8N WI)A +PECIA! G! )RAN+AC)I6N
P6+)ING ,END6R IN,6ICE - ;4?9 ;4!8N WI)A N6)ED I)E.%+PECIA! G!
)RAN+AC)I6N% N6R.A! I)E.
ADJK+) D6WN PALE.N) WI)A ,END6R IN,6ICE - ;$>= &GI,E ,END6R IN,6ICE
&DR' NK.4ER' - ;4!8N WI)A A!! I)E.+(
RE+) A.6KN) PAID 2 RECEI,ED CA+A DI+C6KN) &,END6R PAL.EN)' - ;$>B;$>:
;4!8N WI)A A!! I)E. CRI)A)IA(
STEP F0 PART#AL PAY.ENT 8 RES#5UAL PAY.ENT
;$>B;$>:A) )AE PAL.EN) +E!EC) PAR)IA! PAL.EN) )A4 GI,E PAR)IA!
A.6KN) IN AC)I,E ;IE!D( )AEN +I.K!A)E 2 +A,E( - ;4!8N
+)EP :- PAL.EN) WI)A AK)6.A)IC PAL.EN) PR6GRA.(
,END6R IN,6ICE P6+)ING ;4?9 6R ;$=B
DI+P!AL D6CK.EN) - ;49B
DI+P!AL ,END6R !INE I)E. - ;4!8N
DI+PAL ,END6R )RAN+AC)I6N ;IGKRE - ;D89N
,END6R PAL.EN) - ;889 &WI)A CAECD PRIN)INGPAL.EN) AD,ICEPAL.EN)
+K..ARL WI)A AK)6.A)IC'

STEP G 4 TRANS7ER W#T9 CLEAR#NG
EOA.P!E L6K WR6NG!L CREDI) A ,EN6R( ;$>8
STEP A; 4 W#T9 9OL#NG TAD A56UST.ENT
CREA) D6WN PAL.EN) RE1KE+) - ;$=< ;4!8N WI)A N6)ED I)E.&6; R+$ 89999'
RE!EA+E D6WN PALE.N) RE;ERENCE )6 D6WN PALE.N) RE1KE+) - ;$=:
;4!8N WI)A +PECIA! G! )RAN+AC)I6N &6; R+( 89999'
P6+)ING ,END6R IN,6ICE - ;4?9 ;4!8N WI)A N6)ED I)E.%+PECIA! G!
)RAN+AC)I6N% N6R.A! I)E. &6; R+( 79%999 4K) W()AO A.6KN) 89999 2
DE!E)E )AO C6DE ;6R PAL.EN) P6+)ING'
ADJK+) D6WN PALE.N) WI)A ,END6R IN,6ICE - ;$>= &GI,E ,END6R IN,6ICE
&DR' NK.4ER' - ;4!8N WI)A A!! I)E.+(
RE+) A.6KN) PAID &,END6R PAL.EN)' - ;$>B;$>: ;4!8N WI)A A!! I)E.
CRI)A)IA(
CREA) )D+ CAA!! ;6R PALIN )D+ A.6KN) - J8INCA!N
4AND RECEIP) KPDA)E - J8IN4AND
)D+ CER)I;ICA)E PRIN) - J8INCER)
REPRIN) )D+ CER);ICA)E - J8INREP
1KA)ER!!L RE)KRN - J8IN1E;I!E
)D+ +)A)K+ $ J8IN.I+
.ATER#AL .ANAGE.ENT RELATE5 TRANSACT#ON
CREA)E .. ,END6R 4L )(C6DE OD98
STEP AA 4 PO CREATE- C9ANGE 8 5#SPLAY
CREA)E PKRCAA+ER 6RDER - .E78N
CAANGEDI+P!AL - .E77N.E7BN
STEP A/ 4 GOO5S RECE#PT 8 5#SPLAY
G66D+ RECEIP) -.IG6
DI+P!AL G66D+ RECEIP) D6CK.)N .49B
STEP A1 4 LOG#ST#C #NO#CE *ER#7#CAT#ON 8 PAYE.ENT
!6GI+)IC IN6ICE ,ERI;ICA)I6N $ .IR6
DI+P!AL .. IN,6ICE D6CK.EN) - .IR=
DI+P!AL ,END6R !INE I)E. - ;4!8N
DI+PAL ,END6R )RAN+AC)I6N ;IGKRE - ;D89N
,END6R PAL.EN) - ;$>B;$>:&WI)A CAECD PRIN)INGPAL.EN)
AD,ICEPAL.EN) +K..ARL'
AP LOG#CAL )UEST#NG
#f in in'oice Po nu"!er is .entioned- then Which T>code ou ,ill !e used to Process that
#n'oice?
Ans *We can directl" post the invoice b" using t(code ;4?9 i# goods receipt is not re/uired(
Example* service invoice(
We can use .IR6 i# it is GR base invoice(
What is WBS Ele"ent?
It is nothing but wor0 brea0 down structure% it represents that goods are ta0en #or speci#ic pro3ect
where budgetar" control is applied( +o "ou have to entered W4+ code number during Invoice
posting li0e cost center(
9o, ou ,ill +no, ,hether do,n (a"ent or (a"ent reHuest has "ade to 'endor not?
Ans * &;4!8N' In vendor line item there is a column o# special general ledger indicators are
displa"ed( A$ Down pa"ment made% ;$ down pa"ment re/uest &noted item'
Whether the in'oice is a%ainst the PO or Non PO it should %o to the concern de(art"entIs
head for the a((ro'al
;inance will chec0 i# the purchases are budgeted #or both &P6 2 Non P6' and i# Non P6 then
#inance will as0 #or the reasons and G. approval to process the pa"ment
#f the in'oice itself does not ha'e the co"(lete details then it is better to re3ect the invoice and
as0 the supplier to provide the invoice with #ull details and supporting(
What is the di##erence between Consigner and ConsigneeG
Consi%ner is the person who is the owner o# the goods and who deliver the goods to the
consignee(
Consignee is the person who receives the goods and he 3ust possesses the goods and not the
owner(
What ste(s ,ould ou ta+e !efore a((ro'in% an in'oice for (a"ent?
)he #ollowing are the important steps one should ta0e be#ore approving the pa"ment(
Re#er the Purchase 6rder issued(
Re#er the Goods Received Note &GRN' #or having received goods service as mentioned in the
P(6
Re#er the terms and conditions #or ma0ing the pa"ment &an" credit period'
Chec0 the ban0 balance be#ore approve the invoice #or pa"ment
)he most critical part o# AP process is Mveri#icationM o# goods services as per invoice( Whether
it is thruP certi#ication o# the concerned team which has raised the P6 or b" con#irmation o# the
+tores Department having received the material $ depending on the nature o# invoice $ it is
important #or a Pa"ables team member to loo0 into this be#ore starting to vet the other aspects o#
the invoice(
What the situation ,e (ar+ed the docu"ent?
In#ormation re/uired #or posting the invoice document is missing in the invoice document and
"ou do not want to have to enter again the data alread" entered
8( )he balance is not Cero
7( )he #ollowing updates are to ta0e place*
B( !og o# document changes
=( In#ormative purchase order histor"
>( Data #or advance tax returns
?( Index #or chec0ing #or duplicate invoices
<( ,endor open items
:( ,endor open items #or par0ed documents
When "ou +ave Invoice Documents as CompleteG
Lou create an invoice document in document par0ing( Choose +ave as complete to do this(
4e#ore saving the data% the s"stem per#orms consistenc" chec0s( In the event o# errors% the data is
not saved% but is presented #or correction instead( +ubse/uentl"% "ou can still change% delete% or
post Documents complete #or posting(
Kse +ave as complete i#*
No more changes are to be made to the invoice document
)he balance is Cero
)he invoice document is to be par0ed #or posting but not posted "et
Can ,e s(ecif (a"ent "ethod in o(en ite"s? #s it done in in'oice?
A* Pa"ment method is speci#ied in several places in +AP s"stem*
,endor master record( Lou can speci#" several pa"ment methods in there% and APP will
automaticall" select the best one(
Directl" in the invoice(Q
In the pa"ment terms% and then this value will be inherited into the invoice(
Pa"ment method in the invoice has a priorit" over the pa"ment method in vendor master record(
Wh" do I have ,endors and Customers on the selection screens o# APPG What is a relation
between Customers and Pa"ment program which is used #or outgoing pa"mentsG
A* ;irst o# all% we can pa" Customers too( ;or example% re#unds or returns o# down pa"ments(
+econd% APP can be also used #or pa"ments collection( ;or example% direct debits(
)hat@s wh" customers are prett" much on their place in APP(
Can ,e "a+e 5o,n (a"ent to 'endor in APP?
Ans* "es% #irst create Pa"ment Re/uest b" using )(code ;$=<% that re/uest can be converted in to
down pa"ment in APP(
Can ,e "a+e Partial (a"ent to 'endor in APP?
Ans * No% 6nl" #ull amount o# invoice &bill to bill' is consider #or pa"ment in APP(
Can ou 'erif the Lo%istic in'oice !efore to %oods Recei(t?
Les% i# the case is Import purchase(
What are the (rior acti'ities to (ost an in'oice?
All re/uired #illed are entered correctl"
+"stem should response Green signal
Debit 2 Credit should e/ual
+imulate the transaction $ chec0 Journal entr"% chec0 document header data - posting date%
re#erence no(% document date% compan" code% document t"pe 2 currencies(
Aow man" vendors "ou handled in "our compan"G
Ans * I Was handled around 899 vendors in terms o# Reconciliation(
Is there an" dail" target #or posting the InvoiceG
Ans * "es% Ever" individual has dail" target o# ?9 invoices to post(
#f # assi%n Pa"ent ter" ;;;A- ;;;/- ;;;1- ;;;3 8 !aseline date is toda- then tell "e a!out
all the due dates> BA
st
due date- /
nd
5ue date- 1
Rd
due date or Net due dateC
CONTENT
IN)R6DKC)I6N
C!A++I;ICA)I6N 6; ACC6KN)+*
G6!DEN RK!E+ 6; ACC6KN)ING*
ACC6KN)ING EN)RL IN +AP APP!ICA)I6N*
+A!E+ AND DI+)RI4K)I6N
IN,6ICE GENERA)I6N*
DE4I) .E.6+
.A)ERIA! .ANAGE.EN)
G66D+ RECEIP)
IN,6CIE RECEIP)
CREDI) .E.6*
IN,EN)6RL ACC6KN)ING EN)RIE+
;IC6*
CEN,A) EOCI+E EN)RIE+*
4ANDING )RAN+AC)I6N ;INANCIA! ACC6KN)ING EN)RIE+ *
#NTRO5UCT#ON
)he double$entr" boo00eeping s"stem was codi#ied in the 8>th centur" and re#ers to a set o#
rules #or recording #inancial in#ormation in a #inancial accounting s"stem in which ever"
transaction or event changes at least two di##erent accounts( In modern accounting this is done
using debits and credits within the accounting e/uation* assets E liabilities I e/uit"( )he
accounting e/uation serves as a 0ind o# error$detection s"stem* i# at an" point the sum o# debits
does not e/ual the corresponding sum o# credits% an error has occurred(
An organiCations having large assets% external suppliers o# capital and thousands o# transactions
to deal with in a reporting period% it is more appropriate to use a double entr" accounting s"stem(
)here are two distinct characteristic #eatures o# a double entr" boo00eeping s"stem% which are%
that ever" transaction is recorded in two accounts and each account has two columns( In a double
entr" boo00eeping method% two entries are made #or each transaction( 6ne entr" is made as a
debit in one account and one entr" is made as a credit in another account( )he entries are entered
in this manner to 0eep the accounting e/uation in balance( )he columns in a double entr"
boo00eeping s"stem are namel" date% accounts% debit and credit( )he debits are entered in the le#t
column and the credits are entered in the right column( ;or each debit entr"% an e/ual and
opposite credit entr" is entered( When totaling the accounts% the sum o# all debits must be e/ual
to the sum o# all credits(
6nline boo00eeping is where boo0s are updated through a online boo00eeping application(
6nline boo00eeping is ver" secure as the documents are uploaded on to a secure location or into
a online boo00eeping application(
In the double entr" boo0 0eeping s"stem ever" transaction has to have with at least two line
items i(e( one debit and one credit entr"( )he line item o# an accounting document ma" be more
that one and in case o# clearing document% there ma" be Cero line item(
In double entr" boo0 0eeping% account has been subdivided into two t"pes i(e( Personal and
impersonal Account( Impersonal is again sub divided into real and nominal( Personal accounts
represent the person involved in the organiCation( Real accounts include li0e cash% ban0%
inventor"% goods and services and tangible assets( Nominal accounts include all the intangible
assets% incomes% pro#its% gains% losses% and expenses(
)here two sets o# boo0s o# accounts li0e General !edger Accounting and +ub !edger
Accounting( +ub !edger accounting records transaction in detail and post to its corresponding
Control Account in General !edger Accounting( +ub !edger includes Account Pa"able% Account
Receivable and ;ixed Assets Accounting(
CLASS#7#CAT#ON O7 ACCOUNTS@
A> Personal Account@ when a transaction involved with a person 0nown as personal account
such as .r( Ro"% 4ose2 sons A4C !td( co( etc(
/> #"(ersonal Account@
#"(ersonal Account is su!di'ided into t,o accounts as follo,s@
R No"inal Account@ All recurring expensesincomes gainslosses are 0nown as Nominal
Account% such as salar"% Rent% Interest etc(
R Real Account@ 6ther than above two accounts all are #all under this categor"%such as
.achiner"% ;urniture etc(
GOL5EN RULES O7 ACCOUNT#NG@
)he golden rules #or accounting entr" in an accounting document are as #ollow
a' Personal Account @
Debit the receiver and credit the giver(
b' Real Account @
Debit what comes in and credit what goes out(
c' No"inal Account @
Debit all loses 2 expenses and credit all income 2 Gains(
ACCOUNT#NG ENTRY #N SAP APPL#CAT#ON@
+AP is one o# the online boo0ing applications and is being used in most o# the !arge and +.E
organiCations( We need to thin0 about the accounting entr" is +AP since the posting transaction
having impact on G! Account 4alances( G! Account gets value #rom di##erent source such as
4illing Document in +D% .aterial document and Invoice in ..% Pa"roll Entr" in AR and Direct
;I Entr" in ;I .odule( We will tr" to bring most o# the commonl" used accounting entr" in the
+AP Application +"stem( Accounting Entr" will be posted based on the Account Determination
in the con#iguration settings as well as manual entr" o# G! Account( Account Determination
settings re/uired #or the #ollowing to get a real time auto posting to G! while executing a +ub
!edger or other transaction which generates a automatic line items based on the rule de#ined%
e(g(% Input 6utput )ax% Withholding )axes% ;6REO Evaluation(
)ax )ransaction
4an0 )ransaction
Account Receivable and Account Pa"able )ransaction
;oreign Currenc" )ransaction
;ixed Asset )ransaction
Pa"roll )ransaction
+ales and Distribution )ransaction
Purchasing )ransaction
Inventor" )ransaction
)ravel Expenses )ransaction
Excise and Custom )ransaction
SALES AN5 5#STR#BUT#ON
#N*O#CE GENERAT#ON@
#n'oices ,ill !e %enerated at the S"elters and stoc+ (oints> The accountin% entries
for the sale of %oods dis(atched ,ill flo, fro" the Sales in'oice %enerated in SAP
Sales and 5istri!ution "odule> The follo,in% entries shall !e (assed>
aC 5O.EST#C SALE
Customer Account Dr
Revenue Cr
Excise Dut" Pa"able Cr
+ales )ax Pa"able &local or central' Cr
Note* As mentioned above in the ;I document% which is created in the bac0ground% the +D
invoice number shall be captured( Aowever as per the current accounting procedure the
accounting entr" passed is as #ollows*
,;98*
Customer Account Dr
Revenue Cr
Excise Dut" 4illed Cr
+ales )ax Pa"able &local or central' Cr
J8IIN*
Excise dut" paid ac Dr
Excise dut" pa"able ac Cr
!C EDPORT SALES
)here have been ver" #ew export transactions in the past( +AP s"stem will be designed to handle
export business( Exports are mainl" #rom the mines and will be handled at the mines% however
the documentation part will be ta0en care at the Aead 6##ice( )he accounting entr" is*
Customer Account Dr
Revenue &Exports' Cr
)he realiCation o# export sales will be directl" credited to the ban0( )he accounting entries will
be as #ollow*
4an0 Dr
Customer Cr
Exchange ;luctuation Dr Cr
RebatesDiscounts Dr
Customer Cr
5EB#T .E.OS
Debit .emos shall be issued in case o# price di##erence% sale tax di##erence and interest on
usance period and overdue pa"ments(
)he accounting entries #or two possible scenarios are as #ollows*
Price Kndercharged*
Customer Account Dr(
Revenue Cr(
+ales tax pa"able Cr(
+ales tax undercharged
Customer Account Dr(
+ales tax ad3ustment Cr(
Interest on dela"ed pa"mentsusance period and other charges
Customer Account Dr(
Interest 6thers Cr(
In case o# AF! a complete retirement or a partial retirement o# asset is done( )he s"stem uses the
asset retirement date to determine the amount to be charged o## #or each depreciation area( )he
existing accounting polic" is to provide depreciation #or the #ull /uarter in which the asset is
solddiscarded% recommended that the depreciation be provided #rom the date o# ac/uisition on
prorata basis (
SALE O7 SCRAP
)he sale o# scrap &non$stoc0' shall be mapped as a direct manual ;I entr"( )he customer will be
created as a ;I customer( No !ogistics module will be involved in the process(
A ;I Invoice will be prepared #or the sale o# scrap with the #ollowing entries*
Customer Dr
+ale o# +crap Cr
Excise Dut" Pa"able Cr
A5*ANCES 7RO. CUSTO.ERS
Advances are received #rom the customers against deliver"( )hese advances will be recorded in a
special general ledger account( )he accounting entr" #or the same will be*
4an0 Account Dr
Advance Customer Pa"ments Cr
)hese advances will be later on ad3usted against the invoices raised on the customers( Advances
can be ad3usted against more than one invoice at the time o# clearing o# the invoices against
advances(
Ad3ustment o# Advances*
Customer Account Cr
Advance Customer Pa"ments Dr
A #inancial document would be created #or each 4an0 Guarantee received and this document
number will be re#erred to in the +ales 6rder which would then monitor the value and the
validit" o# the o# the 4an0 Guarantee instrument wise while doing the billing( )he letter o# credit
4an0 guarantee given will be recorded as a noted item(
MATERIAL MANAGEMENT
GOO5S RECE#PT
4ased on the Purchase order and the 1uantit" actuall" received Goods Receipts &GR' will be
done( 4ased on the GR done the #ollowing accounting entr" will be passed in the ;inancial
Accounts
Accounting Entr" #or Goods receipt*
+toc0Inventor" account Dr
GRIR account Cr
;reight clearing account Cr
Accounting Entr" on invoice veri#ication o# supplier*
GRIR Dr
,endor account Cr
#N*OC#E RECE#PT
Accounting Entr" on invoice veri#ication o# #reight vendor
;reight clearing account Dr
;reight ,endor account Cr
SAP Transaction Code@
R.P. +toc0 Account Dr
GRIR Account Cr
;reight Clearing Account Cr
CRE5#T .E.O@
EDC#SE #N*O#CE *ER#7#CAT#ON
6n receipt o# the excise invoice cum gate pass the #ollowing entr" will be passed
RG 7B A RG 7B C Part 7 Account Dr
Cenvat Clearing Account Cr
#N*ENTORY ACCOUNT#NG ENTR#ES
All the Inventor" transactions will loo0 #or the valuation class and the corresponding G(!(
Accounts and post
the values in the G(! accounts(
;or Example* during Goods Receipt
+toc0 Account $ Dr
GR IR Account $ Cr
;reight Clearing account $ Cr
6ther expenses pa"able $ Cr
During Invoice ,eri#ication
GR IR Account $ Dr
,endor $ Cr
When the Goods are issued to the Production 6rder the #ollowing transactions ta0es place*
Consumption o# Raw .aterials $ Dr
+toc0 Ac $ Cr
When the Goods are received #rom the Production 6rder the #ollowing transactions ta0es place*
Inventor" Ac $ Dr
Cost o# Goods Produced $ Cr
Price di##erence $ DrCr
&depending on the di##erence between standard cost and actual cost'
When the Goods are dispatched to customer through deliver" the #ollowing transactions ta0es
place*
Cost o# Goods +old $ Dr
Inventor" Ac $ Cr
When the Goods are issued to a Cost Center or charged o## against expenses the #ollowing
transactions ta0es place*
Repairs and .aintenance $ Dr
Inventor" Ac $ Cr
When the Goods are stoc0 trans#erred #rom one plant to another% the #ollowing transactions ta0es
place*
+toc0 Ac $ Dr &Receiving location'
+toc0 Ac $ Cr &+ending location'
Price di##erence $ DrCr
&due to an" di##erence between the standard costs between the two locations'
When the stoc0s are revalued% the #ollowing transactions ta0es place*
+toc0 Ac $ DrCr
Inventor" Revaluation Ac $ Cr Dr
When the Wor0 in Progress is calculated the #ollowing transaction ta0es place*
Wor0 in Progress Ac $ Dr
Change WIP Ac $ Cr
Ph"sical veri#ication shortages and excesses * +hortagesexcesses on authoriCations shall be
ad3usted using the ph"sical inventor" count transaction(
Transaction Code@
7#CO@
Journal Entr"
AccrualDe#erral
Recurring Entr"
Account Pa"able
Account Receivable
;ixed Assets
4an0 Account
CE4A,)
SALE O7 ASSETS
Accounting entr" #or sale o# Asset to customers*
Customer Account Dr
Asset +ale Cr
Accumulated Depreciation Dr
!oss on +ale &i# applicable' Dr
Asset +ale account Dr
Asset account Cr
Pro#it on sale &i# applicable' Cr
Note@ In case o# an" +ales )ax Excise dut" applicable #or this transaction% +AP will calculate the
+ales )axExcise Dut" based on the )ax Code selected the entr" is posted to the G! Account
&+ales )ax Pa"able'
Accounting entr" #or sale without a customer*
Accumulated Depreciation Dr
!oss on +ale &i# applicable' Dr
Asset +ale account Dr
Asset account Cr
Pro#it on sale &i# applicable' Cr
Accounting entr" #or scrap
Accumulated Depreciation Dr
!oss on +ale o# Assets Dr
Asset account Cr
CENVAT EXCISE ENTRIES:
8( 6n receipt o# material &.IG6'
DR Inventor" 8999(99
CR GRIR Clearing Account 8999(99
7( At the time o# Posting excise invoice &J8IEOSP'
i' i# it is raw material
DR RG7B Part II Posting 8?9(99
CR Cenvat Clearing Account 8?9(99
ii' i# it is capital goods
DR CEN,A) on hold Account :9(99
DR RG7B Part II Posting :9(99
CR Cenvat Clearing Account 8?9(99
iii'when ma0ing trans#er posting &J7I:'
DR RG7B Part II Posting :9(99
CR CEN,A) on hold Account :9(99
B( At the time o# Invoice ,eri#ication &.IR6'
DR GRIR Clearing Account 8999(99
DR Cenvat Clearing Account 8?9(99
CR ,endor 88?9(99
=( Excise Dut" pa"able on dispatches
DR Excise Dut" Account 7=9(99
CR Excise Dut" !iabilit" Account 7=9(99
>( Advance pa"ment o# Excise Dut" &;$97'
DR P!A 6n Aold Account :9(99
CR 4an0 :9(99
?( Creation o# )R? Challan &J8IA' a#ter Deposit
DR P!A Account :9(99
CR P!A 6n Aold Account :9(99
<( Ad3ustment o# Dut" liabilit" KtiliCation &J7IK'
DR Excise Dut" !iabilit" Account 7=9(99
CR RG7B Part II Posting 8?9(99
CR P!A :9(99
Transaction Code@
BANKING TRANSACTION FINANCIAL ACCOUNTING ENTRIES :
+ettlement 6# )our Advances Domestic;oreign
8' +ettlement o# advance will be done b" the Accounts Department based on the )ravel Expense
+tatement submitted b" the emplo"ee% which is approved b" the Concerned Department Aead(
7' Expenses Account DR
Cash4an0 Account DR &i#% re#und'
Emplo"ee Advance Account CR
Cash4an0 +ub ledger Account CR &i#% pa"able'
B' 4an0ing 6perations $ .aintenance 6# 4an0 .aster
=' A Aouse 4an0 is a combination o# a 4an0 and a 4ranch( Account id is the account number( A
house ban0 can have multiple account IDs(( )here could be a main account as also pa"able
account% which will be de#ined as separate account ids( General !edger accounts have to be
created #or each combination o# a house ban0 and account ID( )he ban0 master details are to be
provided b" AF!(
>' General !edger accounts have to be created #or each account ID in the house ban0( 4an0
Account .aster data will be maintained b" the ;inance Department centrall"(
?' Each house ban0 and account ID combination shall have one main general ledger account and
several sub accounts mainl" based on broad transaction t"pes( )hese sub accounts are necessar"
to #acilitate automatic ban0 reconciliation process in RB s"stem(
Ban+ Accountin%
<' )he accounting entries will be generated automaticall" according to the posting rules attached
to the )ransaction t"pe( )he #ollowing accounting entr" is passed b" the s"stem in respect o#
che/ue deposit on account o# collection #rom domestic customers(
4an0 che/ue deposit account Debit
Customer account Credit
:' In this case% a ban0 sub account is selected based on the transaction code entered b" the user(
)he customer account is cleared i(e( invoice is cleared against the receipt( In respect o# an" other
deposits% the relevant accounts to be credited will depend on the nature o# transaction(
H' Pa"ment against bills #or collection( 4ased on the ban0 advices #alling due on a particular da"
one pa"ment advice is made debiting the vendors and crediting ban0(
CheHue 5e(osit 0 Custo"er Recei(ts
89' All che/ues received #rom customers shall be accounted at the point o# receipt( )he entr"
posted shall be
4an0 +ub account Dr
Customer Account Cr
CheHue 5e(osit 0 Other Than Custo"er Recei(ts
88' All other receipts will be accounted through the Incoming Pa"ment )ransaction o# the
Accounts Receivables module(
CheHue Bouncin% 4 Other Than Custo"er Recei(ts
87' 4ased on the in#ormation o# che/ue bounced #rom the 4an0% the accounts Department will
pass accounting entries #or the che/ue that have been bounced( )he procedure to handle
bouncing o# a che/ue has been discussed under the #ollowing
8B' Reset the clearing document - I# the document has been cleared i(e( an open outstanding
item has been cleared against an incoming receipt% then the clearing document has to be reset to
its original status o# open item( )his process is 0nown as reset o# cleared document(
8=' Reverse the entr" passed #or che/ue deposited earlier - 6nce the document has been reset it
will be reversed( )he #ollowing accounting entr" will be passed(
;I Customer DR
4an0 che/ue deposit account CR
8>' In case o# che/ues being damaged while printing% the concerned che/ues no( has to be voided
and the pa"ment will be rer
Ban+ Reconciliation
8?' )he 4an0 reconciliation process is based on the entries passed through the 4an0 sub account
and main account( )he process is dependent on the 4an0 +tatement received #rom the 4an0 that
will be entered into +AP( Accounting rules are to be de#ined #or each transaction t"pe and posting
rule #or posting accounting entries as per ban0 statement( 4an0 statements to be uploaded into
+AP(
8<' 4an0 .ain account balance is the actual balance as per the ban0 statement whereas the 4an0
sub accounts denote the reconciliation items( )hese sub accounts show those entries% which will
#low #rom the sub account which are not cleared in the ban0 statement(
8:' Adding or subtracting the 4an0 sub accounts will help in preparing the 4an0 reconciliation
statement(
8H' )he #ollowing scenarios would explain the reconciliation process*
$Che/ue received #rom customer(
$Che/ue issued to vendors(
$Che/ue received #rom 6ther than Customers(
$Direct Debits in 4an0 +tatement(
$Direct Credits in 4an0 +tatement(
$;und )rans#er between 4an0 Accounts(
CheHue Recei'ed 7ro" Custo"er
79' Accounting entr" at the time o# che/ue deposit entr"
4an0 Che/ue deposit account Debit
Customer Credit
78' Accounting entr" a#ter che/ue has been cleared in the 4an0 statement .ain 4an0 account
Debit 4an0
Che/ue deposit account Credit
77' )he clearing criteria #or updating the ban0 main account and ban0 sub account will be
amount and document number which will be captured in the allocation #ield o# the ban0 sub
account( )he items% which have not been cleared in the ban0 statement% will remain open in the
ban0 sub account and will #orm part o# the ban0 reconciliation statement(
CheHue #ssued To *endors
7B' Accounting entr" at the time o# che/ue issue
,endor account Debit
4an0 che/ue pa"ment account Credit
7=' Accounting entr" a#ter che/ue has been presented in the 4an0
4an0 che/ue pa"ment account Debit
.ain 4an0 account Credit
7>' )he clearing criteria used #or updating vendor account and 4an0 che/ue pa"ment account
will be amount and che/ue number( )he che/ues presented to the ban0 and are cleared are
trans#erred to the ban0 main account( )he remaining che/ue issued will #orm part o# the ban0
reconciliation statement(
5irect 5e!it #n Ban+
7?' Direct debit instructions will be given to the ban0 #or example% !C pa"ments or certain ban0
charges are directl" debited in the 4an0 +tatement( In this case accounting entr" is passed onl"
a#ter the entr" is passed in the ban0 statement(
,endor Expense Account Debit
4an0 clearing account Credit
5irect Credit #n Ban+
7<' Customer receipts are sometimes directl" credited in 4an0( E(g( export receipts( In this
scenario accounting entr" is passed onl" at the time o# ban0 statement entr"( )he #ollowing
accounting entr" is passed
4an0 clearing account Debit
Customer account Credit
.ain 4an0 Ac Debit
4an0 Clearing Ac Credit
Ban+ 7i$ed 5e(osits
7:' AF! has a practice o# converting an" amount above Rs( 8 crore in its .ain ban0 account% to
a #ixed deposit sub3ect to a minimum o# Rs( 8(98 crores( )he ;DR number can be #illed in one o#
the #ields available in the accounting document(
CheHue .ana%e"ent & CheHue Printin% Cu" Ad'ice
7H' )he #unction o# che/ue management will enable printing o# che/ue through +AP( Che/ue
series will be de#ined #or a combination o# a Compan" code and 4an0 Account( Che/ue
numbering will be se/uential order(
B9' Che/ue series #or automatic pa"ment has to be in se/uential order( Che/ue printing #acilit"
will be available #or the ban0 account(
Cash .ana%e"ent & LiHuidit Analsis
B8' )he da"$to$da" treasur" process in a compan" includes a number o# transactions( )his
includes determining the current li/uidit" using ban0 account balances &cash position'%
determining open receivables and liabilities &li/uidit" #orecast'% manuall" entering planned cash
#lows &pa"ment advice notes'% through to clearing ban0 accounts% that is% collecting multiple ban0
account balances on one target account(
B7' )he main ob3ective is to ensure li/uidit" #or all due pa"ment obligations( It is also important
to control and monitor e##ectivel" the incoming and outgoing cash #lows(
BB' )his section shows "ou the overall li/uidit" status o# "our compan" b" displa"ing together
the cash position and the li/uidit" #orecast( )he cash position is used in Cash .anagement to
show the value$date$dependent ban0 accounts and ban0 clearing accounts% as well as the planned
cash #lows &pa"ment advice notes'( )he li/uidit" #orecast comprises the incoming and outgoing
cash #lows% as well as the planned items on the sub$ledger accounts(

When the Goods are stoc0 trans#erred #rom one plant to another% the#ollowing transactions ta0es place*
+toc0 Ac $ Dr &Receiving location'+toc0 Ac $ Cr &+ending location'Price di##erence $ DrCr&due to an"
di##erence between the standard costs between the twolocations'
When the stoc0s are revalued% the #ollowing transactions ta0es place*
+toc0 Ac $ DrCrInventor" Revaluation Ac $ Cr Dr
When the Wor0 in Progress is calculated the #ollowing transaction ta0esplace*
Wor0 in Progress Ac $ DrChange WIP Ac $ Cr
Ph"sical veri#ication shortages and excesses* +hortagesexcesses onauthoriCations shall be ad3usted using the
ph"sical inventor" counttransaction(+ales and Distribution Accounting Entries

IN,6ICE GENERA)I6N
Invoices will be generated at the +melters and stoc0 points( )he accountingentries #or the sale o# goods
despatched will #low #rom the +ales invoicegenerated in +AP +ales and Distribution module()he #ollowing entries
shall be passedCustomer Account DrRevenue CrExcise Dut" Pa"able Cr+ales )ax Pa"able &local or central'
CrNote* As mentioned above in the ;I document% which is created in thebac0ground% the +D invoice number shall
be captured( Aowever as per thecurrent accounting procedure the accounting entr" passed is as #ollows *$Customer
Account DrRevenue CrExcise Dut" 4illed Cr+ales )ax Pa"able &local or central' CrExcise dut" paid ac
DrExcise dut" pa"able ac Cr

EOP6R) +A!E+
)here have been ver" #ew export transactions in the past( +AP s"stem will bedesigned to handle export business(
Exports are mainl" #rom the mines and willbe handled at the minesT however the documentation part will be ta0en
care atthe Aead 6##ice()he accounting entr" is*Customer Account DrRevenue &Exports' Cr)he realiCation o#
export sales will be directl" credited to the ban0( )heaccounting entries will be as #ollow*4an0 DrCustomer
CrExchange ;luctuation Dr Cr)he accounting entries will be*RebatesDiscounts DrCustomer Cr
DE4I) .E.6+
Debit .emos shall be issued in case o# price di##erence% sale tax di##erence andinterest on usance period and
overdue pa"ments()he accounting entries #or two possible scenarios are as #ollows*Price Kndercharged*Customer
Account Dr(Revenue Cr(+ales tax pa"able Cr(+ales tax underchargedCustomer Account Dr(+ales tax ad3ustment
Cr(Interest on dela"ed pa"mentsusance period and other chargesCustomer Account Dr(Interest 6thers Cr(In case
o# AF! a complete retirement or a partial retirement o# asset is done()he s"stem uses the asset retirement date to
determine the amount to becharged o## #or each depreciation area( )he existing accounting polic" is toprovide
depreciation #or the #ull /uarter in which the asset is solddiscarded%recommended that the depreciation be
provided #rom the date o# ac/uisition onprorata basis(Accounting entr" #or sale o# Asset to customers*Customer
Account DrAsset +ale Cr

Accumulated Depreciation Dr!oss on +ale &i# applicable' DrAsset +ale account DrAsset account CrPro#it on sale
&i# applicable' CrNote* In case o# an" +ales )ax Excise dut" applicable #or this transaction% +APwill calculate the
+ales )axExcise Dut" based on the )ax Code selected theentr" is posted to the G! Account &+ales )ax
Pa"able'Accounting entr" #or sale without a customer*Accumulated Depreciation Dr!oss on +ale &i# applicable'
DrAsset +ale account DrAsset account CrPro#it on sale &i# applicable' CrAccounting entr" #or scrapAccumulated
Depreciation Dr!oss on +ale o# Assets DrAsset account Cr
+A!E 6; +CRAP
)he sale o# scrap &non$stoc0' shall be mapped as a direct manual ;I entr"( )hecustomer will be created as a ;I
customer( No !ogistics module will be involvedin the process(A ;I Invoice will be prepared #or the sale o# scrap
with the #ollowing entries*Customer Dr+ale o# +crap CrExcise Dut" Pa"able Cr
AD,ANCE+ ;R6. CK+)6.ER+
Advances are received #rom the customers against deliver"( )hese advances willbe recorded in a special general
ledger account( )he accounting entr" #or thesame will be*4an0 Account DrAdvance Customer Pa"ments
Cr)hese advances will be later on ad3usted against the invoices raised on thecustomers( Advances can be ad3usted
against more than one invoice at the timeo# clearing o# the invoices against advances(Ad3ustment o#
AdvancesCustomer Account CrAdvance Customer Pa"ments Dr

A #inancial document would be created #or each 4an0 Guarantee received andthis document number will be
re#erred to in the +ales 6rder which would thenmonitor the value and the validit" o# the o# the 4an0 Guarantee
instrument wisewhile doing the billing( )he letter o# credit 4an0 guarantee given will be recordedas a noted
item(Accounting Entr" #or Goods receipt+toc0Inventor" account DrGRIR account Cr;reight clearing account
CrAccounting Entr" on invoice veri#ication o# supplierGRIR Dr,endor account CrAccounting Entr" on invoice
veri#ication o# #reight vendor;reight clearing account Dr;reight ,endor account Cr
G66D+ RECEIP)
4ased on the Purchase order and the 1uantit" actuall" received Goods Receipts&GR' will be done( 4ased on the
GR done the #ollowing accounting entr" will bepassed in the ;inancial AccountsR.P. +toc0 Account
DrGRIR Account Cr;reight Clearing Account Cr
EOCI+E IN,6ICE ,ERI;ICA)I6N
6n receipt o# the excise invoice cum gate pass the #ollowing entr" will be passedRG 7B A RG 7B C Part 7
Account DrCenvat Clearing Account Cr
,endor Invoice ,eri#ication Accounting Entries

,END6R IN,6ICE ,ERI;ICA)I6N
)he detail process related to invoice veri#ication is documented in .aterials.anagement Document(6n receipt
o# vendor bill the #ollowing entr" will be passed*GRIR Account DR;reight Clearing Account DRCenvat
Clearing Account DR,endor Account CR

Invoice ,eri#ication #or ;oreign ,endor6n receipt o# vendor bill the #ollowing entr" will be passed*GRIR
Account DR,endor Account CRInvoice ,eri#ication #or Custom vendor6n receipt o# ,endor bill the #ollo wing
entr" will be passed*8' RG 7BARG 7BC Part 7 Ac &C,D' Ac DRCenvat Clearing Ac CR7' GR IR Ac
DRCenvat Clearing Ac DR,endor Ac CRB' Cost o# .aterial Ac DR,endor Ac &Customs' CRInvoice
,eri#ication #or ;reight Clearing AgentCost o# .aterial Ac DR,endor Ac &Clearing Agent' CRInvoice
,eri#ication #or 6ctroi ExpensesCost o# .aterial DR,endor Ac &6ctroi' CR)D+ &Wor0 Contract )ax' #or +ervice
6rders shall be calculated and deductedaccordingl"()he #ollowing entr" will be passed on bill passing*Expenses
Account DR,endor Account CR)D+ Account CR)he material shall be returned to the vendor using theReturn to
vendor movement t"pe in +APCreating a Return P6)hese transactions will be processed in the .. module()he
accounting entries will be *Returns a#ter GRNGRIR Ac Dr+toc0 Ac Cr)he accounting in respect o# debit credit
memos #or ;I vendors% the process willbe similar to that o# invoice processing( )he accounting entries will be*6n
issue o# debit note

,endor Account DRExpenses Account CRIn respect o# import vendor $ capital goods exchange di##erences are to
beaccounted manuall" through a Journal ,oucher #or capitaliCation(Exchange rate di##erences will be accounted at
A6( An example o# theaccounting entr" in this case shall be*Invoice entr" U =9 INR* 8 K+DAsset Expense Ac
DR 899,endor Ac CR 899Pa"ment Entr" U =8 INR* 8 K+D,endor Ac DR 8994an0 Ac CR 889Exchange
rate loss Capital Ac DR 89Asset Ac DR 89Exchange rate loss Capital Ac CR 89A new G! account shall be
created #or the special G! transactions()he accounting entr" #or ma0ing the down pa"ment shall be*Advance to
supplier account Debit4an0 Ac CreditWhen the invoice is boo0ed the #ollowing entr" is passedGRIR account
Debit,endor account CreditClearing o# Invoice against Down Pa"ment,endor Ac Debit,endor down pa"ment
account CreditWherever% )D+ is applicable% the )D+ will be deducted at the time o# down$pa"ment to the
vendor(Down Pa"ment #or Capital &tangible' AssetsDown pa"ment to vendors #or capital ac/uisitions is to be
reported separatel" inthe 4alance +heet under the head Capital Wor0 in Progress( Aence downpa"ment #or capital
goods would be trac0ed through a separate special generalledger indicator()he procedure to be #ollowed
is*De#inition o# alternative reconciliation accounts #or Accounts Pa"able #or postingdown pa"ments made #or
Capital assetsClearing the down pa"ment in Accounts Pa"able with the closing invoice(
SAP 7# .. #nte%ration@Accountin% Entries related to .. transactions
Initial stock entry:
Movement type - 561(Receipt per initial entry of stock balances into unrestricted-use)
TCO! - M"1C
FI Document Type - WA
89 Raw material BSX S
91 Initial Stock entry GBB BSA
Physical inventory differences:
Movement type # $%& ('oods (ssue # )*ysical (nventory difference) t*is is tri++ered because of t*e movement type
1%&, -*ic* is +iven -*ile calculatin+ t*e difference # (./0 for e1penditure2income from inventory differences
TCO! - M(%$ (M(%1 3 M(%4)
5( ocument Type - 6(
81 In!entory "i##erence$ % G&' GBB I() S
99 Raw material BSX
Goods Issue to Production Order:
Movement type - &61 (Consumption for order from -are*ouse) # /"R0 for internal +oods issues (for e1ample, for cost
center)
TCO! - M"17
5( ocument Type - 670 'oods (ssue
81 Raw material *on$umption GBB )BR S
99 Raw material BSX
In ca$e +o!ement type ,i!en i$ -.1/*on$umption #or co$t center#rom ware0ou$e12 at t0e time o#
+B1A $y$tem a$k$ #or t0e *3ST center 4 G5(5RA' '5DG5R6 ere2 t0e account "etermination 0appen$
"irectly #rom +B1A an" not #rom t0e 3B7*6 Accountin, entry will 8e $ame a$ a8o!e e9cept t0e :Raw
material *on$umption:; it tri,,er$ w0ate!er t0e G' ,i!en6
Goods Issue / Delivery: SD
Movement type - 6%1 (Customer delivery) # /780 for +oods issues for sales orders -it*out accountassignmentob9ect
(t*e account is not a cost element)
TCO! - /:%&
5( ocument Type - 6:0 'oods (ssue2elivery
81 +ater6 con$ume"&tra"in, ,oo"$
wit0out co$t elementCOGS
GBB )AX S
99 Fini$0e" Goo"$ BSX
Goods Receipt: FG PP
Movement type - 1%1 ('oods Receipt) # '""-7;50 for +oods receipts for orders (-it*out account assi+nment) and for
order settlement if 7;7 is not maintained
TCO! - M"<1 'oods Receipt for )roduction Order
FI Document Type - W5< Goo"$ Receipt
89 Fini$0e" Goo"$ BSX S
91 In!entory c0an,e % #actory
output COGP
GBB A=F
Goods Receipt: RM MM
Movement type - 1%1 ('oods Receipt)
TCO! - M('O 'oods Receipt for )urc*ase Order
FI Document Type - W5< Goo"$ Receipt
89 Raw +aterial BSX S
9> GR / IR *learin, account WRX
Invoice Receipt: RM MM
Movement type - 1%1 ('oods Receipt)
TCO! - M('O 'oods Receipt for )urc*ase Order
FI Document Type - W5< Goo"$ Receipt
8> GR / IR *learin, account WRX S
?1 )en"or account @BS
@BS % i$ wit0out any account "etermination an" po$tin, keysare 81 4 916 It tri,,er$ w0en t0ere i$ no
material i$ assignedin t0e A3 at t0at time6
WRX % In ca$e o# any po$tin, reBuire" wit0out material2 account "etermination $0oul" 8e wit0out
!aluation cla$$6
I# price changedat t0e time o# IR2 t0en 8a$e" on t0e "i##erence in t0e material price $y$tem po$t$
amount$ to particular material account an" not to t0e price "i##erence account /t0i$ i$ relate" to t0e
material$ wit0 price control % )16
Material aluation: MM
+o!ement type -
TCO! - MR&& r2Cr Material # material valuation (belo- +iven calculation) 3 MR&10 )rice Change(ifference
amount posts to t*e material account and calculation is ((.e- price # Old price) = >uantity)
5( ocument Type - )R0 )rice change# "elo- entry in case of price increase
89 Ra! "aterial BSX S
9? +aterial )aluation =+B
*alculation - C*urrent Stock )alue D /Amount ,i!en in +R-- & Euantity ,i!en in +R-- F *r6
Euantity1G
#illin$ Docu"ent: SD
T*3D5 - )F.1 Billin, - )F11 *ancel Billin,
5( ocument Type - R/0 "illin+ document transfer - R60 Reversal of billin+
.1 Custo"er account BSX S
H. Sale$ Re!enue account =+B