openSAP

SAP Business ByDesign Financials

Week 5 Unit 1

00:00:13 Hello and welcome to our last week of this openSAP course. In the previous weeks, you
learned – based on many system demos – how operational
00:00:22 processes are seamlessly integrated in financial and management accounting. Many
process steps of different business scenarios created a lot of automatic postings.
00:00:32 Now we want to deep-dive into financial and management accounting. You will learn in this
week how to create manual postings in accounting,
00:00:40 see how the system supports you in performing financial closing activities, and get to know
the most important reports to serve your external and internal stakeholders.
00:00:51 We already talked about the main pillars for a company to control their business from a
financial perspective. In the last unit of Week 4, we had a closer look at the "liquidity
management" pillar.
00:01:05 In all units of this week, we will concentrate on accounting and controlling. The circle around
these two pillars shall express that these two areas are harmonized in SAP Business
ByDesign,
00:01:18 contrary to what you may know in some countries like Germany where these areas are
often handled as separate valuation areas. As you know this slide from previous sessions,
I will just use it for your orientation.
00:01:34 This unit will focus on manual postings in accounting. These manual postings create source
documents which belong to financial and management accounting,
00:01:43 but will not create new entries in the operational business area or in any registers of the
cash flow management. Now let’s have a closer look at the document flow into accounting.
00:01:56 In the past few weeks, you have learned that each source document which has an effect on
accounting is automatically recorded as a journal entry per set of books.
00:02:06 It is important to understand that journal entries are always generated automatically, not
manually. In some cases, an accountant may need to create manual postings, for example
for payroll postings or special reserves.
00:02:20 How can he do this in the system? We know that journal entries are always based on
source documents.
00:02:26 A source document can be an invoice, a payment, a valuation run, or a journal entry
voucher. A valuation run is a mass data run in accounting for valuation purposes
00:02:38 like depreciation runs for fixed assets or foreign currency revaluation runs for payables,
receivables, and cash. Journal entry vouchers are transactions which are manually entered
in accounting if needed.
00:02:53 You can consider a journal entry voucher as a manual posting of journal entries. Valuation
runs create postings automatically by making use of business transactions.
00:03:04 You might remember Unit 3 of Week 1 where business transactions and sets of books are
explained by Carsten. A journal entry voucher can be done either in all sets of books or if
necessary just in one set of books.
00:03:17 That means an accountant can adjust values only for one specific set of books, like local
GAAP or IFRS, or for all relevant sets of books. We will see this later in the system demo.
00:03:31 Another thing I want to mention is the reversal concept in the system. Reversals are always
done for the source document, for example a journal entry voucher,
00:03:40 a valuation run or a supplier invoice, never on any subsequent journal entry. Depending on
the configuration settings, the system creates reversal journal entries as reference of the
reversed journal entries,
00:03:54 either with negative amounts or debit and credit are switched. When a journal entry is
created – either automatically or manually – a journal entry type is assigned.
00:04:07 The journal entry type allows the user to post to specific subledgers like inventory or work in
process. The general ledger is always updated simultaneously
00:04:17 since only one document is created for both subledger and general ledger in financial
accounting. In addition, journal entry types are used to classify journal entries in accounting.

00:04:30 If a journal entry is created automatically by a business transaction, the system uses the
assigned journal entry type of that business transaction.
00:04:39 If an accountant creates a journal entry voucher, he needs to manually select a journal entry
type. You can create additional journal entry types to classify your manual postings.
00:04:51 For automatically created journal entries SAP provides preconfigured journal entry types
and assigns them already to business transaction types.
00:04:59 We will see later in the system demo which journal entry types are available. Also, we will
have a look at how they can be used to search for journal entries.
00:05:11 In some special cases, an accountant needs to create a VAT entry that the system does not
include automatically based on business transactions.
00:05:19 This can be, for example, if goods and services are granted free of charge or within an intra-
community movement. For such a case you can use the manual VAT entry in the system.
00:05:31 Each VAT entry is entered in the tax register as an open tax item and automatically posted
to the respective general ledger accounts. This is the reason why you need to use the
manual VAT entry for the abovementioned examples.
00:05:45 It is important to understand that manual tax postings created in general ledger do not
create new open items in the tax register. Only entries in registers either created
automatically through invoices or through manual VAT entries are regarded as an open item

00:06:02 and are subject to clearing through VAT runs. Please note when an accountant creates a
manual VAT entry,
00:06:10 the system does not check whether the combination of the general ledger account and the
tax code entered is permitted. Now let us switch to the system demo.
00:06:23 The first thing I want to show you is how you can create the manual journal entry voucher.
You will find it under "General Ledger",
00:06:32 and there you have the view "Journal Entries", and within that view there is a subview
"Journal Entry Vouchers". Here you can create new entry vouchers.
00:06:43 You can do that either one by one, or if you have perhaps a little integration, you can also
upload it from Microsoft Excel if you receive information from any other system which needs
to be posted, for example payroll postings.
00:06:59 I will now do that manually here. Here you see the header data of the journal entry voucher,

00:07:06 where you have to, of course, define first of all for which company you want to do the
posting. Then here you can enter the set of books.
00:07:15 As mentioned in my slides already, you can either say for one specific set of books, like
your German GAAP, or if you leave it empty and you have a mapping of accounts between
different charts of accounts done already in the system,
00:07:30 then you can also leave it blank and just do the posting for all sets of books with one journal
entry voucher. The journal entry types you see here.
00:07:41 So you can also do manual entries for
"... Accounts Payable", "... Receivable". Typical examples of that are that you want to
depreciate or write up something.
00:07:55 "Manual Entry for Cash" as well, "... Materials", "... Sales Documents". Maybe corrections
are also necessary.
00:08:01 If you do not want to reverse the original document and it's perhaps just one line item that
contains a mistake, then you can do these kinds of things here as well.

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00:08:13 And we also have "Manual Posting - Journal Entry Voucher with Offset Entry". This is used
normally if you do accruals and you want to reverse them directly in the next period again,
on the first day of the next period.
00:08:25 We will now use the manual posting, the generic one just for G/L accounts without any
subledger included. Then here you also have screen variants – for this journal entry type
here we have only this one.
00:08:39 You can enter a transaction currency, you have to enter a posting date, and here you can
also enter a text. By clicking on "Add Row" you can then define the accounts which will be
posted to.
00:08:53 I will now do just a correction posting for salaries, where maybe the wrong cost center was
used. So you enter... "salaries",
00:09:05 the account, then an amount.
00:09:12 Here you can then enter the cost center. And then you add a second line.
00:09:23 You can either search by the G/L account number or by the name of the G/L account. Also
enter a credit amount and a different...
cost center.
00:09:37 Here you can use this "Simulate" button to see what the system will do, what the posting will
look like. Then you also get the journal entries simulated for the other sets of books.
00:09:50 And here you also see some additional determinations which we will discuss a little bit later
in other units, like "Functional Area" and "Profit Center".
00:10:02 If you go back, you can save the document or post it, and then the journal entries will be
created automatically.
00:10:10 If you do a refresh, you can now see the posting here in the overview. In addition to this
possibility, you can also use "Recurring Journal Entry Vouchers".
00:10:22 Normally also for accruals and stuff like that during the financial closing activities. You see
here that we have some recurring journal entry vouchers available in the system.
00:10:35 They are all for payroll postings. And if you click on one of the IDs, you can see the details.

00:10:45 So, for example, you can see how the recurrence is done. It's done every month on the
25th, from 01.01.2013 to 25.12.2017, at the end of this year.
00:10:57 You also see for which company it is done, then the set of books. And, of course, by clicking
on "View All", you can then have a look at what the posting is really about.
00:11:12 So if you click on "Recurring Journal Entry Voucher", you can see the details about what is
posted here. If you have such a recurring journal entry voucher entered, you can also
schedule the posting of them.
00:11:27 Therefore, under "Periodic Tasks" we have "Post Recurring Journal Entry Voucher", so you
could say always on the 31st, for example, each month the posting should take place,
00:11:37 or on the 25th when it's posted anyway with this posting date in this case here. But to make
sure that they are all posted, the end of the month makes more sense.
00:11:51 Okay, then let's have a look at the manual VAT entry. We discussed there that this may be
necessary for some special cases.
00:12:03 I would now use just the case of a monetary benefit. You will find the manual VAT entry
under "Tax Management", "Manual Tax Entries", "VAT Entries".
00:12:14 And here it works in the same way as for the journal entry voucher. By clicking on "New"
you can either create one new tax entry or you can also upload it from Excel.
00:12:26 We will now do only one posting. Again, the company is determined by my user.
00:12:34 Then the currency is entered already. We will do the posting with the date today – it fits
quite well with the month-end closing.
00:12:42 You can also enter, if you want to, a business partner and the relevant tax number. And
here you add the rows.
00:12:48 And what is now different from the manual journal entry voucher, because we are now again
in a tax register, we are not using a G/L account here directly, so you cannot enter any
account numbers, but you have to use an account determination group,

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00:13:05 which needs to be defined up front. So I will now do the monetary benefits under "Other
income".
00:13:14 And let's say it was €1,000. Then I can select the relevant tax code for that, so we just use
the standard rate for Germany.
00:13:30 And then on the other side, the opposite account will be... "Other liabilities/provisions" – just
see it as a kind of clearing account. And there I now enter the gross amount together with
the tax, and that's it. I can also do a check.
00:13:49 The system did not find any errors. If I want to, I can also add a cost center if it makes
sense – in this case, for this posting it does not.
00:13:57 And if I'm fine with that, I can post it, or if I'm not sure, I can just save it. I will post it right
now, because afterwards I also want to check the tax report.
00:14:07 So if I refresh that right now... Ah, "... in Preparation" – sorry. Then I have to use a different
selection, then you see here that it was posted: "31.01.2017".
00:14:21 So if we now go to the tax reports, I just want to quickly open the report "Open VAT / Sales
Tax Items".
00:14:34 And I also want to enter... First of all, I start the full report as it is with the default selection –
you see that it's quite a lot that is still not reported. And to find our posting a little bit more
easily now, I will enter the posting date as we have just done
00:14:51 And you see here "Company: 1000", "Payable", "Domestic Supply Of Goods And Services",
and there is our posting we just did. Now I just want to show you also by a report in
"General Ledger" how you can also search for journal entries by a specific journal entry
type.
00:15:14 If you – first let's take this list here – if you look here you can already search by "Today's
Postings" by different journal entry types. You can select it here and say, for example: Did I
post perhaps a bank statement today? No, there is nothing found.
00:15:33 But if I search for it for the last three days, we should find our bank statement we posted.
There we go – there are different bank statements.
00:15:46 Or you can also use the journal entry type... let's do it like that, from the manual entry, so
"Manual Posting – Journal Entry Voucher". And then you can search for all these postings
here as well.
00:16:02 The same is true for reports – there you have these selection criteria available as well, but
that's one classification for journal entries regarding how to search easily for them in the
system.
00:16:15 That's it so far for the system demo, so let's go back to the slides. So let's summarize this
unit with the key learnings.
00:16:25 In SAP Business ByDesign we have one unique document in accounting which is the legal
source of information. Each business transaction has a unique representation of its
document in the system, a source document.
00:16:38 It provides a clear referencing between source documents of one common business
process by the document flow and from each source document to its accounting
documents.
00:16:49 This supports compliance requirements with transparent document flow and clear audit trail.
A reversal is always performed by reference only, not by sending copied data.
00:16:59 This allows for very clear behavior in accounting and distinguishes clearly from credit
memos. In Unit 2 we will have a deeper look into the financial closing activities in the
system.
00:17:10 I hope you’ve enjoyed this unit. Thank you for your attention, and see you again in Unit 2.
Bye.

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Week 5 Unit 2

00:00:13 Hello and welcome to Unit 2 of our last week. In this unit we will have a closer look at how
the system supports the financial closing process.
00:00:24 I guess many of you know additional posting periods used in other systems to reflect
postings regarding financial closing activities. In SAP Business ByDesign we use a different
concept.
00:00:36 The "closing steps" classify journal entries which belong to different sequential steps of the
financial closing. SAP provides predefined closing steps which should be sufficient for most
companies.
00:00:50 The use of closing steps allows you to perform closing in a similar way, no matter if it is the
monthly, quarterly, or yearly closing. In other solutions, only extra periods on top of period
12 are available,
00:01:04 but it is not possible to define extra periods, for example, for the first quarter. What does this
mean exactly?
00:01:12 Every journal entry belongs to one closing step. You can categorize closing steps as
follows:
00:01:20 closing steps for operational postings; closing steps for closing and adjusting entries;
00:01:27 closing steps for balance carryforward entries. To control which types of postings are still
possible in an accounting period,
00:01:35 an accountant can open or close accounting periods separately for each closing step. Let’s
have a more detailed look into this concept.
00:01:46 It is important that operational postings are assigned to the accounting period in which the
transaction occurred. An accountant needs to make sure that before he starts to perform
financial closing activities,
00:01:58 no new operational postings which are relevant for this accounting period can still be
created. Therefore, he needs to close the accounting period for operational postings.
00:02:09 In the system the process will look as follows. For example in 2017, at the beginning of
period 1, he opens the period for closing step 010 – "Operational postings".
00:02:20 Before he starts to perform his financial closing activities, he will close period 1 for closing
step 010, which means, for example, last invoices, time recordings, or travel and expense
reports,
00:02:33 but may keep it open for closing step 015 – "Late operational postings" like VAT returns or
physical inventories. Doing that he still allows operational postings in a very controlled way.

00:02:46 How does this work? The graphic displays how postings sent from operational applications
are assigned to closing steps.
00:02:54 Journal entries based on source documents from operational applications are automatically
assigned to closing step 010. Let’s assume a supplier invoice was created on January 29,
2017, but is not posted yet because the approval is still not done.
00:03:11 In the meantime, the accounting period has been closed for closing step 010. In such a
case, the system does not create the journal entry but sends a business task for general
ledger.
00:03:21 This is another example of the "push principle" in the system – bring the work to the user.
An accountant now has the following options to process this business task.
00:03:32 As long as the accounting period is still open for closing step 015, he can assign this closing
step and then post the journal entry to the old period.
00:03:41 He can change the posting date of the source document to February 1, and with that, post
the journal entry with closing step 010 in the new period.
00:03:50 If an accountant wants to prevent source documents in general from being created for
closed accounting periods, he can use the process control in general ledger.

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00:04:00 By that he can completely block the creation of such source documents or at least trigger a
warning when they are entered. As we have talked already with regard to closing steps
about business tasks in general ledger, let’s have a deeper look into this topic.
00:04:17 In general ledger, you can differentiate between two fundamentally different types of
business tasks. Either business tasks which are triggered because an accountant
performed a periodic task in general ledger.
00:04:29 This can be to review a balance carryforward run or a reconciliation run. Or, in exceptional
cases, errors which occurred when the system tried to automatically generate journal
entries based on source documents.
00:04:42 For example, a journal entry cannot be posted because of faulty configuration settings or
master data. As soon as the errors are corrected, the accountant posts the affected
business transactions directly from the business task.
00:04:56 It is critical that you process all business tasks regarding error messages and post the
affected transactions. Otherwise, your accounting periods will be incomplete.
00:05:09 The view "Closing-Relevant Tasks" displays all relevant tasks that an accountant needs to
process as part of financial closing activities. It is important that these tasks are processed
completely before an accountant creates financial statements,
00:05:24 such as balance sheets, income statements, and cash flow statements. So what is the
business value of the scenario financial closing in SAP Business ByDesign?
00:05:35 The system helps to manage financial closing activities efficiently. From completing
operational transactions and their required postings
00:05:44 to submitting reports to tax authorities at the right time late during the prepare phase
through to the creation of financial statements.
00:05:55 Let’s go to the system demo. So the first thing I want to show you in the system is the
"Closing Cockpit", which you can find in the work center "General Ledger".
00:06:09 In the Closing Cockpit, you can define all relevant steps which need to be done for the
financial closing activities. I have already prepared one for December 2016,
00:06:22 but you can easily create a new one via "New", "Period-End Close" or also via "Period-End
Close with Reference". That means that you can choose an old one and just copy the data,
more or less.
00:06:35 If you click on the link, you can now see the details for this closing. We see here the
description again – "December 2016 German GAAP" –
00:06:47 the responsible employee, the due date – as it is a year-end closing, it may take a little bit
longer, that's why it's February 15. And we have all relevant activities listed down here.
00:07:00 As a first activity, you see "Close Accounting Periods for Operational Postings". The
processor is also assigned here – Eduard Becker –
00:07:10 and you can also change the status here. You have here the possibility to say it's not
relevant or to say it's in process or completed.
00:07:22 And by clicking on "Execute", you can directly open the screen to open and close periods.
The system then takes all relevant information from the Closing Cockpit,
00:07:35 so it already selects the periods of company 1000, which is Almika. Also the set of books
4010, which is the German GAAP,
00:07:47 and in addition, also the fiscal year 2016. So we have December 2016 at the top now.
00:07:55 We see that there is still the first allowed step 010 for operational postings, and we can
change it right now here to 015 "Late operational postings".
00:08:10 Excuse me. So now we have done this.
00:08:19 So we can say it's in process, because it's not completed at any time you will definitely also
close the periods completely. So the second step here is "Set Process Control".
00:08:31 This is what I also mentioned on my slides. If you want to block operational postings
completely for a period,
00:08:40 you can do that also by different business transactions via the process control. So let's have
a look what this looks like.

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00:08:47 You can also go directly from the Closing Cockpit into this functionality. So you see here the
relevant items for today, so what is open for today.
00:09:01 As this is a test system here, of course there's a lot open. So all business groups are still
possible to post.
00:09:09 The entry is possible until February 15 based on the Closing Cockpit. And "From Posting
Date" January 1, 2017, to January 31, 2017.
00:09:24 That means, for example, that you can post for January at least by February 15 into the
system. So let's have look whether we can now also find the 2016 entries.
00:09:41 I cannot scroll down at the end so I will now just use January as an explanation. So if you
now want to add a specific business process group and say it's blocked for them, the
posting, then you can do that here.
00:09:58 You say it's "Not Blocked", select, for example, "Customer Invoicing"... oh, that makes no
sense... "Supplier Invoicing" is still allowed.
00:10:08 The entry is also possible until February 15, for example. And "From Posting Date" would
be...
00:10:21 oops, that's the wrong year... until... not January 1 but December 1 I wanted to enter...
00:10:33 and until December 31... Yeah, that's because of the other entries.
00:10:47 I now have a similar entry in here because everything is allowed here in this system at the
moment. So I will not save it, just remove it again, but this is how it would work.
00:10:57 You can say then for different business groups that it's still allowed to post, or you can also
block it, and that's what I wanted to do.
00:11:06 I used the wrong the status. So that should be fine then.
00:11:12 Yeah, now the system is fine. And if I save now, you cannot post any supplier invoices in
December anymore for just this business group "Supplier Invoicing".
00:11:27 So another thing I want to mention – but therefore we now leave the Closing Cockpit – is the
topic with the closing-relevant tasks, which we discussed as well.
00:11:36 So in "General Ledger" we also have the view for "Closing-Relevant Tasks". And there we
need to check if anything needs to be done and can be solved, and how it can be solved.
00:11:48 In this case, we have a task here where a payment allocation still needs to be done. Of
course, there are more to do, but this is now one possibility.
00:11:59 So I will open this business task. In this case, jump directly into the payment allocation.
00:12:07 I see here in the "Memo Line" that a customer is mentioned. It's an incoming bank transfer
but an amount was not assigned,
00:12:15 so I'll just try it now with this customer ID here. And now we see... yes, there is an open
invoice of the same amount as the payments.
00:12:29 I select it. And now the system is able to post this payment allocation – I will post it.
00:12:37 And if we now refresh the list before the "Closing-Relevant Tasks", this task is gone. So it's
still here and I will refresh it right now...
00:12:48 and now it's gone because it's completed. In addition, I wanted to show you some runs.
00:12:58 We can do that directly in the work centers. So, for example, we have the "Reconciliation"
run in "General Ledger".
00:13:13 So here you can define the run, and the system will then check if all items, the totals of the
line items, match the total stored in the general ledger and subledgers.
00:13:26 So from a technical point of view, this is a reconciliation you can do. I will not do a new run
now, but let me show you some others.
00:13:36 Quite common things like the foreign currency revaluation. Here in the system it's called
"Foreign Currency Remeasurement Runs".
00:13:47 For "Payables" the same is available... for "Receivables". So that means all open items and
foreign currency will be valuated by key date with a specific currency exchange rate.
00:14:00 And then here we also have the "Reclassification of Payables" available. And, of course, for
"Fixed Assets" we also have the "Depreciation" run.

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00:14:14 Let's see what such a run looks like. They all have a similar selection and description.
00:14:24 So here you could now enter "January 2017" as the description, for example. You can
select the company again.
00:14:35 You can do that either with one set of books or all sets of books if you leave it blank. You
can also select the valuation view ID, which is necessary only for fixed assets.
00:14:47 And you can also define which closing step should be used for this run. Although I would
recommend, of course, always to use closing step 020 because this is how the concept is
designed,
00:15:03 that closing-relevant activities are also always posted and done with closing entries. And
you can also select and do that only for specific fixed assets, for example,
00:15:15 and you have to define, of course, the period and the year. And then you can start it directly
or schedule it.
00:15:24 I will now schedule it... for tomorrow. Yeah, that's fine, it doesn't matter which time.
00:15:38 Yeah, okay. Now the period is not open for this closing step – I didn't do that.
00:15:47 Now we start it directly. That's all I wanted to show you in the system.
00:15:55 The run will maybe take a few minutes now, but it's the same as any other run in the system
– you get a lock afterwards, which you can check with all the details,
00:16:05 as you have also seen it in the VAT return run, for example. And then you can check
whether any errors have occurred and you need to maintain anything,
00:16:15 or whether everything went through fine. So let's go back to the slides.
00:16:26 So let's summarize this unit. We have seen that the system provides a central and
standardized closing procedure
00:16:33 which ensures the integration of each individual statement form. Using reconciliation
capabilities, SAP Business ByDesign proofs the consistency across different business
areas.
00:16:45 The Closing Cockpit provides an up-to-date, comprehensive overview of the closing status,
which promotes transparency. Based on the Closing Cockpit, accountants can define
closing tasks and their sequence well in advance,
00:16:58 and thereby supporting compliance and minimizing the risk of missing important steps or
getting their timing wrong. In addition, the parallel accounting functionality enables the
creation of financial statements that comply with appropriate accounting principles.
00:17:15 In Unit 3 we will have a closer look at how the system supports you in serving your external
stakeholders. Thanks for your attention, and see you again in the next unit.
00:17:24

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Week 5 Unit 3

00:00:12 Welcome back to Unit 3 of our last week. In the last unit, we had a look at how the system
supports an accountant when performing financial closing activities.
00:00:23 Now let’s assume the financial closing activities are finished and we want to serve our
external stakeholders with relevant information. What are reporting structures and what are
they used for?
00:00:36 General ledger accounts are structured in the chart of accounts on the basis of their account
number. For financial reporting requirements, this structure is not sufficient.
00:00:46 Therefore, you can use financial reporting structures to group general ledger accounts in
another way and in another order. Reporting structures form the basis for creating different
financial statements.
00:00:58 For example, you need a different reporting structure for each of your balance sheets,
income statements, and cash flow statements. You can use several hierarchical levels in a
reporting structure and you need to assign it to one particular chart of accounts.
00:01:15 When you add a new general ledger account to a certain chart of accounts, you also need
to add it to all relevant reporting structures based on this chart of accounts.
00:01:24 Some structure types contain fixed structure items which provide certain calculations such
as totals or balances. A balance sheet, for example, always contains assets, liabilities,
equity, and the balance sheet result.
00:01:38 An income statement always contains the profit and loss result. A cash flow statement
always contains operating activities, investing activities, financing activities,
00:01:50 and net increase in cash and cash equivalents. Reporting structures of the structure type
“Income Statements by Function of Expense”
00:01:58 are not based on general ledger accounts but on functional areas and price components.
We will talk about this income statement in more detail on the following slides.
00:02:10 An important thing to mention is that SAP Business ByDesign treats expenses for sales
documents as costs of goods sold. The posting logic of such expenses differs depending on
whether you use revenue recognition or not.
00:02:24 Pooja already explained in Unit 1 of Week 2 that if you use revenue recognition, the time at
which such costs are treated as expenses depends on the revenue recognition method.
00:02:36 If you do not defer costs, they are treated directly as expenses. This means that in contrast
to the nature of expense method, the function of expense method does not consider
changes of inventory.
00:02:49 All postings on cost accounts can be grouped by the area of operation where they occurred.
These areas of operation are called functional areas in the system.
00:02:59 This enables you to create income statements by function of expense as required by many
accounting principles like US GAAP or IFRS. In addition, you can perform a detailed
analysis of your earned profit.
00:03:13 The structure of an earned profit analysis is the same as the structure of an income
statement by function of expense. We know now that the system uses functional areas to
create income statements by function of expense.
00:03:27 But how are these functional areas assigned to postings? In most cases, they are
automatically determined based on configuration settings.
00:03:36 The determination rules and their search sequence are described on this slide. The highest
priority has a manually entered functional area.
00:03:46 This is only possible in manual postings in general ledger, in the "journal entry vouchers".
This is normally necessary for corrections.
00:03:56 The second priority is the determination directly from the general ledger account. The
determination by a general ledger account can differentiate depending on the business
transaction.
00:04:07 If the posting is created based on a sales object like a sales order, you can define a different
functional area than with nonsales objects.

9
00:04:17 As an example, delivery cost based on sales transactions can be assigned to the functional
area "cost of goods sold". In the case of delivery cost incurred based on any business
transaction independent of sales,
00:04:30 they can be assigned to the functional area "administration". The third priority is the
determination based on a cost center type.
00:04:39 If you post any expenses on cost center accounting which has the cost center type
"administration" assigned, the functional area "administration" will be determined.
00:04:50 There are other scenarios possible like a consumer fair project which is organized by the
cost center "marketing". In this case, the assigned cost center type is also "marketing" and
this leads to the functional area "marketing".
00:05:05 If you do not specify a functional area and the system cannot derive one, it uses the default
functional area "9900". If you need to report by segments or profit center because of local or
company requirements, the system can support you.
00:05:25 Depending on your requirements, you can choose one of three degrees of profit
center/segment reporting: The first degree – called "Profit Center/Segment Reporting" –
assigns profit center and segments one-to-one to cost, revenue, asset,
00:05:39 material, and work in process items. In this case, no additional line items are created.
00:05:46 This allows you to create income statements and balance sheets with asset, material, and
work in process items by profit center and segment.
00:05:56 The second degree – called "Profit Center/Segment Reporting with Balancing" – splits
receivables, payables, and tax items according to the offset information of profit center and
segment.
00:06:08 In this case, additional line items are created. This allows you to report on additional
balance sheet items – receivables, payables, and tax – by profit center.
00:06:20 The third degree – called "Profit Center/Segment Reporting with Clearing" – splits cash
according to the offset receivables/payables information of profit center and segment.
00:06:30 The split is done during payment clearing. In this case, additional line items are also
created.
00:06:37 This allows you to create complete balance sheets for your profit centers and segments.
The higher the degree of profit center and segment reporting, the more reporting capabilities
you have.
00:06:50 But consider that the additional line items make the journal entries more complex. Based on
your decision on whether you want to do profit center and segment reporting and to which
degree
00:07:03 and, additionally, whether you want to create income statements by function of expense or
earned profit analysis, the system activates "reporting principles".
00:07:14 You need to assign one reporting principle to each of your sets of books. You might
remember Unit 3 of Week 1 where Carsten explained the set of books.
00:07:25 The table gives an overview of which reporting principle belongs to which decision. If you
are not sure which degree of profit center and segment reporting you will need in future, you
can choose reporting principle 1 or 2.
00:07:39 The advantages of these reporting principles are higher simplicity, better performance, and
less required table space than reporting principles of higher degrees of profit center and
segment reporting.
00:07:50 You can switch to a higher degree later if necessary. If you do not need profit
center/segment reporting, income statements by function of expense, or earned profit
analysis,
00:08:01 you can choose "Initial". The advantages of this reporting principle are higher simplicity,
better performance, and less required table space.
00:08:12 Now let’s go directly to the system. I'm logged on again as Eduard Becker.
00:08:22 The first thing I want to show you is the balance sheet. Therefore, we go to the work center
"General Ledger",

10
00:08:29 and under "Reports" you will find all reports which are assigned to the work center "General
Ledger". You see in total we have here... if you see the number on the right-hand side at the
bottom...
00:08:43 130 reports available here – quite a lot. So let's search for "Financial Statements".
00:08:53 This report contains the balance sheet and also income statement and cash flow statement.
Depending on selections, the report is then executed.
00:09:03 So I created a selection for that already. I will now explain to you the selections I made.
00:09:10 I selected company 1000, Almika, which we used the whole time, then the set of books
4010, which is the German GAAP, as you can see here.
00:09:20 The fiscal year of last year because in the system we have more postings in the last year, of
course. And for all periods.
00:09:30 You see now the overview of the balance sheet, but this is quite collapsed, so if you want to
expand it, you can just use this icon here.
00:09:41 Click on "Characteristic Settings" and then say either "Fully Expanded" or just use any level
that you want to see. I'll just take level 3 right now.
00:09:52 And then you get more details. So you see the structure as usual for "Balance Sheet",
"Assets", and "Liabilities".
00:10:01 Below "Assets" you of course have "Long-Term Assets" and "Current Assets". And I now
want to go to "Accounts Receivable & other Assets",
00:10:12 and just show you a drilldown from the balance sheet here based on the account "Trade
Receivables - Domestic". So now we have this line here.
00:10:21 This is the general ledger account that I can see here. And if I open my possibilities for
reportings to drill down,
00:10:30 I can choose, for example, "G/L Accounts - Line Items". Then the system will open the new
report with the selections based on the balance sheet that we saw before,
00:10:42 and based on the G/L account "Trade Receivables - Domestic". You see that here as well,
but here also in the selection.
00:10:50 Also the accounting period and year was taken over, and the set of books. And now we get
the full list of all postings,
00:10:59 with debit and credit, the journal entry types belonging to that. Of course, you can change
the information which is shown here as well by adding fields,
00:11:11 but I wanted to show you right now that you can also switch directly from here now to the
source document. So, for example, just take a customer invoice.
00:11:23 You can just open the source document right here and check what happened there... if you
click on... we see now that was for the customer "Heizung und Sanitär GmbH" in Hanover.

00:11:37 If you click on "View All", you can also switch to the document flow, as you already saw in
the previous weeks and units. And from there, if there was a sales order before, as we have
it right now here,
00:11:51 you can switch to the sales order, the outbound delivery, and so on. So that's it so far
regarding the drilldown to the source document.
00:12:04 Now I want to show you how you can also select a balance sheet for a different set of
books. So let's check IFRS.
00:12:17 You have to select the "Set of Books" and in addition the "Financial Reporting Structure"
because this is now assigned to the chart of accounts for the German GAAP.
00:12:28 Therefore, you don't get any structure here. As you can see, there is no structure behind
that.
00:12:33 And if I now select the right reporting structure, so "IFRS Balance Sheet", which has a
different number, as you can see here, then I get the structure according to IFRS for my
balance sheet.
00:12:48 Of course the same is true here – if I want to go into more details, I can drill down. In
addition, you can also now select the "Profit Center" or "Segment"

11
00:13:00 to check your balance sheet just for one profit center. Depending, of course, on the settings
that we have seen before... just wait a moment...
00:13:13 ah, there we go. For example, we just take sales of heaters and just execute it.
00:13:27 I guess I do a refresh... let's see. Did it just change? I didn't notice. No.
00:13:42 Okay, try it again. Ah, there we go – I don't know why the system didn't recognize my
selection before,
00:13:53 but now we see the balance sheet based on this profit center. Of course, you can do that by
several profit centers, as you saw before as well for "Profit Center Group".
00:14:07 These are the selections here. We have additional selections based on add fields but this is
something I don't want to go into in much detail right now.
00:14:18 Another thing I want to show is the income statement, therefore I also created a selection.
00:14:27 So now the system just changes from the balance sheet to the structure of the income
statement, you see at the top as well.
00:14:36 Also here we have "Result from Ordinary Operations". This is now the income statement "by
Nature of Expense".
00:14:47 And in addition, we can also... if we use the different reporting structure here... this is now
"ZD11"... it's based on German GAAP but also Nature of Expense.
00:15:00 If I want to now see "by Function of Expense", I can just select the different structure type,
and then I get a different structure "by Function of Expense".
00:15:10 Also here a drilldown is possible, and you see the lowest level here is now the general
ledger account. But as explained in the slides before, the income statement "by Function of
Expense" is structured by a functional area,
00:15:22 and therefore you see here the functional area "Sales". That's it so far for the system demo.

00:15:30 Let's go back to the slides... So what are the key learnings of this unit?
00:15:40 The built-in analytics in SAP Business ByDesign enable a drilldown up to the source
document. Based on the parallel accounting functionality, you can create financial
statements that comply with appropriate accounting principles.
00:15:54 The system uses the function of expense method, which means that expenses for sales
documents are treated as costs of goods sold. Together with the structure of an income
statement by functional areas,
00:16:05 this supports you to create income statements by function of expense which is often
required by accounting principles. Profit center and segment reporting is supported.
00:16:16 If you want to use it, you must choose one of three degrees of profit center and segment
reporting. In our last unit, we will see how the system helps you to serve your internal
stakeholders.
00:16:28 Thanks for your attention, and hope to see you again.

12
Week 5 Unit 4

00:00:12 Hello and welcome back to our last unit of this openSAP course. In Unit 3 of this week, we
concentrated on serving external stakeholders.
00:00:21 In the last unit of the course, you will see how the system helps you to serve your internal
stakeholders. As you might remember, Carsten explained some business topics within
management accounting
00:00:33 in SAP Business ByDesign in Week 1. I just want to quickly recap it.
00:00:41 You can see on this slide the relation of different business topics in management accounting
to each other. By using "Cost Center Management Accounting", you are able to manage
and allocate overhead cost
00:00:53 such as operating supplies, wages and salaries, social security contributions, and
depreciation. The correct allocation of direct cost and revenue to cost objects and
profitability attributes is supported by "Sales and Profit Analysis",
00:01:09 "Project Cost and Revenue Management", and "Production Costing". "Sales and Profit
Analysis" enables you to analyze the profitability of your sales and service orders.
00:01:20 With "Project Cost and Revenue Management" you can manage cost and revenue on your
internal and external direct cost and overhead cost projects.
00:01:29 An internal direct cost project can be, for example, a consumer fair. When selling project-
based services such as consulting services to your customers,
00:01:40 you can use external direct cost projects to manage the respective cost and revenue.
Overhead cost projects can be used if you want to manage overhead cost on a more
detailed level than cost centers.
00:01:52 The costs stay in this case on the requesting cost center of the project. Production costing
enables you to valuate work in process, including overhead cost, based on production lots.

00:02:05 Later in the system demo I will show you cost center, project, and profit reports, but for now
we will concentrate on the profit analysis. We discussed this slide in more detail in the
previous unit regarding the income statement by function of expense.
00:02:20 I just want to mention again that the structure of an earned profit analysis is the same as the
structure of an income statement by function of expense.
00:02:29 Remember the slide with the three pillars liquidity management, controlling, and accounting.
The pillars accounting and controlling were surrounded by a circle
00:02:37 to show that these two areas are harmonized in SAP Business ByDesign. This
harmonization is also reflected by sharing one reporting structure for an income statement
in financial accounting
00:02:49 and a profit report in management accounting. Let’s have a more detailed look at the profit
analysis in the system.
00:02:58 The profit report enables you to easily compare key figures for different market segments
such as customers in different regions. By breaking down the income statement amounts
into various aspects,
00:03:10 the report provides insight into the structure of your revenues and margins. As you can see
in the graphic, the following attributes can be used in the profit reports to analyze market
segment profitability:
00:03:23 customer group, product category, country, region, and sales unit. The profit report derives
these attributes either from the sales documents or from the cost objects depending on the
business transaction.
00:03:37 The information of the selling sales unit, the customer, and the sold product is stored within
sales documents like sales and service orders. For other cost objects like cost centers or
projects, the profit analysis attributes are directly stored in the cost object.
00:03:53 You can specify the attributes of cost centers in the organizational management and for
projects in the project itself. The profit analysis can be done based on three different types
of profit.

13
00:04:06 Why do you need these profit types? They allow users to choose between seeing early
profit figures of a more or less predictive nature
00:04:14 and profit based on the data posted in accounting and reflected in the balance sheet.
Therefore the profit type depends on the time of data entry.
00:04:24 When you create a sales order you can already do a profit analysis based on order profit. If
you have already created service or warehouse confirmations as well as invoices, the profit
analysis can be done by invoice profit.
00:04:38 When you execute the revenue recognition run, you can analyze your earned profit. If you
are not using the automatic revenue recognition functionality in the system,
00:04:48 the earned profit can be analyzed after invoice creation. Now let's switch to the system.
00:04:57 The first report I want to show you is the profit report "Profit Detail by Contribution Margin
Scheme", which you can find in the "Cost and Revenue" work center...
00:05:08 under the view "Reports"... And we can search here for the name.
00:05:16 I know that it starts with "Profit Detail"... So we see here "Profit Detail by Contribution Margin
Scheme".
00:05:29 And here I also saved a selection, as I did it in the last unit for the reports. I will quickly show
you what the selection is about.
00:05:39 So the first selection field you see here is "Profit Type". You see what I explained on the
slides already.
00:05:46 We have the profit types "Earned Profit", "Invoice Profit", and "Order Profit". Now we have
selected "Earned Profit".
00:05:54 For company, "1000 Almika". And the set of books is German GAAP again.
00:06:00 And the contribution margin scheme, as mentioned, is the same as the income statement
for function of expense, which you can also see here in the name, income statement "I/S by
Function of Expense".
00:06:12 I've selected the last fiscal year, and this is what we first get as information.
00:06:18 In addition, of course, I can add some more information, the profitability attributes that we
just mentioned.
00:06:26 For example, I now want to see the results by customer. And I can just add it here to the
columns.
00:06:35 Or if it's more interesting to me by the region, I quickly switch. I can also add it just to the
customer,
00:06:46 just for a better overview right now here in the system. I just use it separately, so now we
see it by region.
00:06:54 So I see what my net sales revenues are in Bavaria, Berlin, Hamburg, and so on. And all
fields which are available here can be used to select or to report on that:
00:07:09 "Customer Group", "Distribution Channel". Of course, what also makes sense is you can go
on the single "Sales Document ID" if you want to.
00:07:19 Let's do that in addition. That will now be quite huge.
00:07:25 So now I see for the region "Bavaria" all the sales orders, and for the different sales orders
my revenues and cost of goods sold.
00:07:35 So this is how this report works. I want to finish that one right now and go to another report
00:07:43 because I mentioned we will have a look into cost center reports and also projects. So for
the next one, I want to take a "Cost Center" report.
00:07:57 So here we have "Cost Center - Line Items" and "Cost Centers - Overview" – I will first take
"Cost Centers - Overview". Also here I have done a selection variant, or saved a selection
variant for this user.
00:08:10 Again, company "1000", "Last Fiscal Year", and "German GAAP". You can, of course,
select more information here, but I'll just leave it now for the totals.
00:08:21 And here in this report, based on the "Cost Center Hierarchy" on the different levels, you
see what was charged to a cost center, for example here for "Vertrieb Pro".

14
00:08:32 And if there are allocated costs as well, like here in this area "Operations Pro", for "Service
& Support Pro", you see also the allocated costs and then the total balance of the cost
center.
00:08:48 Also here you have additional information available that you can select either in the columns
or in the rows, depending on how you want to define your report here.
00:09:01 On the other side, we also have the "Cost Center - Line Items", and I will just use my
selection variant again...
00:09:13 And then, in this case, you see the single line items by the "G/L Account (Origin)" with the
"Journal Entry". And, of course, I can drill down again here, as we have seen it in the other
reports in Unit 3, to the source document.
00:09:36 So this was an expense settlement, and from the "Journal Entry" I can view the source
document directly.
00:09:48 That was one of Melanie's. Okay.
00:09:54 So now I also want to switch to the project reports. I wanted to show you one example there
as well.
00:10:02 So I know that that report is named "Profit Totals". So let's have a look into that report.
00:10:14 Again, I've created a selection variant to select all projects which are available right now
here in the system, which is not a lot. But anyway, we can see here per project, per line, the
"Total Planned Revenue", the "Total Planned Cost",
00:10:33 then the "Total Planned Margin" as an amount and in percentage, and of course the same
incurred, so actual, costs already.
00:10:44 Here I just want to quickly show you that there are a lot of possibilities to see these results
in different ways, so predefined views are available here for this report.
00:10:55 So if you click on "Cost Details", you will see just the costs on the projects which were
already posted in more detail based on the "G/L Account (Origin)".
00:11:06 If you select, for example, "Cost Details"... exactly, sorry... no, we had that already...
00:11:18 if you select, for example, "Revenue Details", you just see the revenues, or you can just
have the overview again.
00:11:28 So there are many possibilities for displaying your results and deciding which key figures
you really want to see for such a project. So that's it from my side for the system demo.
00:11:41 Of course, there are many more reports available. If you have the possibility later on to get
hands-on in the systems and do the exercises,
00:11:52 then you can check which reports are available in the system. Let's go back to the slides.
00:12:00 So let’s summarize this last unit. We have discussed that the standard reporting in SAP
Business ByDesign serves all business topics in management accounting.
00:12:09 We have seen that the reports "earned profit analysis" and "income statement by function of
expense" have a similar reporting structure, and this is possible because accounting and
controlling are harmonized in the system.
00:12:21 We are now at the end of the course. I hope you've enjoyed being with us,
00:12:25 and on behalf of the SAP Business ByDesign team, I want to thank you for joining this
course, and I wish you all the best with your final exam.
00:12:33

15
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