The gentleman in charge of setting up all of the GL accounts at work and I were chatting about a conversion and he commented to me “I don’t know what all of these settings do. I just follow the instructions that you guys gave me.” It dawned on me that many people do not know what all of the settings on an account do, but making mistakes here can cause serious trouble down the line.
Structure of a GL Account
SAP divides the GL master into two parts. First, each GL account is created inside of a single chart of accounts. That chart of accounts is assigned to one or more company codes. Second, the account is extended to each company code. If the account is not extended to the individual company code, it cannot be posted to in the company code. Thus, some characteristics are constant across all company codes (since they are set in the chart of accounts data), while others are different in each company code.
Settings in the Chart of Accounts
Inside the chart of accounts we have the following settings:
1|G/L Account Number|The numbering scheme for the accounts should be rational and carefully structured. Many places will have a hierarchy of accounts that will correspond to the numbering scheme. For instance, assets may start with 1, liabilities with 2, short term liabilities with 22, and so on.
2|P&L Indicator|If the account is marked as P&L, then the account will be pushed to retained earnings during the year end rollforward. If the account is marked as a balance sheet account, then it will rollforward into the same account.
3|Account Group|The account group controls which fields are available for use on the GL master as well as what number interval the account number is in. Often, the account group is used to help with reporting.
4|Text Fields|The short text and long text provide a description of the account.
5|Trading Partner|The trading partner on an account will auto populate any posting against the account with the trading partner populated here.
6|Group account|The group chart of accounts is used to roll up different operational charts of accounts into a common standard across the enterprise.
Settings in the Company Code
The settings in the chart of accounts are straightforward. The company code settings though are not so simple.
1|Account Currency|The currency of the account. If the currency is the same as the company code’s local currency, then any document currency can be used when posting to the account. If not, then document currency must match that of the GL account. This is used primarily with cash accounts.
2|Only balances in local currency|This setting does not mean what you think it means. If this field is flagged, any document currency can be used with this account, but the document currency is immediately converted to the local currency and is not recorded in the tables. This setting helps performance and complexity, but that detail is often necessary.
3|Exchange Rate Difference Key|This key will specify where exchange rate variances should be posted to. This key may not be necessary for exchange rate differences depending on the configuration.
4|Tax category|The tax category will enable the entry of a tax code on postings to this account. The type of tax or even individual tax can be specified.
5|Posting w/o tax|This setting will enable postings to the account without a tax code if the tax category is set.
6|Recon account type|A reconciliation account is used to denote the balance that is supported by a subledger. These accounts cannot be posted to. For instance, if the account is a recon account for customers, then inside of AR, the total sum of the customer postings should match that of the GL account.
7|Alt Account Number|The alternate account number is open for use. For simple migrations, it can be used for legacy account numbers.
8|Tolerance Group for GL Accounts|Tolerance groups assign the maximum percentage or absolute amount that can be written off during open item clearing.
9|Open Item Managed|If an account goes through a clearing process where debits and credits should be matched against one another, then it should be flagged as open item managed. This flag should be set for cash reconciliation accounts and any other clearing accounts. It should not be set for reconciliation accounts.
10 |Line Item Display|This indicator enables display of the account’s line items. That enables reporting of the individual line items in entry view via transactions such as FAGLL03 or FBL3N. GL view is always line item enabled. Recon accounts, tax accounts, and so on should not be flagged as line item displayed.
11|Sort key|The sort key controls how the assignment/allocation field is populated in SAP. BSEG has an index by default on this field, so by properly populating the allocation field, then line item level reports will execute faster. SAP provides a set of different rules for populating the allocation field. This is called the sort key.
12|Authorization Group|The authorization group controls whether special security permissions are necessary for posting to this account.
13|Accounting Clerk|The accounting clerk on the account assigns responsibility for the account to a particular person.
On the Create/bank/interest tab, we have the following fields:
14|Field Status Group|The field status group controls what fields are required, optional, and hidden per account. In general, field statuses should be setup to only display the necessary fields per account and not every field.
15|Post Automatically Only|If this field is set, the account cannot be posted to via manual transaction.
16|Supplement Auto Postings|If this field is set, a post automatically only account can have additional characteristics such as profit center or cost center set manually during posting.
17|Planning level|This field is used to classify the account’s activity into current day cash forecasting
18|Relevant to cash flow|This field must be set to enable processing in current day cash forecasting
19|Commitment Item|This field is used to classify the account’s activity into current day cash forecasting
20|House Bank|The house bank will assign the GL account to a house bank. This field should be set for the confirmed cash account related to a house bank account.
21|House Bank Account|The house bank account will assign the GL account to a house bank account. This field should be set for the confirmed cash account related to a house bank account.
22|Interest Indicator|The interest indicator controls whether the account should be considered for automatic interest calculation.
23|Interest Calculation Frequency|This indicator determines how often interest should be applied on the account.
In addition, there are several text fields on both the chart of accounts level information and the company code level information that can be used to store what the account is being used for and any other notes. In addition, the account can be translated into multiple languages as necessary.
I hope that this overview of the GL account provided more in-depth information on how the GL account is used.