A list of Account name & number used in a company’s general ledger to record day to day transactions. A company need to publish its state of affairs and operating result for the use of Shareholders, Creditors, Bankers, Employee, Govt. Authorities, etc. To publish the financial statement all the day to day transaction should be recorded in its books of accounts.

 We need two or more accounts to record a financial transaction in the books of account. Accounts represent a head of account under which transaction will be recorded such as Bank Account, Cash Account, Printing and Stationary Account, etc. The list of these accounts is called the Chart of Accounts. The same chart of accounts can be used by many company under the same group by extending and adding company specific requirement.

Chart of accounts provide a framework for the recording of values to ensure an orderly rending of accounting data. The G/L accounts under COA are used by one or more company codes in the SAP System. This Chart of accounts is the operative chart of accounts and is used in both financial accounting and cost accounting. The general ledger module supports creation of balance sheets, revenue and expenditure statements according to Generally Accepted Accounting Principles (GAAP) for external reporting. It also supports creation of journal entries, maintenance of control accounts and enforcement of accounting rules.

Indian GAAP:

Section 209 of the Indian Companies Act prescribes that every company shall keep at its registered office proper books of account with respect to:

a)     All sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place;

b)     All sales and purchases of goods by the company;

c)     All the assets and liabilities of the company;

d)     In the case of the company pertaining to any class of companies engaged in the production, processing, manufacturing or mining activities, such particulars relating to utilization of material or labour or to other items of cost as may be prescribed, if such class of companies is required by the Central Government to include such particulars in the books of accounts.

Section 210 of the Indian Companies Act prescribes that, At every annual general meeting of s company held in pursuance of section 166, the Board of Directors of the company shall lay before the company.

a)     Balance sheet as at the end of the period specified in sub section 3 and

b)     A profit and loss account for the period.

International Accounting Standard:

IAS1- Presentation of Financial Statement says Present complete set of Financial Statements before the shareholder of the company, classify the assets/liabilities as current/non current and classify the expenses based on the nature/function of the expenses.

Complete set of the Financial Statement includes:

a)     Balance Sheet – Statement of the financial position at the end of the financial year;

b)     Profit and Loss Account – Statement of comprehensive Income for the period;

c)     Statement of changes in equity for the period;

d)     Cash Flow Statement for the period; and

e)     Notes containing significant accounting policies and other explanatory information.

1.1 Purpose:

It defines the structure of G/L accounts. It is a list of G/L accounts used by one or more company codes. In that Chart of account you have to specify the length of G/L accounts. In SAP all the entries are document oriented and each document will be posted in the system as well as GL Account. There are three types of Chart of Account:

1.2 Types:

a) Operative Chart of Accounts

Operative Chart of Accounts is a Chart of Account you use for the company code. We need a common operative chart of account for the cost controlling in a Controlling Area. All the company codes assigned to a Controlling Area will have to have same operative COA and Fiscal Year Variant.

b) Group of Chart of Accounts

For different chart of accounts(operative COA) for different company code, you can group the chart of account into one chart of account for internal reporting, but cross company code controlling is not possible, because of different chart of account for different company code.

c) Country Chart of Accounts

For different country you can have different reporting system. so for different company code you can have different company code, but can have same Operative Chart of account, so cross company code controlling is possible.

1.3  Assignment of COA:

To summarize, here is the COA setup in SAP:
1. Operative chart of account – It is the main chart of account assigned to each company code in OBY6.
2. Group chart of accounts – This is structured in accordance with requirements pertaining to Consolidation. Assign Group COA to the Operating COA. Assign a Group GL Account in the Operating COA GL Master in the COA Segment data. Group Account Number field is a mandatory filed if the Group CAO is assigned to the Operating COA. Group COA GL Account Master Data is required to create only for COA Segments.

3. Country-specific charts of accounts – These are structured in accordance with legal requirements of the country in question. Assign the Country COA in the Company Code Global Parameter settings. Update the alternative account filed with the Country COA GL Account. Country COA GL Account Master data is required to create only for COA Segments.

2.0 Define Chart of Account:

Menu Path:

IMP-> Financial Accounting (New)-> General Ledger Accounting (New)-> Master Data-> G/L Accounts-> Preparations-> Edit Chart of Accounts List

T Code: OB13

Select the template then copy

a) COA Maintenance Language

Language in which the chart of accounts is created specifies the length of a G/L account number in the chart of accounts. This number may have up to ten digits.

b) Length of GL Accounts

Length of GL Account

c) Controlling Intigration

Control of how a cost element can be maintained when maintaining a G/L account. Detailed

The following options are available:

• No maintenance of cost elements.

• Cost elements maintained manually. A push button is available for this purpose, with which you can go directly to the related cost element.

• Cost elements maintained automatically. When you save a new G/L account, the related cost element is automatically created. A prerequisite is that a default value for the cost element category has been set up for this cost element. If no default value is found, the system will not create a cost element.

To activate automatic creation of cost element, we need to activate the same in Controlling:

Menu Path: Controlling-> Cost Element Accounting-> Master Data-> Cost Elements-> Automatic Creation of Primary and Secondary Cost Elements-> Make Default Settings.

T Code : OKB2

d) Consolidation – Group COA

Chart of accounts which is used in the corporate group for consolidation. You can enter a group account number as additional information in the G/L accounts of the chart of accounts you are using. The system checks whether the group account number exists in the corporate chart of accounts. Assign the group COA here to update the value in the COA Segment of the Operating COA.

e) Block Indicator

Indicator which blocks the chart of accounts from being released i.e. no G/L accounts can be created for this chart of accounts in the company codes. This is only advisable if charts of accounts are created centrally and accounts are created locally. If this is the case, then the block prevents accounts from being created in the company codes for a chart of accounts that is not yet completed.

2.1 Define Account Group:

Grouping of GL Accounts with similar characteristic is called Account Group.

Account Groups controls the Master records. It controls the number range of Master record and Field status group (Suppress, Required, Optional and Display) also. SAP follows a Grouping principle all throughout SAP to handle the Master Records that may be in GL, AR, AP or any other thing.

GL Number range is always External and Alpha Numeric. It can be up to 10 characters. And also it controls the field status of the entry screen, which is company code specific. Field status Group assigned to a GL Master can be modified based company code requirement. We have two major categories of GL Accounts i.e., Balance Sheet Account and P&L Accounts. These two can be sub divide into different categories based on the requirement and statutory provisions.

Equity

Loan & Advances

Liabilities

Cost of Sales

Expenses

Revenue

Define Account Group

IMG>Financial Accounting (New)> General Ledger Accounting (New)> Master Data> G/L Accounts> Preparations> Define Account Group.

Account Group is COA specific. To create account group select new Entries and then update as follows:

a)      COA

b)      Account Group ID

c)      Account Group Name

d)      Number Range (From to to)

Account Group Controls Field Status of the GL Master Data. Maintain Field status for all the Groups.

Double clicke of one of the Group to maintain the Field Status.

3.0 COA vs. GL Account Master Data:

a) Group Chart of Account in a operation COA Segment

This group number is one many assignment. You can assign one group GL Account to many Operative GL Account. COA Segment is required to maintain for Group COA.

b) Country COA in Company Code Segment

The alternative account number field in the company code area is freely definable. You could use it to enter:

the account number from your legacy system or the account number from a country chart of accounts if your corporate group uses a standard chart of accounts. The alternative account number is only issued in the financial statement if you explicitly assign it to the relevant items in the financial statement version. COA Segment is required to maintain for Country COA. This is required to get the Trial based on the Legacy GL Account or Country Specific sets of GL Account. This assignment is normally one to one ssignment. We can assign one Country COA to many Operative COA, provided need to change the Message Control to allow the same. Table: T004

4. GL Master Data

To publish its Financial Statement an entity required to maintain its books of Account. In double entry book keeping system we need account to post the financial transaction (Covered in detail in the topic for “Accounting Entry and SAP System”). GL Master data is required to maintain in SAP to account all the transaction in the SAP. GL Account Master provide some Characteristics to record a transaction directly in FI-GL or Indirectly through its Sub Ledger FI-AP, FI-AR & other modules of SAP and to get the report.

There are two parts in a GL Account. We say segment in SAP. GL Account will be created at Chart of Account Level then it can be extended to many Company Codes.

Segment in the master data

a)     COA Segment

The settings in the COA segments are specific to the COA only.

b)     CO Code Segment

GL Coding Logic

Each digit of the GL Account Number should represent a identification of the GL Account, so that Classification/Grouping of the Asset/Liabilities and Revenue/Expenses can be carried out for the presentation of the State of Affairs of the Company as at the End of the Financial Year and Result of the Operation and non operation activities of the company. GL Code can be maximum up to 10 digits. Based on the business requirement number of digits need to be selected.

Create GL Master Data

FS00 – Create GL Account Master Data Centrally

FSP0 – Create GL Account for COA

FSS0 – Create GL Account for Company Code

FS01 -Create GL Account

FS02 – Chaneg GL Account

FS03 – Display GL Account

Extension of GL Account to other Company Codes

A GL Account Master Created can be extended to any number of company codes provided the COA is assigned to the company code. Extension can be done as follows:

FSP0 – Create GL Account Master Data at Company Code Segment

FS15 – Copy GL Account Master Data from one Co Code to Another

Mass Change of the GL Account Master Data

OB_GLACC11 – Chart of Accounts Data

OB_GLACC12 – Company Code Data

OB_GLACC13 – Descriptions

GL Master Data Reports

Display GL Account Master Data Changes:

FS04 – Centrally

FSP4 – In Chart of Accounts

FSS4 – In Company Code

5. Important Fields in GL Master Data

GL Account

Account Group

Profit Loss Account or Balance Sheet Account

Retained Earnings Account

Trading Partner

Functional Area

Group Account Number

Account Currency

Only balance in Local Currency

Tax Category

Posting without tax code

Reconciliation Account Type

Alternative Account

Post Automatically

Field Status Group

OI Management

Line Item Display

Sort Keys

6. GL Master Data Tables

SKA1 – COA Segment Data

SKAT – GL Text

SKB1 – Company Code Segment Data