Now that you have a better understanding of the overall structure and importance of the G/L

account. Let’s look at the specific elements of its structure. The G/L account itself is made up of
three distinct segments i.e.

• Chart of Accounts

• General Data

• Company code data.

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.

Structure of GL Master

GL Master has the following Tabs:

1. Type/Description
2. Control Data
3. Create/Bank/Interest
4. Key word/Translation
5. Information in Chart of Accounts
6. Information in Company Code

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Field description
G/L Account - The G/L account number identifies the G/L account in a chart of accounts. Here
we insert the number (4 digit alpha-numeric key) of the general ledger account that we want to
create. The number should be within the number range for the type of the account that we
want to create. When creating we can do it with reference to an existing account (to copy
existing data and speed up data entry) or we create without referencing any existing account.

Company Code -Company Code is the main organizational unit within Financial accounting. By
specifying the company code we are making sure that the general ledger account is complete
and ready for use in the specified company code.

G/L Account Types- Are classified into 4 types:

o Balance Sheet Account- Account that is posted from business transactions. The balance
of a balance sheet account is carried forward at fiscal year-end.

o Nonoperating Expense/Income- Income statement account that records expenses or

gains from activities that are not part of the main purpose of the company, such as gains
realized from financial investments by a manufacturing company.

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 o Primary Costs or Revenue- Income statement account that functions as a cost element
for primary costs or revenue. Primary costs reflect operating expenses such as payroll,
selling expenses, or administration costs.

o Secondary Costs-Income statement account that functions as a cost element for

secondary costs. Secondary costs result from value flows within the organization, such
as internal activity cost allocations, overhead allocations, and settlement transactions.

Account Group- It determines the number interval from which the account number is selected
when a G/L account is created. Standard COA are recommended in most countries. And these
are created so that the number of accounts belonging to same functional area begin with same
digits.

Short Text- The general ledger account short text is used for online displays and evaluations
which do not have sufficient space for the long text.

G/L Account Long Text- When there is sufficient space, the general ledger long text is used for
online displays and evaluations.

Trading Partner- In this field we enter the company ID of the trading partner. The company ID is
standard for the whole group.

Now we go to the next tab -> Control Data

Insert data in the fields.
CONTROL DATA

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Fields relevancy
Account Currency- The account currency indicates the currency in which the account is held. If a
currency other than the company code currency is specified, users can only post items in that
currency to this account. If the company code currency is specified, users can post items in any
currency to this account.

Exchange Rate Difference key- This is a key for account determination in valuating foreign
currency amounts posted to balance sheet accounts.

Valuation Group- A valuation group can include a number of different general ledger accounts.
The exchange rate is determined from the foreign currency total when the valuation is carried
out.

Tax Category- This field is used to decide whether you want to use the account for tax relevant
postings, if not leave the field blank.

Recon. Account for Acct Type- An entry in this field characterizes the general ledger account as

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a reconciliation account. The reconciliation account ensures the integration of a sub ledger
account into the general ledger. All postings to sub ledgers are also posted automatically to the
general ledgers marked as reconciliation accounts. The reconciliation account itself is not
designed for direct postings.
Tolerance Group- In real time business scenario, tolerance groups allows the SAP system to
process and post the transactions beyond the tolerance groups limits. Tolerances are referred
as payment differences, it can be a amount tolerance, percentage tolerance, and debit & credit
tolerance.
Open Item Management- Determines that open items are managed for this account. Items
posted to accounts managed on an open item basis are marked as open or cleared. The balance
of these accounts is always equal to the balance of open items. Accounts that are managed on
an open item basis include bank clearing accounts, payroll clearing, cash discount clearing
account and goods receipt/invoice receipt clearing account. Accounts that are not managed on
an open item basis are bank accounts, tax accounts, raw material accounts, reconciliation
accounts, profit and loss accounts and material management accounts posted with a posting
key that has account type M.

Sort Key- Indicates the layout rule for the allocation field in the document line item. The system
uses a standard sort sequence for displaying line items. Among other things, it sorts the items
according to the content of the allocation field.
Authorization group: The authorization group allows extended authorization protection for
particular object.

Accounting Clerk Abbreviation: Identification for the accounting clerk.

Cost Element Category: Identifying a cost element category, used in the controlling component.
The cost element category determines which cost elements can be used for which business
transactions. There are categories for Primary and Secondary cost elements.

Create / Bank / Interest

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Fields relevancy

Field Status Group- Determines the screen layout during the document entry for this account.
Fields can have three statuses which are optional entry, mandatory entry and suppressed. For
optional fields one can enter data in the field or leave it blank. Mandatory fields are fields that
needs to be filled with data for the user to be able to proceed. Suppressed fields are fields that
do not appear on the screen.

Post automatically only: Indicates that this account can only be posted to by the system using
account determination tables.

Supplement for Automatic Postings: Indicates that line items which are generated automatically
by the system for this account can be supplemented manually.

Reconcil.Acct Ready for Input: Indicator which determines that the reconciliation account is
ready for input when posting a document.

Planning Level: The planning level is used to control displays in Cash Management.

The following levels could be possible:

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 ➢ Only noted items in the cash position

➢ Only noted items in the liquidity forecast

➢ Purchase orders

➢ Sales orders

➢ Notified incoming payments

➢ FI payment settlements (incoming checks, outgoing checks, bills of exchange,

payments).

Relevant for cash flow: Indicator that determines that the GL account is a cash flow account.
This information is used by the system in order to determine the payment amount for
payment notices.

Commitment items: Alphanumeric code of the commitment item you are creating,
changing, displaying or to which you are assigning budget.

House Bank- All bank data is determined using this key. House banks are the banks that are
used by the company. This field links the general account with the house bank.

Account ID: The Account ID of house bank has to be attached here to the respective Bank
G/L.

Interest Indicator: The interest indicator to be mapped with respective loan GL account.

Interest Calculation frequency: Entry in this fields determines interest calculation frequency.

Key Date on Last int.Calc: Date of last interest calculation program run processed.

Date of Lat Int Calc: Last interest calculation for this account

Maintain company codes for Material Management:

To create a material master record, the control record must exist for the company code for
which you want to create your master record. To set up a company code, enter the current
period here. Alternatively, you can do this with the period closing program.

Menu Path SPRO-> IMG-> Logistic General ->Material Master ->Basic Settings ->
Maintain Company codes for material management.

T-code OMSY

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Material types:

➔ Materials with the same basic attributes are grouped together and assigned to a
material type.

➔ This allows you to manage different materials in a uniform manner in accordance with
your company’s requirements.

Define Attributes of Material Types:

Menu Path SPRO-> IMG-> Logistic General ->Material Master ->Basic Settings ->
Material types -> Define Attributes of Material Types.

T-code OMS2

Select ROH and click on Quantity/value updates as shown above.

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From position select the plant G800 and G808 and update as shown below

In similar way maintain for remaining FERT, HALB, HAWA, ERSA

Business scenario:

➔ The Procurement department initially wants to set up the following materials into SAP
system.

o Raw Material

o Semi-Finished Goods

o Finished Goods

o Trading Goods

o Service items

o Returnable Packaging

➔ Raw Material (ROH)

o Raw materials are always procured externally and then processed.

o A material master record of this type contains purchasing data but not sales data
since they cannot be sold.

➔ Trading goods (HAWA)

o Trading goods are always procured externally and then sold.

o A material master record of this material type may contain only accounting data
and not costing data.

o It can contain both purchasing data and sales data.

➔ Finished Products (FERT)

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 o Finished products are produced in-house.

o They have got both accounting and costing data.

➔ Semifinished products (HALB)

o Semifinished products can be procured externally and manufactured in-house.

They are hen processed by the company.

o A material master record of this material type can contain both purchasing and
work scheduling data.

➔ Services (DIEN)

o Services can be performed internally or procured externally (outsourced). They

cannot be stored or transported.

▪ Construction work

▪ Cleaning services

▪ Legal Services

➔ Packaging Material (VERP)/Returnable Packaging (LEIH)

o Packaging materials are used to transport goods and come with the goods free
of charge.

o A material master record of this material type is managed on the both a quantity
basis and value basis.

Activation of material ledger (Configuration)

➔ Material ledger is mandatory to be activated in SAP S/4HANA and is embedded in the

product.

➔ It is a tool that collects transaction data for materials whose master data is stored in
material master.

➔ The material ledger uses this data to calculate prices to valuate these materials. The
Material ledger is the basis of Actual Costing and Parallel currencies/Valuation.

➔ It is related to product costing that is the sub-module of SAPS/4HANA Controlling area.

➔ It can be activated through the following transaction codes.

Define Material ledger type (T-Code: OMX2)

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Used here standard

Assignment of Material Ledger types to valuation areas (T-code: OMX3)

Activation of Material ledger (OMX1)

Finally it needs to be set up productive by using transaction code CKMSTART

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Execute

Material ledger is in productive message will be displayed.

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