VMS Trading Company

Structure DocumentSAP Financial Accounting

Implementation Partner: Allied VMS

Author: VMS FI Team

12th April, 2013

SAP Implementation Project VMS Trading Company – FI Structure Document

12th April, 2013

Copyrights:

Copyright © 2013 Allied VMS Technologies. All rights reserved.

No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of Allied VMS Technologies. The information contained herein may be changed without prior notice. Some software products marketed by Allied VMS and its distributors contain proprietary software components of other software vendors.

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Contents PageI. Handling Procedure 1-5

II. Objective: 1-5

III. Overview of Module (FI): 1-61 Organizational Structure: 1-72 Configuration Data 2-82.1 General Ledger 2-82.1.1 General Settings 2-82.1.2 Account Groups 2-82.1.3 Field Status Group 2-92.1.4 Document Types 2-92.1.4 Posting Key 2-102.1.5 Posting Period 2-122.2 ACCOUNTS PAYABLE 2-142.2.1 ACCOUNTS PAYABLE GROUP 2-152.2.2 PAYMENT TERMS 2-152.2.3 SPECIAL GL INDICATOR 2-152.3 ACCOUNTS RECIEVABLE 2-162.3.1 ACCOUNTS RECIEVABLE GROUP 2-172.3.2 PAYMENT TERMS 2-172.3.3 SPECIAL GL INDICATOR 2-172.4 BANK ACCOUNTING 2-182.4.1 HOUSE BANKS 2-182.4.2 CASH JOURNAL 2-182.5 ASSET ACCOUNTING 2-202.5.1 Asset Class 2-202.5.2 Calculation of Depreciation 2-21

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I. Handling Procedure

Document Number:

Document Number Document date

VMS_STDOC_FI 12-04-2013

Version History:

Version Number Version date Summary of Changes Ref: Minutes of review

001 12-04-2013

Reviewers:

This document should be reviewed by:Name Signature Date

Mr. Nadeem Ansari

Mr. Faisal Masood

Approvals:

This document requires the following approvals. Name Signature Date

Mr. Nadeem Ansari

Mr. Faisal Masood

This document has been distributed to:

Name Signature Date

Mr. Adnan Bashir Khan

Mr. Nadeem Ansari

Mr. Arshad Ali

II. Objective:

The Structure Document is a core implementation document for SAP Implementations. This document defines the important information required for initialization and setup of the SAP.

III.Overview of Module (FI):

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The component Financial Accounting focuses on the General Ledger, the processing of Receivables and Asset Accounting. Important tasks of Financial Accounting are the recording of monetary and value flows as well as the evaluation of the inventories.The GL contains the recording of all accounting-relevant business transactions on to G/L accounts from a business point of view. Every general ledger is structured according to a chart of accounts. The COA contains, in orderly form, the definitions of all G/L accounts of the General Ledger. These definitions basically include the account number, the G/L account designation and the categorization of the G/L account as an Income Statement and Balance Sheet Account.For reasons of clarity, the General Ledger often contains only collective postings. In such cases, the posting data is represented in a more differentiated way in so-called Sub Ledgers which pass on their data in compressed form to the General Ledger. Reconciliation Accounts connect the sub ledgers to the General ledger in real-time that means, as soon as a posting is made to a sub ledger, the posting to the respective reconciliation account in the General Ledger takes place analog to this. The AP records all business transactions that have to do with the relationships to suppliers. It takes much of its data from Purchasing (MM - Materials Management).The AR records all business transactions that have to do with the relationships to customers. It takes much of its data from SD.The Asset Accounting records all business transactions that have to do with the management of assets.The Bank Ledger (BL) supports the booking of cash flows.

1 Organizational Structure:

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2 Configuration Data

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2.1 General LedgerThe central task of G/L accounting is to provide a comprehensive picture for external accountingand accounts. Recording all business transactions (primary postings as well as settlements frominternal accounting) in a software system that is fully integrated with all the other operationalareas of a company ensures that the accounting data is always complete and accurate.

2.1.1 General Settings

Title Code DescriptionChart of Accounts INT International Chart of AccountsField Status Variant G001 Field Status Variant is GeneralFiscal Year Variant K4 Fiscal Year Variant taken is from January to DecemberCurrency USD US Dollar is taken as the local CurrencyPosting Period Variant 8000

Posting Period includes 1 – 12 January to December and it also includes 13 – 16, 4 special periods

2.1.2 Account Groups

Account groups are used to group customer, vendor, GL Accounts, and Fixed Asset Accounts.

Account Group Description From Account To Account10ER Equity & Reserves 110000 11999911LT Long term liabilities 120000 12999912ST Short Term Liabilities 130000 13999913AP Account Payable 140000 14999914IN Inventory 150000 15999915AR Account Receivable 160000 16999916PA Prepaid & Advances 170000 17999917CC Cash & Cash Equivalent 180000 18999918WP Capital Work in Progress 190000 19999919FA Fixed Assets 200000 20999920SR Sales Revenue 500000 50999921SD Sales Deduction 510000 51999922CG Costs of Goods Sold 520000 52099922PD Price Difference Accounts 521000 52199922CA Consumption Accounts 522000 52299922RA Revaluation Accounts 523000 523999Account Group Description From Account To Account22CI Changes in Inventory 524000 52499923DE Depreciation Expenses 530000 53999924RE Running Expenses 540000 54999925OE Other Expenses 550000 55999926TA Taxation 560000 569999

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27DE Dividends 570000 57999928FC Finance Costs 580000 58999929OI Other Misc. Income 590000 599999

2.1.3 Field Status Group

Field Status Group G001 will be used for all accounts used. With the Field Status Group we can suppress, make it Required Entry, and Make it Optional Entry to the fields of the account groups. The following field status is used for the configuration of VMS Trading Company as mentioned below.

FSG DescriptionG001 General (with text, assignment)

2.1.4 Document Types

Whenever a transaction is posted a document is generated which is differentiated with a document type. There are various document types that are defined for VMS Trading Company and the respective document type will be used according to the criteria. The following are the documents types that are used:

Document type Description Number range Account typesAA Asset Posting 01 ADKMSAB Accounting Document 02 ADKMSAF Depreciation Postings 03 ASAN Net Asset Posting 04 AKMSDA Customer Document 05 DSDG Customer Credit Memo 06 DSDR Customer Invoice 07 ADMSDZ Customer Payment 08 ADSKA Vendor Document 09 AKMSKG Vendor Credit Memo 10 AKMSKN Net Vendors 11 ASKKR Vendor Invoice 12 AKMSKZ Vendor Payment 13 AKSML ML Settlement 14 MS Document type Description Number range Account typesPR Price Change 15 MSRB Reserve for Bad Debt 16 SRE Sales Invoice - Gross 17 AKMSRN Sales Invoice - Net 18 AKMSRV Billing Doc.Transfer 19 ADSSA G/L Account Document 20 ADKSMSB G/L Account Posting 21 S

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SK Cash Document 22 SSU Adjustment Document 23 SUE Data Transfer 24 ADKMSWA Goods Issue 25 AMSWE Goods Receipt 26 AMSWI Inventory Document 27 AMSWL Goods Issue/Delivery 28 AMSWN Net Goods Receipt 29 AMSZP Payment Posting 30 ADKMSZR Bank Reconciliation 31 ADKMSZS Payment by Check 32 DKSZV Payment Clearing 33 ADKMSZZ Reversal Document 34 ADKMS

2.1.4 Posting Key

Posting Key is assigned in order to differentiate debit and credit of an account. For example in VMS Trading Company 40 is assigned for debit entry and 50 is assigned for credit entry for General Ledger Accounts. The following Posting keys are assigned in the VMS Trading Company configuration:

Posting key Name Debit/credit Account Type01 Invoice Debit Customer02 Reverse credit note Debit Customer03 Bank charges Debit Customer04 Other receivables Debit Customer05 Outgoing payment Debit Customer06 Payment difference Debit Customer07 Other clearing Debit Customer08 Payment clearing Debit Customer09 Special G/L debit Debit Customer11 Credit note Credit Customer12 Reverse invoice Credit Customer13 Reverse charges Credit Customer14 Other payables Credit Customer15 Incoming payment Credit Customer16 Payment difference Credit Customer17 Other clearing Credit Customer18 Payment clearing Credit Customer19 Special G/L credit Credit Customer21 Credit note Debit Vendor22 Reverse invoice Debit Vendor24 Other receivables Debit Vendor25 Outgoing payment Debit Vendor26 Payment difference Debit Vendor

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27 Clearing Debit Vendor28 Payment clearing Debit Vendor29 Special G/L debit Debit Vendor31 Invoice Credit Vendor32 Reverse credit note Credit Vendor34 Other payables Credit Vendor35 Incoming payment Credit Vendor36 Payment difference Credit Vendor37 Other clearing Credit Vendor38 Payment clearing Credit Vendor39 Special G/L credit Credit Vendor40 Debit entry Debit G/L accounts50 Credit entry Credit G/L accounts70 Debit asset Debit Assets75 Credit asset Credit Assets80 Inventory taking Debit Material81 Costs Debit Material82 Inventory difference Debit Material83 Price difference Debit Material84 Consumption Debit Material85 Change in stock Debit Material86 GR/IR debit Debit Material89 Stock inward movement Debit Material90 Inventory taking Credit Material91 Costs Credit Material92 Inventory difference Credit Material93 Price difference Credit Material94 Consumption Credit Material95 Change in stock Credit Material96 GR/IR credit Credit Material99 Stock outward movement Credit Material

2.1.5 Posting Period

Posting is used to sum up the open and closing periods including special periods for the transaction to be processed. The posting period is to be assigned ZZZZZZZZZZ for the posting period 1 to 12 for current year, and special periods from 13 to 16 for next year. The following posting periods are defined as follows:

VAR. 8000A + valid for all accountsFrom Account BlankTo Account BlankFrom Period 1 Previous MonthYear Previous Months Year

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To Period 1 Current MonthYear Current Year

VAR. 8000A DFrom Account Empty To Account ZZZZZZZZZZFrom Period 1 Current MonthYear Current YearTo Period 1 Current MonthYear Current Year

VAR. 8000A KFrom Account EmptyTo Account ZZZZZZZZZFrom Period 1 Current MonthYear Current Fiscal YearTo Period 1 Current MonthYear Current Year

VAR. 8000A MFrom Account EmptyTo Account ZZZZZZZZZZFrom Period 1 Current MonthYear Current Fiscal YearTo Period 1 Current MonthYear Current Year

VAR. 8000A SFrom Account EmptyTo Account ZZZZZZZZZZFrom Period 1 Current MonthYear Current Fiscal YearTo Period 1 Current MonthYear Current Year

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2.2 ACCOUNTS PAYABLE

The Accounts Payable application component records and manages accounting data for all vendors. It is also an integral part of the purchasing system: Deliveries and invoices are managed according to vendors. The system automatically triggers postings in response to the operative transactions. In the same way, the system supplies the Cash Management application component with figures from invoices in order to optimize liquidity planning.

Payables are paid with the payment program. The payment program supports all standard payment methods (such as checks and transfers) in printed form as well as in electronic form (data medium exchange on disk and electronic data interchange). This program also covers country-specific payment methods.

If necessary, dunning notices can be created for outstanding receivables (for example, to receive payment for a credit memo). The dunning program supports this function.

Postings made in Accounts Payable are simultaneously recorded in the General Ledger where different G/L accounts are updated based on the transaction involved (payables and down payments, for example). The system contains due date forecasts and other standard reports that you can use to help you monitor open items.

You can design balance confirmations, account statements, and other forms of reports to suit your requirements in business correspondence with vendors. There are balance lists, journals, balance audit trails, and other internal evaluations available for documenting transactions in Accounts Payable.

2.2.1 ACCOUNTS PAYABLE GROUP

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Account Group Description Number ranges ID

1001 Raw Material – Local 100000 - 199999 101002 Raw Material – Imported 200000 - 299999 201003 Packing Material – Local 300000 - 399999 301004 Packing Material – Imported 400000 - 499999 401005 Aluminum Foil Printers 500000 - 599999 101006 General Order 600000 - 699999 101007 Lab. Equipment’s 700000 - 799999 201008 Lab. Chemicals And Glass Wares 800000 - 899999 30

1009 Consumable Items 900000 - 999999 401010 Stationary 110000 - 119999 10

2.2.2 PAYMENT TERMS

ID Description

Y001 7 days payment Y002 15 days paymentY003 30 days paymentY004 45 days payment –

2.2.3 SPECIAL GL INDICATOR

Sp. GL Ind DescriptionA Down Payments - Vendors

BSecurity Deposits - Long Term Vendors

CSecurity Deposits - Short Term Vendors

FDown Payments Request - Vendors

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2.3 ACCOUNTS RECIEVABLE

Accounts Receivable application component records and manages accounting data of all customers. It is also an integral part of sales management.

All postings in Accounts Receivable are also recorded directly in the General Ledger. Different G/L accounts are updated depending on the transaction involved (for example, receivables, down payments, and bills of exchange). The system contains a range of tools that you can use to monitor open items, such as account analyses, alarm reports, due date lists, and a flexible dunning program. The correspondence linked to these tools can be individually formulated to suit your requirements. This is also the case for payment notices, balance confirmations, account statements, and interest calculations. Incoming payments can be assigned to due receivables using user-friendly screen functions or by electronic means, such as EDI.

The payment program can automatically carry out direct debiting and down payments.

There are a range of tools available for documenting the transactions that occur in Accounts Receivable, including balance lists, journals, balance audit trails, and other standard reports. When drawing up financial statements, the items in foreign currency are revalued, customers who are also vendors are listed, and the balances on the accounts are sorted by remaining life.

Accounts Receivable is not merely one of the branches of accounting that forms the basis of adequate and orderly accounting. It also provides the data required for effective credit management, (as a result of its close integration with the Sales and Distribution component), as well as important information for the optimization of liquidity planning, (through its link to Cash Management).

2.3.1 ACCOUNTS RECIEVABLE GROUP

Account Group Description Number Range

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100 Direct Sale 100000– 199999110 Indirect Sale 200000 – 299999120 Intercompany Sale 300000 – 399999

2.3.2 PAYMENT TERMS

ID Description

A001Advance payment

A002 Cash paymentA003 7 days payment A004 15 days payment

A005 30 days payment

2.3.3 SPECIAL GL INDICATOR

Sp. GL Ind DescriptionA Down Payments - CustomersB Security Deposits - Long Term CustomerC Security Deposits - Short Term CustomerF Down Payments Request - CustomersZ Customer - Bad Debt

2.4 BANK ACCOUNTING

This component is used to handle accounting transactions that you process with your bank.

It includes the management of bank master data; cash balance management (check and bill ofExchange management), and the creation and processing of incoming and outgoing payments. It is possible to freely define all country-specific characteristics, such as the specifications for

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Manual and electronic payment procedures, payment forms, or data media.

2.4.1 HOUSE BANKS

HBID Name Of Bank BranchKARACHIMCB02 Muslim Commercial Bank S.I.T.E. Branch Karachi

House Bank MCB02Bank Key 25-222Telephone1 021-2586801-4Contact Person Syed Zain

Bank NameCurrent Account for MCB

SWIFT code PKKMYBSWBank Account No. 157030-301GL Account No. 180002

2.4.2 CASH JOURNAL

CJ No. Description1000 Cash Journal - Head Office

Amount Limit in Cash JournalCJ No. Amount Limit1000 50,000.00

Doc No. Range for Cash JournalNo. From01 1000000000

Business Transactions in Cash Journal

CoCD Business Transaction8000 Payment To Bank8000 Receipt From Bank8000 Receipt From Customer8000 Paid To Vendor8000 Misc. Costs8000 Sales Revenue8000 Cash Payments

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8000 Cash Reciepts8000 Cheque Reciepts

2.5 ASSET ACCOUNTINGThe Asset Accounting (FI-AA) component is used for managing and supervising fixed assets with the SAP R/3 System. In SAP R/3 Financial Accounting, it serves as a subsidiary ledger to the FI General Ledger, providing detailed information on transactions involving fixed assets.

The R/3 Asset Accounting component is intended for international use in many countries, irrespective of the nature of the industry. This means, for example, that no country-specific valuation rules are hard-coded in the system. You give this component its country-specific and company-specific character with the settings you make in Customizing. To minimize the time and energy involved in Customizing, country-specific defaults are provided in the standard system where possible.

As a result of the integration in the R/3 System, Asset Accounting (FI-AA) transfers data directly to and from other R/3 components. For example, it is possible to post from the Materials Management (MM) component directly to FI-AA. When an asset is purchased or produced in-house, you can directly post the invoice receipt or goods receipt, or the

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withdrawal from the warehouse, to assets in the Asset Accounting component. At the same time, you can pass on depreciation and interest directly to the Financial Accounting (FI) and Controlling (CO) components. From the Plant Maintenance (PM) component, you can settle maintenance activities that require capitalization.

2.5.1 Asset Class

Asset class is the main criteria for classifying fixed assets. Each asset is assigned to only one asset class. It is recommended that as many asset classes are defined as there are assets with different valuation types. The asset class default values determine depreciation calculation and other master data. Screen layout specifies which input fields are displayed in asset master record and if they are required entry or optional fields. In each asset class you also maintain screen layout rules for Depreciation & maintenance level. This ensures that depreciation is controlled uniformly.

Asset Class

Description Screen Layout rule

Equipment Category

Account of Depreciation (No. Ranges)

1100 Freehold Land Z100 NR

1000000 TO 1999999

2100 Building on Freehold Land Z100 NR

2000000 TO 2999999

3000 Plant & Machinery Z300 M – Machines

3000000 TO 3999999

4000 Motor Vehicles – Owned Z200 V – Vehicles

4000000 TO 4999999

4500 Motor Vehicles – Leased Z500 V - Vehicles 5000000 TO 5999999

5000 Office Equipments Z300 M - Machines

6000000 TO 6999999

5100 IT & Communication Equipment

Z300 M - Machines

7000000 TO 7999999

5200 Laboratory Equipments Z300 M - Machines

8000000 T O 8999999

6000 Furniture & fixtures Z300 F- Furniture

9000000 TO 9999999

7000 Asset Under Construction Z400 NR 10000000 TO 10999999

9100 Low Value Assets Z400 NR 11000000 TO 11999999

Depreciation will be calculated by straight line method.

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2.5.2 Calculation of Depreciation