Sap Fico Q&A

1. What is SAP FICO? Explain its importance.
   • Answer: SAP FICO stands for Financial Accounting (FI) and Controlling (CO), and it is an essential module in SAP ERP. It helps companies manage their financial data, perform financial reporting, and analyze costs.
2. What is the difference between FI (Financial Accounting) and CO (Controlling) modules in SAP?
   • Answer: FI focuses on external financial reporting (balance sheet, profit and loss statements), while CO deals with internal cost management (budgeting, cost allocation, and internal reporting).
3. What is a Company Code in SAP FICO?
   • Answer: A Company Code is the smallest organizational unit for which a complete set of financial statements is prepared. It represents a legal entity.
4. What is a Chart of Accounts (COA) and why is it used?
   • Answer: A Chart of Accounts is a list of all general ledger accounts used by an organization. It categorizes accounts for assets, liabilities, equity, revenue, and expenses.
5. Explain the concept of a Fiscal Year in SAP.
   • Answer: The Fiscal Year represents the accounting period, usually covering 12 months. It defines the financial reporting period for which financial statements are prepared.
6. What is a Business Area, and how does it differ from a Company Code?
   • Answer: A Business Area is a segment within a company that allows internal reporting across company codes, while a Company Code is a legal entity requiring external financial statements.
7. Define the term ‘Controlling Area.’
   • Answer: A Controlling Area is an organizational unit within CO where costs are tracked. It can encompass multiple company codes.
8. What is a Credit Control Area in SAP FICO?
   • Answer: A Credit Control Area is used to manage customer credit limits across one or more company codes.
9. What is the purpose of Document Types in SAP?
   • Answer: Document Types categorize accounting documents (like invoices, credit memos) and define the number ranges and characteristics of the postings.
10. What are Posting Keys, and why are they used?
    • Answer: Posting Keys are two-digit codes that control how line items are posted, indicating whether the item is a debit or credit.

Financial Accounting (FI) Module

11. Explain the term ‘General Ledger’ in SAP FI.
    • Answer: The General Ledger (G/L) is a centralized repository where all financial transactions are recorded, providing a comprehensive view of an organization’s financial status.
12. What is a Reconciliation Account, and how is it used in SAP?
    • Answer: A Reconciliation Account connects sub-ledgers (like Accounts Payable) to the General Ledger to ensure consistency in financial data.
13. What is Open Item Management?
    • Answer: Open Item Management tracks unpaid items in an account (like invoices) until they are cleared (paid).
14. Explain the purpose of a Field Status Group.
    • Answer: A Field Status Group determines which fields are mandatory, optional, or suppressed during the document entry process.
15. What is an Account Group in SAP FI?
    • Answer: An Account Group categorizes G/L accounts and controls the field status of the master data.
16. How do you define a new Company Code in SAP?
    • Answer: A new Company Code can be created using the transaction code OX02, where you define the company code’s details (name, address, country).
17. What is the purpose of a ‘Tolerance Group’ for G/L accounts?
    • Answer: A Tolerance Group defines limits for posting documents, such as the maximum amount for a line item or a cash discount.
18. What is a Posting Period in SAP FI?
    • Answer: A Posting Period defines the time frame during which financial transactions can be recorded. SAP allows configuration of different posting periods for different Company Codes.
19. Explain the purpose of the ‘Special G/L’ in SAP FI.
    • Answer: Special G/L transactions refer to specific entries that are managed separately, such as down payments or guarantees.
20. What are Automatic Account Assignments in SAP FI?
    • Answer: Automatic Account Assignments allow the system to automatically post transactions to predefined G/L accounts based on transaction types.

Accounts Payable (AP) & Accounts Receivable (AR)

21. What is the difference between Accounts Payable (AP) and Accounts Receivable (AR)?
    • Answer: AP deals with money owed by the company to suppliers, while AR is about money owed to the company by customers.
22. How is an invoice posted in Accounts Payable?
    • Answer: An invoice can be posted using the transaction code FB60, where details of the vendor and the amount are entered.
23. What is the Automatic Payment Program (APP)?
    • Answer: APP automates the payment process for vendor invoices based on predefined criteria.
24. What are the steps involved in the Dunning process?
    • Answer: The Dunning process involves sending payment reminders to customers, which include creating dunning levels, assigning dunning procedures, and executing the dunning run.
25. What is a ‘Payment Block’ in SAP?
    • Answer: A Payment Block prevents a payment from being processed for a particular invoice or vendor.
26. Explain the term ‘Residual Payment.’
    • Answer: Residual Payment refers to the partial clearing of an open item, where the remaining balance is posted as a new open item.
27. What is a Down Payment Request in SAP?
    • Answer: A Down Payment Request is a document requesting payment before delivering goods or services.
28. How do you clear open items in SAP AR?
    • Answer: Open items can be cleared using the transaction code F-32 (for customers) or F-44 (for vendors), matching incoming or outgoing payments with invoices.
29. Explain the term ‘Cash Discount’ in Accounts Payable.
    • Answer: A Cash Discount is a reduction in the invoice amount if payment is made within a specified period.
30. What is the difference between Partial Payment and Residual Payment?
    • Answer: A Partial Payment keeps the original invoice open, while a Residual Payment creates a new open item for the remaining amount.

Asset Accounting

31. What is Asset Accounting in SAP FI?
    • Answer: Asset Accounting manages fixed assets in SAP, tracking their acquisition, depreciation, and retirement.
32. What is an Asset Under Construction?
    • Answer: It refers to assets that are still being developed. The costs are accumulated until the asset is ready for use.
33. Explain the concept of Depreciation in Asset Accounting.
    • Answer: Depreciation is the reduction in an asset’s value over time due to wear and tear or obsolescence.
34. What are the different types of depreciation methods in SAP?
    • Answer: The methods include straight-line depreciation, declining balance, and units of production.
35. How do you handle asset transfers in SAP FI?
    • Answer: Asset transfers can be processed using transaction codes ABUMN (within the same company) or ABT1N (across company codes).
36. What is the purpose of an Asset Class?
    • Answer: An Asset Class categorizes assets with similar characteristics, such as machinery or buildings.
37. How do you configure a new Asset Accounting area?
    • Answer: Configuration involves defining depreciation areas, asset classes, and account determinations.
38. What is the importance of the Chart of Depreciation?
    • Answer: It defines the rules for calculating depreciation based on legal or internal requirements.
39. What is Asset Capitalization?
    • Answer: Asset Capitalization is the process of recording an asset as a fixed asset when it is ready for use.
40. Explain the term ‘Scrapping of an Asset.’
    • Answer: Scrapping is when an asset is removed from the books due to its inability to be used further.

Bank Accounting

41. What is Bank Reconciliation in SAP FI?
    • Answer: Bank Reconciliation ensures that the bank account statements match the company’s accounting records.
42. How do you create a House Bank in SAP?
    • Answer: A House Bank can be created using transaction code FI12, where details like bank country, bank key, and account number are entered.
43. What are the steps involved in Electronic Bank Statement (EBS) configuration?
    • Answer: The steps include defining house banks, configuring EBS formats, and setting up posting rules.
44. What is the purpose of the Bank Account Master Data?
    • Answer: It stores the details of a bank account, such as account number and account currency.
45. How is the Cash Journal used in SAP FI?
    • Answer: The Cash Journal records cash transactions like cash receipts and payments.
46. What is a Lockbox in SAP?
    • Answer: A Lockbox is used for processing customer payments received by mail and allows automated cash application.
47. Explain the concept of Manual Bank Statement.
    • Answer: Manual Bank Statement refers to recording bank transactions manually in the system.
48. What are the different types of bank accounts in SAP?
    • Answer: Types include