SAP FICO INTERVIEW QUESTION ANSWER

It is basically a tool that is used for reporting. All the financial accounts can be extracted through it along with all the relevant information required by the users. It is possible to deploy it for the purpose of generating the outcomes of different agencies associated with a business. The same information can then be passed to the concerned authorities for betterment.

SAP FICO stands for FI ( Financial Accounting) and CO (controlling). In SAP FICO, SAP FI take cares about accounting, preparation of financial statements, tax computations etc, while SAP CO take cares of inter orders, cost sheet, inventory sheet, cost allocations etc. It is the software that stores data, and also computes them and retrieves the result based on the current marketing scenario. SAP FICO prevents data lost and also does the verification and reporting of data.

The other modules to which ‘Financial Accounting’ is integrated are

• Sales and Distribution
• Material Management
• Human Resource
• Production Planning
• Controlling of financial transaction

The organizational elements in SAP FI are:

• Company Code
• Business Area
• Chart of Account
• Functional Area

In order to determine the transaction type which is entered in the line item, a two digit numerical is used known as ‘Posting Key’

Posting key determines

• Account Types
• Types of posting. Debit or Credit
• Field status of transaction

To generate financial statements like Profit and Loss statement, Balance sheets etc. company code is used.

You can have one Chart of Account for one company code which is assigned.

There are three currencies that can be configured for a Company code, one is a local currency and two are the parallel currencies.

Fiscal year in SAP is the way financial data is stored in the system. In SAP, you have 12 periods and four special periods. These periods are stored in fiscal year variant that is:

• Calendar Year: From Jan-Dec, April-March
• Year dependent fiscal year

SAP system does not know what is broken fiscal year e.g April 2012 to March 2013 and only understand the calendar year. If, for any business, the fiscal year is not a calendar year but the combination of the different months of two different calendar year and then one of the calendar year has to classified as a fiscal year for SAP and the month falling in another year has to be adjusted into the fiscal year by shifting the year by using the sign -1 or +1. This shift in the year is known as ‘year shift’.

Example: April 2012 to Dec 2012 is our first calendar year, and Jan 2013 to March 2013 is our second year, now if you are taking April-12 to Dec-12 as your fiscal year, then Jan-13 to March-13 automatically becomes the second year, and you have to adjust this year by using -1 shift, and vice versa if the scenario is reversed, here you will use +1 shift.

In a year dependent fiscal year variant, the number of days in a month is not as per the calendar month. For example, in year 2005, month January end on 29th, month Feb ends on 26th etc.

For each country tax procedure is defined, and tax codes are defined within this. There is a flexibility to either expense out the Tax amounts or capitalise the same to stocks.

For each functional area in SAP Validation or Substitution is defined eg, Assets, Controlling etc. at the following levels

• Document Level
• Line item Level

• FI- Financial accounting
• CO-Cost accounting
• AM-Asset accounting
• GL-Special purpose ledger
• CS-Consolidation
• PS-Project system
• RE-Real estate
• PC-Profit center accounting

FSV ( Financial Statement Version) is a reporting tool. It can be used to extract final accounts from SAP like Profit and Loss Account and Balance Sheet. The multiple FSV’s can be used for generating the output of various external agencies like Banks and other statutory authorities.

‘Field status groups’ control the fields which come up when the user does the transactions. In FIGL (Financial General Ledger) master, the field status group is stored.

To get an overview of external Accounting and accounts, G L (General Ledger) Accounting is used. It does the recording of all business transactions incorporated with all other operational areas in a software system and also ensures that the Accounting data is always complete and accurate.

For all SAP transaction, the default exchange rate is M (Average Rate).

• Manual payment without the use of any output medium like cheques etc.
• Automatic payments like DME (Data Medium Exchange), cheques, Wire transfer

The problem faced when a business area is configured, is splitting of account balance which is more pertinent in the case of tax accounts.

The customizing pre-requisite for document clearing is to check the items cleared and uncleared, and this is done by open item management. Open item management manages your outstanding account, i.e account payable and account receivable. For instance, an invoice item that has not yet been paid is recorded as open account until it is paid.

GR/IR ( Good Received/ Invoice Received) is an interim account. In the legacy system, if the goods are received and the invoice is not received, the provision is made, in SAP at the goods receipt. It passes the Accounting entry debiting the Inventory and crediting the GR/IR account. Similarly, when an invoice is received the vendor account is credited, and the GR/IR account is debited, the GR/IR will show as an un-cleared items till the time the invoice is not received.

Each company code can have two additional currencies, in addition to the company code, currency entered to the company code data. The currency entered in the company code creation is called local currency and the other two additional currencies are called parallel currencies. Parallel Currencies can be used in foreign business transactions. In order to do international transaction, parallel currency can be used. The two parallel currencies would be GROUP CURRENCY and HARD CURRENCY.

To track the cost, internal orders are used; they are proposed to be incurred over on a short term basis.

Yes, it is possible to calculate depreciation, to do that you have to switch on the indicator Dep. to the day in the depreciation key configuration.

In Asset Accounting, chart of depreciation is rated as the highest node, and this is assigned to the company node. All the depreciation calculations are stored under the chart of depreciation.

The asset class is the main class to classify assets. Every asset must be assigned to only one asset class. Example of asset class is Furniture & Fixtures, Plant & Machinery, and Computers etc. The asset class also contains G1 account, when any asset is procured, G1 account is debited. Whenever you create and asset master, it becomes mandatory to mention the assest class for which you are creating the required assets. So, whenever any asset transaction occurs, the G1 account attached to the asset class is automatically picked up and the entry is passed. You can also specify the default values for calculating the depreciation values and other master data in each asset class.

‘Capital WIP’ is referred to as Assets under construction in SAP and is represented under specific asset class. Depreciation is not charged under ‘Capital WIP’ usually. The cost incurred on building a capital asset can be booked to an ‘internal order’ and through the settlement procedures, and can be posted onto an ‘Asset Under Construction’.

The major components of Chart of Accounts are:

• Chart of account key
• Name
• Maintain Language
• Length GL account number
• Controlling Integration
• Consolidation-Group chart of accounts
• Block indicator

To immune your company from the risk of bad debts and multiple outstanding receivable, you can set a credit limit for your customer by using credit control area in SAP. With the help of SAP, you can block the deliveries to your customer based on the credit limit and the accounts receivable balance in their account which is maintained by you.

By using transaction code OB45 or path you can create Credit Control Area in SAP

SPRO> enterprise structure >maintain structure>definition>financial accounting>maintain credit control area and then enter the following description

• Update
• Name of the credit control area in SAP
• Currency
• Description
• Credit Limit
• Risk Category
• Fiscal Variant
• Rep group

In fiscal year posting period is a period for which the transactions figures are updated. The posting period variants in SAP is accountable to control which Accounting period is open for posting and ensures that the closed periods remain balanced.

Field status group is a group configured in FSV (Field Status Variant) to maintain field status for G/L (General Ledger) accounts. It controls which field should suppress, display, optional and required.

A short-end fiscal year results when you change from a normal fiscal year to a non-calendar fiscal year, or other way around. This type of change happens when an enterprise becomes part of a new co-corporate group.

To control the data that needs to be entered at the time of the creation of a master record an account group is used. Account group exist for the definition of GL account, Customer Master and Vendor.

The purpose of ” Document type” in SAP is

• Number range for documents are defined by it
• Types of accounts that can be posted are controlled by it, e.g Assets, Vendor, Customer, Normal GL account
• It is used for the reversal of entries

No. Business area is at client level which means other company codes can also be posted to the same business area.

The Vendor and Customer codes are stored at the client level. It means that by extending the company code view any company code can use the customer and vendor code.

Tolerance determines whether the payable places matching or tax hold on the invoice. The following are the instances of tolerance can be defined for Logistic Invoice Verification.

• Small differences
• Moving average price variances
• Quantity variances
• Price variances

Country Chart of Accounts contains G/L (General Ledger) accounts needed to meet the country’s legal requirements.

APP stands for ‘Automatic Payment Program’; it is a tool provided by SAP to companies to pay its vendors and customers. APP tools help to avoid any mistakes taken place in posting manually. Also, when number of employees is more in the company, payment through APP becomes more feasible.

Payment terms are created in the configuration and determine the payment due date for vendor/customer invoice.

They are stored on the customer or vendor master record and are pulled through onto the customer/vendor invoice postings. The due date can be changed on each individual invoice if required.

n certain companies, especially the one dealing with high cash transactions, it is not practical to create new master records for every vendor trading partner. One time vendors allows a dummy vendor code to be used on invoice entry and also the information which is usually stored in the vendor master.

The following steps are the standard stages of the SAP payment run

• Entering of parameters ( Vendor Accounts, Company Codes, Payment Methods)
• Proposal Scheduling – the system proposes the list of invoice paid
• Payment booking- the booking of the actual payments in the ledger
• Printing of payment forms ,example cheques

‘Residual payment’ and ‘Part payment’ are the two methods for allocating partial methods from customers. For example, an invoice for $100 is generated, customer has paid $70. Now this $70 will be off-set and leaving the remaining balance $30. With residual payment, the invoice is cleared for the full value of $100 and a new invoice is generated for the remaining balances $30.

‘Dunning’ is the process by which payment chasing letters are issued to customers. SAP can determine which customers should receive the letters and for which overdue items. Different letters can be printed in SAP depending on the overdue payment date, with a simple reminder. With the help of dunning level on the customer master, we can know which letter has been issued to the customer.

At the end of the year, profit and loss accounts are cleared down to the retained earnings balance sheets account. The field contains an indicator which is linked to a specific GL (General Ledger) accounts to use in this clear down.

Recurring entries can eliminate the need for the manual posting of Accounting documents which do not change from month to month. For example, an expense document can be generated which can be scheduled for the last days of each month or whenever an individual wants it. Usually multiple recurring entries are created at one go and then processed all together as a batch month end using transaction.

Value fields are number or value related fields in profitability analysis such as quantity, sales revenue, discount value etc.

Statistical internal orders are dummy cost objects used for reporting and analysis purposes. It must be posted to in conjunction with a real object such as a cost center.

You can use internal orders for

• Overhead Orders: It monitors internal jobs settled to cost centres
• Investment Orders: It monitors internal jobs settled to fixed assets
• Accrual Orders: Offsetting posting of accrued costs calculated in CO
• Orders with Revenue: It display the cost controlling parts of Sales and Distribution, it does not affect the core business of the company

We already know that SAP stands for Systems, Applications & Products in Data Processing. In SAP FICO, FI stands for (Financial Accounting) and CO stands for (Controlling). To understand the concept well, we can divide the SAP FICO into two parts: SAP FI and SAP CO. The SAP FI takes care of accounting, preparation of financial statements, tax computations, etc. On the other hand, SAP CO takes care of inner orders, cost sheets, inventory sheets, cost allocations, etc.

SAP FICO is the software that stores data, and also computes them, and retrieves the result according to the current marketing scenario. It is responsible for preventing data loss and also does the verification and reporting of data.

The SAP FICO modules are mainly used within a company to manage financial tasks within an international framework of languages and currencies.

• The FI part of SAP FICO deals mainly in financial accounting such as fixed assets, accrual, cash journal, tax accounting, general ledger, and other financial tasks.
• On the other hand, the CO part of SAP FICO deals with buying orders, stock sheets, cost sheets, cost assignments, and other tasks in this category.

Posting Key is a two-digit numerical used to control and determine the transaction type entered in the line item.

Posting Key is used to determine the following things:

• Account Types
• Types of posting. Debit or Credit
• Field status of a transaction

The most important organizational elements in SAP FI are:

• Company Code
• Business Area
• Chart of Account
• Functional Area

The best way to manage transactions originating from different lines of businesses within a company is to create Business Areas. Another way is to create different company codes for each business line.

The other modules to which ‘Financial Accounting’ of SAP FICO is integrated are:

• Sales and Distribution
• Production Planning
• Material Management
• Human Resource
• Controlling of financial transaction

Credit control is used to safeguard the business from overstretching its financial assets. Generally, we set a credit limit for the customers using SAP when the payment is made after the product’s sale. Using this way, we can restrict the customer’s amount to clear in their account before further starting a new purchase.

In SAP FICO, the company code generates financial statements such as Profit and Loss Statements, Balance sheets, etc.

In SAP FICO, the fiscal year is the way to store the financial data in the system. In SAP, you have 12 periods and four special periods. These periods are stored in fiscal year variant in the following way:

• Calendar Year: From Jan-Dec, April-March
• Year dependent fiscal year

You can have only one Chart of Accounts for one company code that is assigned.

In SAP FICO, the Chart of Accounts is used to meet the daily needs of the company as well as the legal requirements of the country.

The Chart of Accounts has two types:

• Operating Chart of Accounts (COA): The Operating Chart of Accounts or operating COA is a record assigned to the company code and contains all the general ledger accounts.
• Country Chart of Accounts (COA): The Country Chart of Account is the list of general ledger accounts required to meet the country’s legal requirements.

We can configure three currencies for a Company Code, one is a local currency, and two are parallel currencies.

The SAP system does not understand what a broken fiscal year is. For Example, from April 2020 to March 2021, it will only understand the calendar year. Suppose that the fiscal year is not a calendar year but the combination of the different months of two different calendar years for any business. In that case, one of the calendar years has to be classified as a fiscal year for SAP and the month falling in another year has to be adjusted into the fiscal year by shifting the year by using the sign -1 or +1. This shifting in the year is called the ‘year shift’.

For Example : Example April 2020 to Dec 2020 is our first calendar year, and Jan 2021 to March 2021 is our second year, now if you are taking April-2020 to Dec-2020 as your fiscal year, then Jan-2021 to March-2021 automatically becomes the second year, and you have to adjust this year by using -1 shift, and vice versa if the scenario is reversed, here you will use +1 shift.

FI is integrated into the following types of modules:

• Production Planning
• Human Resource
• Material Management
• Sales and Distribution

Every country has a tax procedure where tax codes are defined within this. It provides the flexibility to either expense out the Tax amounts or capitalize the same to stocks.

The field status variants are contained within field status groups. On the other hand, the field status groups are maintained within the General Ledger account. You use it to define the fields while you post to the general ledger.

In SAP FICO, validations are used in the FI and CO modules to help ensuring data integrity when entering actual transactions online or in batch. On the other hand, the substitutions are used in the FI / CO / EC modules to derive or correct values being passed via integration or entered into the FI / CO modules.

Validation and Substitution are defined for each functional area at the following levels:

• Document Level
• Line item Level

Following are the application areas in SAP that use validation and substitutions:

• FI- Financial accounting
• CO- Cost accounting
• AM- Asset accounting
• GL- Special purpose ledger
• CS- Consolidation
• PS- Project system
• RE- Real estate
• PC- Profit center accounting

A year is called a year-dependent fiscal year variant if the number of days in a month is not as per the calendar month. For Example, in the year 2021, the month January ends on 30th, the month February ends on 27th, etc.

There are two methods to make the vendor payments:

Manual Payment: The manual payment method is done without the use of a medium such as cheques.

Automatic Payment: The automatic payment method is done through DME (Data Medium Exchange), such as wire transfer or cheque.

The Financial Statement Version or FSV is a reporting tool in SAP FICO. It can be used to extract final accounts from SAP like Profit and Loss Account and Balance Sheet. We can use multiple FSV’s for generating the output of various external agencies such as Banks and other statutory authorities.

After completing the payroll run, we have to add results to the GL accounts, including cost centers. GL posting includes the following steps:

• Groups together posting-relevant information from the payroll results.
• Creates summarized documents.
• Performs the relevant postings to appropriate GL accounts and cost centers.

A field status group is used to control the fields which come up when the user does the transactions. In FIGL (Financial General Ledger) master, the field status group is stored.

Following are the several most common G/L reports that can be generated in SAP FI:

• G/L Chart of Accounts List
• G/L Account Balances
• G/L Account List
• G/L Account Totals and Balances

In SAP FICO, the financial statements are used to manage the company’s financial assets. By creating and handling such financial statements and records, we create data that we can use later to develop further plans and investments for our company.

In SAP FI, the credit control is used to check the credit limit for the customer, and it can use one or more codes. It is used for credit management in Application components- Account Receivable (AR) and Sales and Distribution.

We can define up to 16 posting periods in a fiscal year in the controlling component CO. We need to specify the fiscal year variant for each company code. When you create a controlling area, you also need to specify the fiscal year variant. Each company code requires a specific fiscal year variant. Thus, while creating a controlling area, you should also specify that code’s fiscal year variant.

The credit control area is determined in the following sequence:

• User exit
• Distribution channel
• Customer master
• Company code for the sales organization

In SAP FI, Accounts Receivable components are used to record and manage the accounting data of all customers, and it is also an integral part of sales management. All postings in Accounts Receivable are also recorded directly in General Ledger. Different G/L accounts are updated depending on the transaction involved (for example, receivables, down payments, and bills of exchange).

Business areas in a company can be used if other company codes require the same areas. Following are the benefits of using Business areas:

• The business area is easy to configure as you need to attach to the company code and the other details in the business area, and it will get attached by itself.
• By using Business areas in controlling, you can create Profit and loss statements, Balance sheets, etc., for business areas, which is used for management accounting in a few companies.

In SAP FICO, a company is an organizational unit used in the legal consolidation module to roll up financial statements of several company codes. On the other hand, the company code is the smallest organizational unit for which a completely self-contained set of accounts can be drawn up for external reporting purposes.

A controlling area may contain one or more company codes that must use the same operative chart of accounts as the controlling area. A controlling area can contain multiple company code assignments, but a single company code can be assigned to only one controlling area.

The main problem encountered when a business area is configured splitting of account balance which is more pertinent in the case of tax accounts.

The local currency is the currency that is entered in the company code creation. The other two additional currencies are called parallel currencies. Parallel currencies can be used in foreign business transactions, and it is also used to do international transaction. The examples of two parallel currencies are GROUP CURRENCY and HARD CURRENCY.

The customizing prerequisite for document clearing is to check the items cleared and uncleared. This is done by open item management. Open item management is a process used to manage outstanding accounts, i.e., account payable and accounts receivable. For example, an invoice item that has not yet been paid is considered an open account until it is paid.

The FI-GL Accounting stands for Financial- General Ledger. It is used to get an overview of external Accounting and accounts. It records all business transactions incorporated with all other operational areas in a software system and ensures that the Accounting data is always complete and accurate.

There are two methods used to make vendor invoice payments:

Manual payment method is done without the use of any output medium like cheques etc. Automatic payment method is done using some output medium such as DME (Data Medium Exchange), cheques, Wire transfer, etc.

For all SAP transactions, the default exchange rate type is M (Average Rate).

In SAP FICO, GR/IR stands for Good Received/ Invoice Received as an interim account. If the goods are received in the legacy system, and the invoice is not received, the provision is made. It passes the Accounting entry debiting the Inventory and crediting the GR/IR account. In the same way, when an invoice is received, the vendor account is credited, and the GR/IR account is debited. The GR/IR shows as un-cleared items till the time invoice is not received.

Yes, it is possible to calculate depreciation to the day. The depreciation to the day function becomes active for an asset as soon as the asset has a corresponding depreciation key and is capitalized (posted to). Once this takes place, you cannot switch off this function for the asset, even if you change the depreciation key.

In SAP FI, Accounts payable is used to manage and record the accounting data for all the vendors. It is related to G/L in the following ways:

• All invoices and deliveries are managed as per vendor requests.
• Payables are managed as per the payment program, and all payments can be made using checks, transfers, electronic transfers, etc.
• All the postings made in Account payable are also updated in General Ledger simultaneously, and the system also maintains forecasts and standard reports that can be used to keep track of all the open items.

Internal orders are generally used to plan, collect, and settle the costs of internal jobs and tasks. Internal orders can also be used to track the cost, and they are proposed to be incurred over a short-term basis.

When you block a customer account in AR so that postings are no longer made to that Account, this process is called blocking. We have to block a customer account before marking a customer master record for deletion.

We should also block a customer that we use only as an alternative dunning recipient to ensure that nobody can post to that customer by mistake. We can set the following blocks for a customer in the Sales and Distribution (SD) application component:

• Posting block
• Order block
• Delivery block
• Invoicing block

We can apply the following blocks to a vendor account in SAP FI:

• Posting block for certain company codes or all company codes.
• Purchasing block for certain purchasing organizations or all purchasing organizations. This block is only used if you have purchased and installed the purchasing application component.

In Asset Accounting, the chart of depreciation is rated as the highest node, which is assigned to the company node. All the depreciation calculations are stored under the chart of depreciation.

We can create Credit Control Area in SAP FI by using transaction code OB45 or path. To do this, follow the steps given below:

SPRO> enterprise structure >maintain structure>definition>financial accounting>maintain credit control area and then enter the following description:

• Update
• Name of the credit-control area in SAP
• Currency
• Description
• Credit Limit
• Risk Category
• Fiscal Variant
• Rep group

To define and manage the relationship between two currencies in SAP FI, we use exchange rates. It is also used to translate an amount into another currency.

Exchange rates are defined in the system for the following purposes:

• Posting and Clearing: It translates amounts posted or cleared in foreign currency or checks a manually entered exchange rate during posting or clearing.
• Exchange Rate Differences: It is used to determine gains or losses from exchange rate differences.
• Foreign Currency Valuation: It is used to evaluate open items in foreign currency and foreign currency balance sheet accounts as part of the closing operations.

The field status group is configured in FSV (Field Status Variant) to maintain field status for G/L (General Ledger) accounts.

In SAP FI, the posting period variants are accountable to control which Accounting period is open for posting and ensure that the closed periods remain balanced. In the fiscal year, the posting period is a period for which the transactions figures are updated.

In SAP FICO, APP stands for “Automatic Payment Program”. It is an SAP tool provided to companies to pay their vendors and customers. APP tools facilitate users to avoid mistakes that take place in posting manually. Another benefit is that payment through APP becomes more feasible when the number of employees is more in the company.

In SAP FICO, the term tolerance specifies whether the payable places matching or tax hold on the invoice.

Following is the list of instances of tolerance that can be defined for Logistics Invoice Verification:

• Small differences
• Moving average price variances
• Quantity variances
• Price variances

A short-end fiscal year comes into existence when you change from a normal fiscal year to a non-calendar fiscal year or the other way around. This type of change occurs when an enterprise becomes part of a new co-corporate group.

Account group exists for the definition of GL account and Customer Master and Vendor. It is mainly used to control the data that needs to be entered at the time of the creation of a master record.

• Cost Center: A Cost center is a component in an organization that is added to the cost and indirectly added to the organization’s profit. For example, Marketing and Customer Service. A company’s business unit can be classified as a profit center, cost center, or investment center. The simple and straightforward division of an organization can be classified as a cost center as the cost is easy to measure.
• Profit Center: In SAP FICO, a profit center is used to manage internal controlling. When a company is divided into profit centers, it allows you to delegate responsibility to decentralized units and allows you to treat them as separate companies in a company.

Following is the list of main purposes of “Document type” in SAP FICO:

• It is used to define the number range for documents.
• It is used to control the types of accounts posted, such as Assets, Vendor, Customer, Normal GL account, etc.
• It is also used for the reversal of entries.

Validation and substitutions are used in the following application areas:

• AM-Asset accounting
• CS-Consolidation
• CO-Cost accounting
• FI- Financial accounting
• PC-Profit center accounting
• PS-Project system
• GL-Special purpose ledger
• RE-Real estate

No. Business area is at the client level instead of the company code level, and it means other company codes can also be posted to the same business area.

In such companies especially dealing with high cash transactions, it is not practical to create new master records for every vendor trading partner. In these cases, one-time vendors come into existence, and they allow a dummy vendor code to be used on invoice entry and the information usually stored in the vendor master.

In SAP FICO, the Vendor and Customer codes are stored at the client level. By extending the company code view, any company code can use the customer and vendor code.

In SAP FICO, accounting period variants are used to manage the accounting periods open for validation and for all closed periods to be deleted. These are used for opening and closing periods of the financial year for reservation purposes. These posting periods can be assigned to one or more companies.

In SAP FICO, posting period variants are used to maintain accounting periods open to post while all closed periods are balanced. These are used to open or close periods in the fiscal year for posting. We can also use these posting periods to assign to one or more company codes.

It is basically an option that is used to track the overall cost associated with an item or a project. It is used widely during certain situations and while handling some important tasks.

It is used whenever there is a need for the organization to access external accounts. It simply incorporates all the financial transactions of a business made within a specific time period. The users are free to keep up the pace simply even when the operational areas need core accounting skills or have problems associated with them.

It stands for Work in Progress and basically defines the status of the asset that is under the development model in the SAP FICO. It is possible for the users to customize it if required.

In businesses, it’s not necessary that all months have 30 days working. Depending on the type of projects which vary largely, the organizations have to end a month a day earlier or two. For example, the Month of May can have 29 days. The same can be done with an option in the SAP which is known as Year Dependent Fiscal Year.

The user needs to provide the controller name, Description, Currency option is to be selected, risk category is to be selected and then the information about the Fiscal variant is also to be provided.

The first thing to make sure of is whether the items get cleared status by the management or not. Next is to make sure that the document is valid or not.

The first thing to make sure of is whether the items get cleared status by the management or not. Next is to make sure that the document is valid or not.

The asset class is the primary class that is used for the purpose of justifying the assets. The entire asset category is generally assigned or integrated into one asset class. It is also possible for the users to use the default values for the same.

There are options for manual payments that can be made either in cash or through cherubs. Other options include electronic transfer. The SAP FICO keeps a close eye on all the transactions made through the latter option when the same is integrated with the accounts.

Well, it simply enables them to keep an eye on the purposes for which a specific amount sent including all its information. The users can simply keep a digital record of all the funds received or transferred to any other account. This enables them to prepare documents for the future on which some important plans and decision-making strategies are based. Financial statements also enable businesses to get reductions in taxes in a few cases. In addition to this, the users can access the record of all the financial transactions anytime the same is required.

There is a total of 165 periods among which 4 are considered special. They are generally used when it comes to defining any data that is related to the fiscal year. A user is free to consider the special period anytime when the need for the same is felt.

One of the major issues is Tax Slabs are not similar in all countries. Also, there are additional taxes applicable there. SAP FICO has a tax procedure already defined in it for various nations and the users are free to get the information regarding the same. The Tax amounts can be sent to stocks by default or the users are free to make challenges in them as per their need and convince. Thus, taxes are not an issue with the SAP FICO.

SAP doesn’t have any provision to access broker year. It only understands the calendar year. However, it is not always necessary that for all organizations the calendar year is the financial year. There is often a need to change months. They needed to be added or removed. This can be done easily in the SAP and the same procedure is known as Year Shift.

The first and the foremost is the main language. Next is controlling the integration level, name, Block Indicator, GL, account number, and the chart of Account Key.

The credit-control is in the SAP enables the organization to impose a strict upper limit on the credit for the customers. This can be done by using the option controls are in the SAP. It simply makes sure of avoiding the situation such as the risk of bad debts and outstanding receivables.

Organizations are allowed to add two more currency options than their local. They can be used in the transactions made at the International level by an organization. The organizations are free to use any two options for parallel that they seem to have more need. They can be tagged as Group currency and hard currency.

When transactions are done, there are often fields that come up, this option is used or is enabled when they are not required while handling the tasks.

There are certain benefits and a few major ones are spotlighted below:

• One of the major benefits is accounting data is always correct. The users don’t need to worry about this
• There is no upper limit on handling the accounts. Any number of accounts can be managed
• It is useful in auditing as an eye can be kept on the transactions made by the business
• It makes sure of financial transparency
• The detailed information about the expenses can be prepared and the same can then be considered for the purpose of preparing the future budgets
• A lot of time and money can be saved
• The users can make sure of financial outputs that can be trusted in the long run

Errors are of a lot of types and can be due to a diverse array of reasons. The users can often make mistakes. A single wrong entry of only one digit can bring a lot of issues in the organization and can mislead about the profits and losses. Errors can be due to negligence of users, fault in the system, wrongly prepared bills or claims, gross errors, basic accounting errors, errors due to not updating the sheets, and so on.

SAP FICO has some major applications for which it is actually known. It is widely considered I Financial accounting for handling a lot of tasks that matter to the organizations. In fact, all that matters in accounting can easily be managed with this approach. It also has applications in Asset and Cost Accounting. The Project system accounting can also be managed in a reliable manner. The users are free to consider it for the purpose of Consolidation. In addition to this, SAP FICO has large-scale applications in Real Estate which is one of the emerging domains across the globe in the present scenario.

It is basically a time frame during which the transaction figures are updated. Generally, it is accountable to control accounting periods that are complex.

A Short-end Fiscal Year is basically when a calendar year is modified as per need. This can happen due to a very large number of reasons and the organizations have to adopt the new calendar.

They have generally defined assets for the different functional areas. They can be accessed through two options and are Document level and line level.

It is basically an approach that is used for the purpose of maintaining the General Ledger accounts. It controls the fields which should provide information on the concerned accounts.

It is basically an approach that enables users to determine the transaction type among the various possible options in the domain. Generally, it is a two-digit number when is entered during defining of an item. It simply gives an idea about the type of posting which can either be credit or debit as well as the type of accounts. Also, the status of transactions can also be recorded through it.

It is basically a code that needs to be entered into the system when it comes to generating the Loss or the profit statements. It is not always necessary that all the employees are given access to the same. It is possible for the users to configure up to 3 currencies and among which one generally remains local and the other can be considered as parallel.

FICO stands for Financial Accounting and Controlling. It is basically an important tool that is useful in preparing statements about the finance related to an organization or a business. In addition to this, FICO can also be considered for the purpose of accounting, tax computations, preparing the inventory sheets, financial data storage. The users need not worry about the security of the data and in addition to this, it simply makes sure of managing and utilizing the data in a reliable manner.

There are several useful modules where it is possible for the users to consider this approach in an integrated manner. These include Material Management, Sales & Distribution, Production Planning, financial transaction management, as well as Human resource.

We use SAP FICO modules within a company to manage financial tasks within an international framework of languages and currencies.
SAP FI (Financial Accounting) deals mainly with fixed assets, accrual, cash journal, tax accounting, general ledger, and other such financial tasks.
SAP CO (Controlling) on the other hand deals with buying orders, stock sheet, cost sheet, cost assignment and other tasks in this category.

You find four hierarchical components in SAP FI:

• Company Code
• Business Area
• Functional Area
• Chart of Account

You use financial statements to manage the financial assets of your company. By creating and handling such financial records, you also create data that you can use in developing further plans and investments for your company.

You use the company code before generating the profit and loss statements of your company. While not all employees do not have access to the same code, you can configure up to 3 different currencies. One of these remains local, while the other two are considered a parallel.

You can create Business Areas in order to differentiate among the different lines of businesses in the company. Another way can be to create different company codes for each business line.

You use FI COA in order to meet the daily needs of your company as well as the legal requirements of the country.
The COA has two types:

• Operating COA: this record is assigned to the company code and contains all the general ledger accounts.
• Country COA: this is the list of general ledger accounts required in order to meet the legal requirements of the country.

You use credit control in order to safeguard your business from overstretching its financial assets. Generally, you can set a credit limit for the customers using SAP, when the payment is made after the sale of the product. In this way, you can restrict the amount that the customer needs to clear in his/her account before further purchases can be made.

The fiscal year variants that you create contain the number of posting periods in that fiscal year as well as the number of special periods. Up to 16 posting periods can be defined.

Each company code needs a specific fiscal year variant. Thus, while creating a controlling area, you should also specify that code’s fiscal year variant.

Your field status variants are contained within field status groups. On the other hand, the field status groups are maintained within the General Ledger account. You use it to define the fields while you post to the general ledger.

FI is also integrated into the following modules:

• Production Planning
• Human Resource
• Material Management
• Sales and Distribution

The country of origin of your company will have tax procedures defined, having tax codes within them. You can make the choice to either expend the tax amount or you can choose to capitalize the tax amount into stocks.

You can use two methods to make the vendor payments:

• Manual Payment: This is done without the use of a medium such as cheques.
• Automatic Payment: This is through DME (Data Medium Exchange) such as wire transfer or cheques.

Within a company, the calendar year does not always match the financial year. For example, you may need to remove or add certain months. You can do this using SAP and the procedure is called ‘Year Shift’.

SAP FICO has many real-time applications.

• Handling financial tasks vital to the company
• Asset and cost accounting
• Consolidation
• Real estate

WIP stands for Work in Progress. You sue this to label an asset that is currently under development, and that can be customized by the user if needed.

This list of 15 important SAP FICO interview questions and answers should help you get a head start on preparing for the job interview.

Looking for SAP FICO Jobs in top cities? Click at the links below:

• SAP FICO Jobs in Bengaluru
• SAP FICO Jobs in Chennai
• SAP FICO Jobs in Mumbai
• SAP FICO Jobs in Hyderabad
• SAP FICO Jobs

The validation function allows us to analyze values and also analyze the range of values when these are entering into the SAP system. When the values are entered into the SAP system it automatically checks for standard validation rules. The function of substitution is to validate the values entered into the SAP system, as per the prerequisite. Each functional area in SAP Validation or Substitution is defined at the:- Document Level, Line-item Level.

It is a tool that is used for reporting. It can be used to take out final accounts from SAP like Profit and Loss Account etc. When there is a requirement to generate the output of different outside agencies then we can use multiple FSV’s.

Tax procedures and tax codes are defined for each country. There is the flexibility to either expense out the Tax amounts or capitalize the same to stocks.

These are used in the application areas as:

• Financial Accounting- FI
• Cost Accounting- CO
• Asset Accounting- AM
• Special Purpose Ledger- GL
• Consolidation- CS
• Project System- PS
• Real Estate-RE
• Profit Center Accounting-PC

When the transaction is performed by the user, then field status groups are used to control the fields that are considered. In Financial General Ledger, the field status group is stored.

For getting an overview of external Accounting and accounts, General Ledger Accounting is used. It is used to record all transactions in business and always give surety that accounting data is authentic and complete.

Manual method- When the payment is made without any cheque or draft or DME(Data Medium Exchange) then the process is known as manual.
Automatic method- When the payments are made through DME, wire transfer, draft, cheque, then it is known as Automatic payments.

The problem that can occur when a business area is configured is a splitting of the account balance that is highly relevant in the case of tax accounts, then the business can face the problem.

This is an intermediary clearing account. This is used in SAP to record the goods and invoices in transit. It records the goods received but not invoiced. The provision is made in SAP at the receipt of the goods in the legacy system, if the goods are received and the invoice is not received.

Each company code can have two additional currencies, in addition to the company code, the currency is entered into the company code data. When the currency is added to the company code creation is called local currency and the other two additional currencies are called parallel currencies. There are two parallel currencies that are used in SAP one is a HARD currency and the other is a GROUP currency. When there is the need to do any international transaction then the parallel currency is used.

Internal orders can be used for:

• Investment orders: We can monitor internal jobs related to fixed assets.
• Accrual orders: The accrued cost is calculated in CO as per offsetting costing.
• Overhead orders: We can monitor internal jobs that are related to the cost center.

Orders with Revenue- We only calculate the cost controlling parts of sales and distribution.

For that, you have to switch on the indicator Dep. to the day in the depreciation key configuration.

The asset accounting chart of depreciation is rated as the highest node. The depreciation calculations are stored under this chart.

he asset class is defined as the main class to classify assets. For each asset class, only one class is assigned. Examples of asset classes are Furniture & Fixtures, Plant & Machinery, and Computers, etc.

The asset class also contains a G1 account, when any of the assets are procured G1 account is debited. It becomes necessary to mention the asset class for which you are creating the required assets.
Thus, whenever there is any asset transaction that occurs, the G1 account attached to the asset class is automatically picked up and the entry is done. Default values can also be mention to calculate depreciation values and also master data in every asset class.

APP is the abbreviation for ‘ Automatic Payment Program’. This is a tool provided by SAP to the companies to pay their vendor and customers. This is a very useful tool to avoid any mistakes that can happen if perform manually.

It contains G/L(General Ledger) accounts needed to meet the country ‘s legal requirements.

Dunning is the method by which payment chasing letters are issued to customers. Through the SAP it can determine which customers should receive the letter and also about overdue. Thus different letter can be printed in SAP that depends on the overdue payment date, with a reminder. With the help of the dunning level on the custom master, we can know which letter has been issued to the customer.

Document type is used to define the range of documents. The purpose of “Document type” in SAP is
Types of accounts that can be posted are controlled by it.
The number range for documents is defined by it.
For reversal of entries, it is used.

A short-end fiscal year occurs when there is a change from a normal fiscal year to a non-calendar fiscal year. These types of changes happen when a business becomes a part of the new group.

Both the codes are stored at the client level. It signifies that by extending the company code view in SAP it can use the customer and vendor code.

The profit and loss accounts are cleared down to the retained earnings balance sheet account at the end of the year. This field contains an indicator that is linked to specific GL accounts.

Well, it simply enables them to keep an eye on the purposes for which a specific amount sent including all its information. The users can simply keep a digital record of all the funds received or transferred to any other account. This enables them to prepare documents for the future on which some important plans and decision-making strategies are based. Financial statements also enable businesses to get reductions in taxes in a few cases. In addition to this, the users can access the record of all the financial transactions anytime the same is required.

There are several useful modules where it is possible for the users to consider this approach in an integrated manner. These include Material Management, Sales & Distribution, Production Planning, financial transaction management, as well as Human resource.

In businesses, it’s not necessary that all months have 30 days working. Depending on the type of projects which vary largely, the organizations have to end a month a day earlier or two. For example, the Month of May can have 29 days. The same can be done with an option in the SAP which is known as Year Dependent Fiscal Year.

FICO stands for Financial Accounting and Controlling. It is basically an important tool that is useful in preparing statements about the finance related to an organization or a business. In addition to this, FICO can also be considered for the purpose of accounting, tax computations, preparing the inventory sheets, financial data storage. The users need not worry about the security of the data and in addition to this, it simply makes sure of managing and utilizing the data in a reliable manner.

Errors are of a lot of types and can be due to a diverse array of reasons. The users can often make mistakes. A single wrong entry of only one digit can bring a lot of issues in the organization and can mislead about the profits and losses. Errors can be due to negligence of users, fault in the system, wrongly prepared bills or claims, gross errors, basic accounting errors, errors due to not updating the sheets, and so on.

It is basically a code that needs to be entered into the system when it comes to generating the Loss or the profit statements. It is not always necessary that all the employees are given access to the same. It is possible for the users to configure up to 3 currencies and among which one generally remains local and the other can be considered as parallel.

There is a total of 165 periods among which 4 are considered special. They are generally used when it comes to defining any data that is related to the fiscal year. A user is free to consider the special period anytime when the need for the same is felt.

SAP doesn’t have any provision to access broker year. It only understands the calendar year. However, it is not always necessary that for all organizations the calendar year is the financial year. There is often a need to change months. They needed to be added or removed. This can be done easily in the SAP and the same procedure is known as Year Shift.

One of the major issues is Tax Slabs are not similar in all countries. Also, there are additional taxes applicable there. SAP FICO has a tax procedure already defined in it for various nations and the users are free to get the information regarding the same. The Tax amounts can be sent to stocks by default or the users are free to make challenges in them as per their need and convince. Thus, taxes are not an issue with the SAP FICO.

They have generally defined assets for the different functional areas. They can be accessed through two options and are Document level and line level.

SAP FICO has some major applications for which it is actually known. It is widely considered I Financial accounting for handling a lot of tasks that matter to the organizations. In fact, all that matters in accounting can easily be managed with this approach. It also has applications in Asset and Cost Accounting. The Project system accounting can also be managed in a reliable manner. The users are free to consider it for the purpose of Consolidation. In addition to this, SAP FICO has large-scale applications in Real Estate which is one of the emerging domains across the globe in the present scenario.

It stands for Work in Progress and basically defines the status of the asset that is under the development model in the SAP FICO. It is possible for the users to customize it if required.

There are options for manual payments that can be made either in cash or through cherubs. Other options include electronic transfer. The SAP FICO keeps a close eye on all the transactions made through the latter option when the same is integrated with the accounts.

It is basically an approach that enables users to determine the transaction type among the various possible options in the domain. Generally, it is a two-digit number when is entered during defining of an item. It simply gives an idea about the type of posting which can either be credit or debit as well as the type of accounts. Also, the status of transactions can also be recorded through it.

It is used whenever there is a need for the organization to access external accounts. It simply incorporates all the financial transactions of a business made within a specific time period. The users are free to keep up the pace simply even when the operational areas need core accounting skills or have problems associated with them.

There are certain benefits and a few major ones are spotlighted below:

• One of the major benefits is accounting data is always correct. The users don’t need to worry about this
• There is no upper limit on handling the accounts. Any number of accounts can be managed
• It is useful in auditing as an eye can be kept on the transactions made by the business
• It makes sure of financial transparency
• The detailed information about the expenses can be prepared and the same can then be considered for the purpose of preparing the future budgets
• A lot of time and money can be saved
• The users can make sure of financial outputs that can be trusted in the long run

It is basically a tool that is used for reporting. All the financial accounts can be extracted through it along with all the relevant information required by the users. It is possible to deploy it for the purpose of generating the outcomes of different agencies associated with a business. The same information can then be passed to the concerned authorities for betterment.

When transactions are done, there are often fields that come up, this option is used or is enabled when they are not required while handling the tasks.

The first thing to make sure of is whether the items get cleared status by the management or not. Next is to make sure that the document is valid or not.

A Short-end Fiscal Year is basically when a calendar year is modified as per need. This can happen due to a very large number of reasons and the organizations have to adopt the new calendar.

It is basically an option that is used to track the overall cost associated with an item or a project. It is used widely during certain situations and while handling some important tasks.

The asset class is the primary class that is used for the purpose of justifying the assets. The entire asset category is generally assigned or integrated into one asset class. It is also possible for the users to use the default values for the same.

The first and the foremost is the main language. Next is controlling the integration level, name, Block Indicator, GL, account number, and the chart of Account Key.

The credit-control is in the SAP enables the organization to impose a strict upper limit on the credit for the customers. This can be done by using the option controls are in the SAP. It simply makes sure of avoiding the situation such as the risk of bad debts and outstanding receivables.

The user needs to provide the controller name, Description, Currency option is to be selected, risk category is to be selected and then the information about the Fiscal variant is also to be provided.

It is basically a time frame during which the transaction figures are updated. Generally, it is accountable to control accounting periods that are complex.

It is basically an approach that is used for the purpose of maintaining the General Ledger accounts. It controls the fields which should provide information on the concerned accounts.

Organizations are allowed to add two more currency options than their local. They can be used in the transactions made at the International level by an organization. The organizations are free to use any two options for parallel that they seem to have more need. They can be tagged as Group currency and hard currency.