Accounting Entries-SAP FICO
Accounting Entries-SAP FICO in PDF format to download.
by Mohamed AbdelazizA Preofessional CA with 10+ Years Experience in MENA & Big 4 - Financial Analysis, Accounting & Regulatory ComplianceFollow
Description
Overview of accounting entries in SAP FICO :
Overview of accounting entries in SAP FICO :
- General Ledger (GL) Accounting Entries:
- Posting of Revenue: When a company generates revenue, the accounting entry typically involves debiting the bank or accounts receivable and crediting the revenue account.
- Posting of Expenses: Expenses are recorded by debiting expense accounts and crediting either the bank account or accounts payable.
- Asset Acquisition: When an asset is acquired, such as purchasing equipment, the entry involves debiting the relevant asset account and crediting the accounts payable or bank account (if paid immediately).
- Depreciation: Depreciation entries involve debiting the depreciation expense account and crediting the accumulated depreciation account.
- Revaluation: If assets or liabilities are revalued, the entry can include debiting or crediting revaluation accounts accordingly.
- Closing Entries: At the end of a period, closing entries transfer temporary account balances (e.g., revenue, expenses) to the retained earnings account. This involves debiting or crediting various accounts to ensure accurate financial reporting for the next period.
- Accounts Payable (AP) and Accounts Receivable (AR) Entries:
- Invoice Processing: When an invoice is received from a vendor, the entry involves debiting the relevant expense account (or inventory account for goods purchased) and crediting the accounts payable account.
- Payment Processing: When a payment is made to a vendor, the entry includes debiting the accounts payable account and crediting the bank account.
- Customer Invoicing: For sales to customers, the entry includes debiting the accounts receivable account and crediting the revenue account.
- Customer Payments: When customers make payments, the entry involves debiting the bank account and crediting the accounts receivable account.
- Asset Accounting Entries:
- Asset Acquisition: As mentioned earlier, asset acquisition entries involve debiting the asset account and crediting accounts payable or the bank account.
- Asset Depreciation: Depreciation entries are crucial for tracking the reduction in asset value over time. These entries debit the depreciation expense and credit the accumulated depreciation account.
- Asset Retirement: When assets are retired or disposed of, the entry involves debiting accumulated depreciation and crediting the asset account to remove it from the balance sheet.
This Best Practice includes
Accounting Entries-SAP FICO
