Define Company
Hello, I’m going to walk you through this tutorial step by step to explain SAP in a very simple step. This is SAP FICO. We have the Sun Limited Balance Sheet as an example here. This is a very simple balance sheet because I don’t want to make a complicated balance sheet, then it will be very difficult for you to understand the concepts, so let us use simple figures and simple balance sheets.
Thank you for reading this post, don't forget to subscribe!So on your left-hand side, you see debit, which is also known as assets. We have building machinery, cash in bank, stocks, trade debtors as assets, total of 100,000 on the liability side, which is also known as credit. We have capital, trade creditors, bank loans, and retained earnings. I’ll explain what is retained earning later on, and so forth. If you know accounting, you would know what retained earnings is all about.
The liability side equals the asset side. This is what a typical balance sheet looks like. Now, in order for us to start uploading this balance sheet into SAP, we need to create a company code for Sun Limited, so that we can upload this balance sheet using a simple journal posting to this company code, that’s why we have IMG Configuration Steps for Master Data Setup.
The first step is to create a company code, the second step is to create a chart of accounts. Okay. Let us do it now. Before that, I need to explain to you what is the difference between the company and a company code. There’s a huge difference.
A company is not a company code. It’s something different. Let me show you using this chart here. In a typical organized corporation, we will have a group company and a company code one and company code two, and so forth. I would like to use a simple example here where I have a group company and under the group company, I have company code one and company code two.
Similarly, in our tutorial, we have Sun Limited. Sun Limited is the balance sheet, what you are seeing here now. We also have Mercury, a different company, and Moon. These two are different companies, but all three of these companies are under a group called Solar Group.
For example, I’ve used Solar Group as a group company name. Under the Solar Group company, we have Sun Limited, Mercury and Moon, but we are going to focus only on Sun Limited company transactions because this is good enough for us to understand the FICO functions. When we go into consolidation later on, I’ll show you how to go into consolidation. During the consolidation module, I’m going to show you how to consolidate figures from Mercury, Moon, and Sun Limited under one umbrella called Solar Group. That is part of consolidation.
There’s a module called EC-CS. Let me write it here. It’s known as the EC-CS module. I’ll show you when we go through this. This is all about consolidation. When we go through this model, we are going to use Mercury and Moon as additional companies so we can present the full balance sheet, the consolidated balance sheet for the entire Solar Group.
Okay, so let us minimize this chart. This is going to be my slide whenever I would like to show you something. I’m using this as a whiteboard. Alright, now you know what’s the difference between a group company and a company code.
So, what I wanted to explain now is that, this portion here, this Solar Group will have to be defined here in this function, by a different company, and under the Solar Group, we’re going to create Sun Limited. Sun Limited will be created here. That’s the difference. Can you understand now?
This one will be created here, and this one will be created here, in this step.
Alright, so let us create a company now. Have you noticed the menu part? It’s under enterprise. Once again, enterprise. Let me close all of it. Enterprise. Definition. Financial accounting. Define company. Okay, let me click on it. Click New entries. You see all the companies defined earlier, click new entries, and clean Solar. It is a freely definable field. You can key in whatever you want. I just keyed in Solar. Solar Group. Street, I just put Manhattan. P.O Box, one, two, three, four, five. City, New York. This is just an example. Postal Code, US, English. EN for English, US for the USA, as simple as that. Now, just save it. You have this information here, data was saved, so you have created your company here, Solar, as simple as that.
In our next topic, I’m going to show you how to create the company code, which is Sun Limited. Before that, let’s quit this thing. We’d go here to create a company code. That would be my next topic.