Creating GL Accounts and Posting Entries

So, after completion of all configuration, so we have even created a controlling area for DRL. And we can even post accounting entries. So, let me create few GL accounts in DRL and then we’ll post an accounting entry. So previously, we created the DRL group, DRL company. Now I want to create GL accounts for Doctor Reddy Labs Group. So here, creation of GL accounts is a creation of master record. So, customer accounts are master records, vendor accounts are master records. Similarly, we are going to create general ledger accounts. All general ledger accounts are nothing but master records. So, creation of GL accounts, FS00 – Centrally, and creation of master records is an end user job. It need not necessarily be the consultant job. So, consultants will create GL accounts in the beginning. When we configure the SAP, we’ll create what are the GL account that are there at the beginning. Now once you complete configuration, subsequently, we give authorization to create GL accounts to the end users. So, a few accountants and few business process owners will be given authorization to create GL accounts. So, because they have to run the business, they can create any new GL account.

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Double click on FS00. First, I want to create. These are the GL accounts I’m planning to create: Equity Share Capital, Preference Share Capital, retained earnings, cash on bank, expenses, like that we can create them. So first of all, we have to give 1 lakh 1. Here, I have to give the number. And here, there is a display button, change, create, create with template. So here display. 

Create with template means creation of a GL account with template. So, I’m going to click on create. Now, this is 1 lakh 1. It’s a balance sheet account because we are going to create a GL account for the purpose of balance sheet account. I’m going to create Share capital account, share capital account belongs to share capital group. Whatever account group we have created there in our previous steps, step number 7, creation of account groups, here, those things will appear to us. If you select any wrong account, system throws an error. So, like that. See, if I select correct one, share capital. So, system takes it. If I take any other thing wrongly, system will throw an error. 

So in the first stage, Type/ Description, I’m defining in which account group this GL account is going to fall, and what is the description of the GL account, and we are defining here whether this is a P and L account or a balance sheet account. System cannot identify which one is a P and L account, which one is balance sheet account. It is we, the consultant has to decide which type of account it is. Then go to the control data tab.

After going to control data tab, right, for all balance sheet accounts, select only balances in local currency. Because we are going to create balance sheet in local currency. Then here there are so many fields here. Just don’t bother. What are the fields that are required for us, we’ll take it. Because already I told you, SAP has been developed keeping in view the requirements of worldwide companies, different scenarios. So, whenever it is required, we’ll use these fields. 

Line item display is nothing but, the line items in the GL accounts will be displayed. So, this I’ll show you once we post accounting entries. I’ll take you to the GL account and there I’ll show you what is the purpose of this. And even those line items in what way it has to be sorted out, that is in what way it has to be stored. So, posting date wise, so many options are given here. So, line items will be displayed by posting date wise. Third tab, create/bank/interest. So, it’s only 3 tabs we have to use.

Field status group. So, we have already created/copied 41 field status groups. We’ll select G001, general ledger with text. We have made certain changes in this. The changes we made are business area and text are required entries. Double click on general data, text is a required entry. Similarly, additional account assignments, business area is a required entry. So, these 2 we made required entries. Now these two parameters, we are linking them to this GLaccount. Now so whatever the requirement that we made for those required entries, all these things will be applicable to this GL account. Now save it. 

 

Next, I want to create preference share capital. So, preference share capital account 1 lakh 2. Just change it. And I can create this GL account with template. So, nothing but copying the GL account of 1 lakh 1. Of which company code? DRL. So, everything is same but change the description. 

Now next I want to create a retain earnings account. So, return the earnings account will be 1 lakh 1. So, this we have already explained to the system. If you remember in financial accounting, OB63 is the T-code if I’m not wrong. General ledger accounting new, Master data. G/L accounts, Preparation, Define retainn earnings account. 

For the Retain earnings account I’m going to use my Profit and Loss account statement. So, create retain earnings account with this. Click on create. 

So, this is a balance sheet account. Retained earnings account is nothing but a balance sheet account. So many people think that retainn earnings account is nothing but a profit that should be a P and L account. But it’s funds belong to the shareholders, that’s why this is not P and L account. It’s a balance sheet account. So here select results and surplus because under this group we have created results and surplus balance sheet account. 

So, this is retained earnings account. And next tab, same. Only balances in local currency. Line item display sort key. Third tab, same field status group G001. Save it. Now similarly, I want to create, cash and bank accounts, office rent account etc.. So here for the time being, cash account not required for me because we will have a separate topic called cash journal. So, at that time, we’ll create. Now I’m only creating a bank account with account number 20405.

Then lick on create. So, group belongs to cash and bank balances. It’s a balance sheet account. So, before we create a GL account, an accountant or consultant must know the nature of the GL account that he is going to create, whether income or expenditure or is it a P &L account. So that’s why based on that we’ll select P &L account or balance sheet account. So, this Cash and Bank is a balance sheet account.

 

Next we’ll create HDFC bank account with the same parameters. But here field status group I’m going to take is G005. For bank account generally, right, this is the field status group we have to take, the reason being here the value date will be the required entry. So G005. Save.

Now I want to create a few expenditure accounts. Office rent, telephone, office maintenance like that. Say for example, office rent 400301. Click on create. 

So, this is in admin group. By default system also showing P and L account. For short text description, say office rent. So, only balances in local currency should be checked only for the balance sheet account. For other than balance sheet accounts, don’t check this. Other things are similar. Line item display and we want the accounts to be sorted out posting date wise. Then field status group, let’s take G001. So wherein your text and business area are mandatory entries. Then Save.

So now I can create with reference. So, I want to create telephone expenses with a template. So, we take office rent and change the description to Telephone expenses. Just to change the description, then save it. 

 

So, I have created GL accounts. These are the GL accounts I have created. Equity Share Capital, Preference, Share Capital, Retained Earnings, Bank account, few expenses. 

Now I can post accounting entries. Now for posting of accounting entries, we’ll go to Accounting, Financial Accounting. So, what are the accounting entries I’m going to post? Say, bank account. To equity share capital account because before I commence my business, I need cash, so that’s why I issue share capital. So, let us imagine that we have issued share capital. When I issue share capital, what is the accounting entry? Bank account return to Equity share Capital account.

So, bank account is debited. Equity share Capital account is credited. And, generally, we use debit 40, credit 50. That is the posting key. So, posting key is nothing but  a key which indicates which one is debit or which one is credit. 

 

So, we have two ways to post accounting entry. Let us see. So financial accounting, general ledger, document entry, FB50. So, in FB50, we can post the accounting entry. Double click on FB50. Enter GL account document.

Here you can create multi user. Multi line items can be posted here. Here some different company code is being shown here. To change this, click on company code, select your company code, DRL, Doc Reddy Labs bulk drugs limited. So here, provide the document date, posting date, reference, header text, etc. So, for bank account, we have already created the GL accounts. Pick up the bank account. So, 420405 is my HDFC bank. 

Now if you try to save, let’s see what message system will give you. Press enter. “An entry is required in text field”. You remember we made changes for general data, text is required entry and business area required entry. So, these 2, we made required entries. Now hence right. So, this G01 is linked to 101. Now we are trying to post entry to 101, and system is telling me in message, right, stating that an entry is required in the item text field for account 1 lakh 1. So we’ll fill share capital issue in the text field and select a business area in the business area field. So we’ll use the same business areas, Hyderabad.

So, if you want for the first line item also you can copy it, but it is not mandatory. Once everything is correct, then it will be converted into green. So, once it is green, you can save it. We are posting the first entry we are posting. So, it brings out a message that “document 1 was posted in company code DRL. This is one way of posting. 

Secondly, I can post an entry in F-02. I can copy and paste here. Type of document, SA. If you remember, we have used this is our creation and number ranges under OBA7. If you go here, you can see a document with SA01, numbering information. So that’s why here it is showing SA document.

So whatever the entry that we are posting, the system by default picks up SA. For DRL, click on intervals. See, we have created 1 to 1 lakh. See, first entry we have already posted here. So here, system has picked up 1. 

Now in the previous screen, each and every line item is visible to you on the screen itself. And we have to go towards right side to fill other fields. But here, fields are displayed in the page wise. 

See, now first of all, there’s a document date, posting date. Type of document is SA. You see the current period system by default, it is taking 5. And also posting date system by default takes current period. How is the system picking up the current period? Because in our OBY6, last and final step define global parameters. There, we told the system there is a check mark that indicates the proposed fiscal year. Proposed fiscal year. So that’s why by default system proposes the posting date it shows. And, here, first line item. So, when you are going to have 2-line items, first line item, 40 is the posting key. If you come through the path and, F-02, system by default ticks selects 40. Now here, the same entry I’m posting again.

 

Bank account data to Equity share Capital. So, bank account. So, I can drill down here to and select or manually you can enter it. Press enter. Then it will take you to the next screen. So here, say take 6 lakhs. So, business area. For bank account, business area is not mandatory, of course. Every share capital received. So, first line item, GL account, 200405. Bank account, debit 40, say 10 lakhs. In business area, DRHY. And this is the narration. So this is the first line item. 

Now the second line item is going to be 50 posting key credit. So, credit is also the same. But bank account is equity share capital account. My equity share capital account is 1 lakh 1. Press enter. 

So, if you click on overview, you can see the accounting entry from the top. 

That is line item 1. Line item 1, posting key, 40. My business area DRHY, GL account is 200405, bank account is HDFC bank account. 10 lakhs is the amount and Equity share Capital. 50 is the posting key for the 2nd line item, business area, 1 lakh 1. You have equity share capital, 10 lakhs is the amount. So, this is my accounting entry. Now save it. System will allow you to save because my upper limit is up to 10 lakhs, but it will not accept even 10 lakhs 1 . So, this is posting of entries. 

 

Now, I’m posting one more entry. Once I have received the bank amount, I want to post a few expenditures. I’m going to F-02. So here, I want to post office rent. Office rent account data to bank 400301. And 200403 is my bank account. Say it’s 25,000 I’m posting office rent. Go to F-02. 

Once you enter, the date will appear, so take 27. Type of document, SA. So, office rent GL account number, 4 lakhs 301. Press enter. 

So, office rent. Debit for debit entry 40. Say, 25,000. My business area, DRHY. So, office rent paid. Office rent paid for the month of July. Posting fee, 50. So debit 40, credit 50. So, office rent account returned to bank. My bank is 200405. So, first line item is debit line item along with text. 2nd is credit line item along with text. Press enter. So, 25,000 office rent business area. Then save it. So, entry number 3 posted. Similarly, you can post any number of expenses. And, Now we’ll make certain. Okay. Right. Now I want to post one more entry. Now from now onwards I’m using DRLB company code. DRLB, DRL both are run the same. 

 

Now I will show you about posting period variant. If you remember, we have discussed in length about the posting period variant. So, regarding tolerance group, I have shown you. 

So, because we have given limit here and this limit has been linked to my user ID. 

So, assign user ID, DRAM. Say for example, DRAO is there, and for DRAO for, I have user ID only up to 5 lakhs. If I give this user ID, and I take 6 lakhs, the system would not accept it. Because here, for a DRLB company code, against AO against DRAO, that is doctor Eddy Labs, accounts officer, amount is given only 5 lakhs. So that’s the reason system allows me only 5 lakhs. So, I need to take only 5 lakhs, not more than that. 

 

Next, I want to show you how posting period variant works. So, this is in doctor Reddy labs bulk drugs limited. Now here, if you remember, under posting period variant, ledgers, fiscal year and posting periods, my posting period, Open and close posting periods. We have created one posting period variant, doctor Reddy Labs posting period variant in step number 13. And here, 1st period to 13 period, all periods are open. Since all periods are open, I can post accounting entry in any month. Say now 27th. So, we have posted today’s date. Now if I want to post an entry on say, 01042013, that’s, 1st April, I want to post an entry. Let me check whether the system allows me. Everything is same.

See, period system will automatically it will change. So DRPV, I’m taking say, for all periods are kept open. And here period, though it is showing 5, now it will change. Say office rent, 400302, Telephone expenses account. This is press enter.

System gives a message. “Period 5 adjusted in line with the posting date 01.04.2013”. See automatically by default it has taken 1. So, since we have taken the posting period, posting date, and document date 1/4, system shifted immediately to 1st period and system is allowing me to post. 

One more thing here. What is this value date? What is the value date I’m showing? 27. But what are the date of posting and date of, document? 1/4. So though the date of document and date of posting are with old date, the entry will be posted with the date, but effect is done with today’s date. This is called value date. And also, if you remember in our Company Code Global Data Details, define default value date and propose fiscal year checkboxes are checked. So, define default value date means whatever the default value date we have, that will be taken. So today is the value date, the date on which the actual value is going to be affected. So that’s why system shows the value date. Now save it, system will allow me to save because all periods are kept open.

 

Now I want to change this. Come here. Write in OB52. DRPV from I’m taking only now 5th period. 5 period to 5 periods. Save it. Now let us try the same entry. 

See, posting period 1 of 2013 is not open. So, your posting periods are controlled from here. So, what we have done here, we have defined DRPV that is assigned to company code and DRPV Doctor Reddy Lab posting period variant. Here, the parameters we have defined is only current month should be kept open. Means current month is open. That’s why you cannot post accounting entry in any month other than the current period. System will not allow you.

 

Now what are the entry that we have posted, I want to see the document I want to see. That means display document. Click on document. Document change FB02. Document display FB03. So, whichever it may be? Both are almost the same. In FB02 you can change the document, in FB03 you cannot change it. So I’m going to FB02. Double click on this.

And here if you mention document number, system will show you the document number. Say for example, document number 5. Enter document number and company code DRLB and fiscal year 2013. Press enter.

So here you can see the entry. And this is office rent account return, telephone expense account return, office maintenance account return to bank account. So this is a multilayered entry we have posted. See here, document entry, FB50. In FB50, I can post multilayered entry.

Say, office rent. That is 400301 is my office rent. Then 400302 is my telephone expenses. 400303 is my office maintenance, like that, all these things you can debit. Say debit expenses. Debit and credit is to bank account. Credit bank account. Right. Say office rent. Say, 22,500. Telephone expenses, 9,900. Office maintenance, 4,400. Total bank. So, I can take star so that system will copy the total.