Determining Revenue Account in SAP SD

Revenue Account Determination In Sap Sd

In the O2C process, which includes order, delivery, and billing, an accounting document is not generated when a sales order is created. The integration between FI (Financial Accounting) and SD (Sales and Distribution) begins with the posting of goods issue during outbound delivery.

Contents

1. Preparation for SD-FI Integration

First, we will generate the sales order. Subsequently, using the information from the sales order, we will create an outbound delivery. When the goods are issued for this outbound delivery, the system automatically records the relevant amount in its corresponding general ledger account. This process falls under SD-FI integration.

The process of determining revenue in SAP SD involves the following steps: Sales Order (YOR), Outbound Delivery (YOBD), and Billing (YF2).

Please refer to the following post for a detailed guide on how to configure the three sales documents mentioned above.

Set up SAP S4 HANA Sales Documents in just 10 minutes. Customize the configuration of your sales documents quickly and efficiently.

In order to verify the integration between SD and FI modules in SAP, it is necessary to go through the process of creating an outbound delivery and subsequently performing a post goods issue (PGI) for that particular delivery.

Creation of Sales Order & Outbound Delivery in SAP SD

The following article provides a detailed explanation of the step-by-step process involved in creating a sales order, generating an outbound delivery, and performing PGI (Post Goods Issue).

Before moving forward with SD-FI integration, it is important to carefully review the following post. Please ensure that you thoroughly examine this information.

A comprehensive manual on Sales Order in SAP S4 HANA SD. Restate this text using your own words without elaborating on the subject, just provide original text and nothing else. Write in Indian English.

Revenue Account Determination in SAP SD

In the above post we have explained that since SD-FI configuration is still not done, so as soon as we tried to post goods issue to outbound delivery, system throws the below error.

Determination of Revenue Account in SAP SD

During the process of goods issue, the stock is reduced by both quantity and value, which corresponds to the quantity and value of the goods being issued.

The COGS (Cost of Goods Sold) account is used to make the offsetting entry.

The stock account is credited based on the BSX key configuration in the OBYC setting of MM-FI configuration. To understand the step-by-step setup of BSX, please refer to the following post.

Ultimate guide to configure S4 HANA MM-FI Integration

In our car business, we make BSX postings on GL 113600000 (Inventory Trading goods).

Please click HERE to check the creation of GL account 113600000

The debit entry for the Cost of Goods Sold (COGS) account is determined using the GBB-VAX key. In the upcoming section, we will discuss how to configure this GBB-VAX key.

As soon as we tried to post goods issue system throws the error due to absence of SD-FI integration configuration

Revenue Account Determination in SAP SD: M8147 Error – Unable to Determine Account for Entry PPIN GBB

This error is coming because of absence of configuration of inventory offsetting. We need to configure account determination of VAX key

VAX: for sales order goods issues without account assignment object (where the account is not a cost element).

The determination of the cost of goods sold (COGS) account during the goods issue process is dependent on this specific key.

In our car business, we post the GBB-VAX transaction on GL 550200000, which corresponds to the cost of goods sold without a specific cost element.

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Please click HERE to check the creation of GL 550200000 step by step

Snapshot: Setting up GBB/VAX…Part 1 Snapshot: Configuring GBB/VAX…Part 2

Determining Revenue Account in SAP SD

Now attempt to post PGI once more after configuring GBB VAX.

3.1 Error NR751

Snapshot: Issue with Number Range in Outgoing Delivery PG I.

A material document and an accounting document are created.

3.2 FI Postings (SD-FI Integration OBD PGI Part)

The system generates a material document to record the quantity changes in the Plant/SLOC. As a result, an accounting document is automatically created by the system to post the corresponding values on the relevant GL accounts.

Revenue Account Determination in SAP SD: A Reminder to Verify FI Document with Material Pricing

Verify the cost of the material by examining the “Accounting 1” section in the material master.

Understanding account determination in SAP SD

The account determination key specifies the accounts in Financial Accounting that need to be recorded when conducting asset transactions. This is done for each chart of accounts and depreciation area, which are defined as automatic posting areas within the chart of depreciation.

– The account determination key determines the accounts used in Financial Accounting for asset transactions.

– It applies to each chart of accounts and depreciation area.

– Depreciation areas are considered automatic posting areas within the chart of depreciation.

Determining Accounts for Revenue in SAP SD

Revenue account determination in SAP SD is commonly referred to as account determination.

The relevant accounts are determined by the system through the use of conditions.

We have configured our own customized pricing procedure in the post below

Alternative:

The Complete SAP S4 HANA Sales Pricing Handbook with Commonly Asked Questions. Restate this text using distinct language, without elaborating on the subject matter. Use English suitable for readers in India.

Picture : Pricing Procedure for our Car Business Part 1 Picture : Pricing Procedure for our Car Business Part 2

The various conditions in the pricing procedures are associated with specific account keys, such as ERL, ERS, MWS (as shown in the screenshot above).

The process of determining the revenue account in SAP SD involves using the condition technique to assign the appropriate general ledger account to the designated account keys within the pricing procedure.

The process of finding the accounts, known as the account determination procedure, is used to determine the appropriate accounts.

Account Assignment Groups for Materials in SAP SD

Account assignment groups are utilized to categorize a material as either a product, service, or equipment in order to differentiate the GL accounts.

To determine revenue accounts in SAP SD, navigate to the SPRO menu and access IMG. From there, go to Sales and Distribution, then Basic Functions, followed by Account Assignment/Costing. Under Revenue Account Determination, select Check Master Data Relevant for Account Assignment and Define Account Assignment Groups for Materials.

We have specified the account assignment groups for materials as mentioned below.

The material sales org 2 view of the material master record contains the assignment of account keys.

4.2 Account Assignment Groups for Customers

To determine the revenue account in SAP SD, follow these steps: SPRO –> IMG –> Sales and Distribution –> Basic Functions –> Account Assignment/Costing. Then, go to Revenue Account Determination and check the master data that is relevant for account assignment. Finally, define the account assignment groups specifically for customers.

4.3 Establish Access Sequences and Account Determination Types

In SAP SD, there are two standard condition types available for revenue account determination: KOFI and KOFK.

In our automobile business, we will utilize the default condition type KOFI, which employs an access sequence identified by the key KOFI.

The KOFI access sequence is associated with five condition tables.

To configure revenue account determination in SAP SD, follow these steps: Go to SPRO and navigate to IMG. Then, select Sales and Distribution followed by Basic Functions. Next, choose Account Assignment/Costing and click on Revenue Account Determination. From there, go to Define Access Sequences and Account Determination Types and proceed to Define Access Sequences for Revenue Account Determination.

Visual representation: Access Sequence..Part 1 Visual representation: Access Sequence..Part 2.

To set up revenue account determination in SAP SD, follow these steps: go to SPRO and navigate to IMG. From there, access Sales and Distribution, then Basic Functions. Under Account Assignment/Costing, select Revenue Account Determination. Next, choose Define Access Sequences and Account Determination Types. Finally, define the account determination types according to your specific requirements.

Now, we have the ability to assign the access sequence KOFI to the appropriate account determination type (condition type) in our pricing procedure.

4.4 Define & Assign Procedures for Determining Revenue Accounts

In this section, we establish account determination procedures and assign them to the billing types.

In the process of account determination, we establish the order in which the system should consider the account determination types (condition types) for reading.

For our car business, we will use the standard account determination procedure (KOFI00) with the key “KOFI00” has already been defined. This will serve our purpose. We will copy KOFI00 and create our own as YPPIN0

To define the account determination procedure for revenue in SAP SD, follow these steps: SPRO –> IMG –> Sales and Distribution –> Basic Functions –> Account Assignment/Costing –> Revenue Account Determination.

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Picture : Std Account Determination Procedure Picture : Creating our own Account Determination Procedure

To determine revenue accounts in SAP SD, follow these steps: go to SPRO and access the IMG (Implementation Guide). From there, navigate to Sales and Distribution, then Basic Functions. Next, select Account Assignment/Costing followed by Revenue Account Determination. In this section, you will find the option to Define And Assign Account Determination Procedures. Finally, proceed to assign the appropriate account determination procedure for your needs.

In order to determine the revenue account in SAP SD, we need to assign our customized billing type YF2 with the account determination procedure YPPIN0.

Please click HERE to check the configuration of our billing type “YF2”

4.5 Account Key Definition and Assignment

We define account keys here and allocate them to the condition types in the pricing procedures. We have already defined and assigned account keys to our pricing procedure PPIN01

To determine revenue accounts in SAP SD, follow these steps: Go to SPRO and access the IMG. Then navigate to Sales and Distribution, Basic Functions, Account Assignment/Costing, Revenue Account Determination, Define And Assign Account Keys, and finally Assign Account Keys.

We use account keys to categorize similar accounts in the financial accounting system.

The system identifies the appropriate general ledger (GL) account by utilizing the account key.

4.6 Assign General Ledger Accounts (VKOA)

Here based on the access sequence of tables for KOFI, we will select the table “001” Cust.Grp/MaterialGrp/AcctKey. Here we will assign all the relevant GL accounts.

• AAG (material account assignment group) : From our list

• ActKy (account key): The identifier used in our process.

• Allocated ledger account: Appropriate GL to the chosen key.

To determine the revenue account in SAP SD, follow these steps: go to SPRO, then navigate to IMG, Sales and Distribution, Basic Functions, Account Assignment/Costing, Revenue Account Determination, and finally Assign G/L Accounts.

We have established a general ledger account for each key in our pricing determination.

-> Please check HERE to see the GL creation corresponding to ERL (Revenue) key

-> Please check HERE to see the GL creation corresponding to ERS (Sale Deductions) key

-> Please check HERE to see the GL creation corresponding to ERF (Freight Revenue) key

Now allocate the three general ledger accounts to their corresponding keys.

4.7 Assign G/L Accounts for Tax Posting in SAP SD

Here we first create the tax account for output tax and assign this to the respective key (MWS)

The tax amount will be posted using the GL account 222000000 – PPIN-Output Tax (MWS).

Please see HERE to see the step by step GL 222000000 account creation

To configure tax accounts in SAP SD, navigate to SPRO and then go to IMG. From there, access the Financial Accounting Global Settings and select Tax on Sales/Purchases. Next, choose Posting and proceed to Define Tax Accounts. This allows you to set up the necessary accounts for taxes in your SAP system specifically for India.

Picture: Recording of Taxes in Accounts – Section 1 Picture: Recording of Taxes in Accounts – Section 2 Picture: Recording of Taxes in Accounts – Section 3

Revenue Account Determination in SAP SD: Tax Accounts Keys MW1, MW2 & MW3

As the output tax determination schema includes tax keys MW1, MW2 & MW3, the system will automatically record the tax amounts on the corresponding GL accounts assigned to these three keys.

For all three tax keys, we have assigned GL account 222000000.

Visual representation: Tax Account Posting – Part 1 Visual representation: Tax Account Posting – Part 2.

Identifying revenue accounts in SAP: A guide for India

In the field of accounting, it is common practice to use the first digits of an account number to identify its category. These categories include Revenue, COGS (Cost of Goods Sold), General Expense, SG&A (Selling, General and Administrative Expenses), and others.

5. Create Billing

In the O2C cycle, the next step involves posting the billing. During this process, the system will allocate and assign the appropriate values to specific GL accounts based on the revenue account determination procedure.

Error KI235 – GL Requires Cost Accounting Relevant Account Assignment

The objective is to allocate the cost element of Sales Revenue to a profit center. The task involves assigning the relevant profit center to the cost element in order to accurately track and analyze revenue generated from sales activities.

In the SAP SD module, when a sales order is created and subsequent activities such as goods issue, billing, and payment receipt are performed, the profit center information is retrieved from the material master (specifically from the costing view or sales organization view).

Alternatively, we have the option to allocate a profit center to the revenue element or assign a cost center to the other cost element within the OKB9 transaction.

In order to fix this issue, we must enable profit center accounting and cost center accounting for our controlling area.

5.1.1 Profit Center Accounting

Initially, it is necessary to configure Profit Center Accounting by assigning the controlling area PPIN.

Next, we must update the overall configurations for Profit Center Accounting in our controlling area PPIN.

Controlling Area Configuration for Profit Center Accounting

To access the necessary settings, navigate to SPRO and then go to IMG. From there, select Controlling and proceed to Profit Center Accounting. Within this section, locate the option for Set Controlling Area.

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Visual: Setup of Controlling Area to Enable Profit Center Accounting.

Creating Profit Center in SAP SD

Before proceeding with revenue account determination in SAP SD, it is essential to enable cost center accounting for the controlling area.

To enable Cost Center Accounting in the Controlling Area, follow these steps: access SPRO, go to IMG, navigate to Controlling, select Cost Center Accounting, and activate it.

Picture : Activation of Cost Center Accounting in Controlling Area

Creating a Cost Center in SAP SD: 5.3.1.1

Now that we have established the profit center and cost center, we can assign them to their corresponding cost element in OKB9 to fix this issue.

Understanding the revenue recognition process in SAP SD

Revenue recognition is a crucial process that involves acknowledging the income generated when a sale contract is successfully completed, and the ownership of goods or services is transferred from the seller to the buyer or customer. This process ensures that businesses accurately record their earnings in accordance with accounting principles.

6. Create Billing – Retry after Error Resolution

To begin, open VF01 and enter the number of the outbound delivery. Then, hit the enter key to proceed.

The accounting system has successfully recorded the billing document.

6.1 Accounting Entries at Billing

Revenue Account Determination in SAP SD is a crucial process that determines the General Ledger account to which sales values are posted. This integration between Financial Accounting (FI) and Sales and Distribution (SD) modules ensures accurate financial reporting and analysis.

This concept of revenue account determination is based on condition technique, where various factors such as customer group, material group, or distribution channel can influence the selection of GL accounts. Through configuration settings in VKOA, organizations can establish rules that determine which GL accounts should be used based on specific criteria defined for each condition type.

P.S: Revenue Account Determination plays a vital role in ensuring accurate financial reporting by determining the appropriate GL accounts for posting sales values. By integrating FI and SD modules through VKOA transaction code, businesses can effectively map pricing conditions to relevant GL accounts using condition technique-based rules.

The meaning of ERl and ERS in SAP SD

In SAP SD, revenue account determination is crucial for accurately assigning sales deductions and revenues. Two important account keys used in this process are ERS (for sales deductions) and ERL (for sales revenues). The selection of the correct G/L account for revenue account determination depends on the conditions specified in the pricing procedure. By assigning these account keys appropriately, businesses can ensure accurate financial reporting.

The process of account determination in SAP

In order to determine revenue accounts in SAP SD, the following steps need to be taken:

1. Define valuation control.

2. Group valuation areas.

3. Define valuation classes.

4. Define account grouping for movement types.

5. Set up purchase account management.

6. Configure automatic postings.

These steps are crucial in ensuring accurate revenue account determination within the SAP SD module.

Planting Determination in SAP SD

In the context of Revenue Account Determination in SAP SD, the following checks are performed to determine the plant:

1. Check for plant on Customer Material Info record.

2. If not found, check for delivering plant on Ship-to Customer Master record.

3. If still not found, check for delivering plant on Sales View of Material Master record.

Creating an account determination in SAP: How is it done?

To access the Revenue Account Determination window in SAP SD, follow these steps:

1. Go to the SAP Business One Main Menu.

2. Choose Administration Setup Financials Fixed Assets Account Determination.

4. Provide a description for the set of G/L accounts you are defining.

Revenue account determination is an essential process in SAP SD (Sales and Distribution) module that helps determine which general ledger (G/L) accounts should be used for recording revenue generated from sales transactions. This ensures accurate financial reporting and analysis.

In simple terms, when a company sells products or services, it earns revenue. The revenue account determination functionality in SAP SD allows businesses to specify which G/L accounts should be credited with this revenue based on various factors such as product type, customer group, or sales area.

Benefits of proper revenue account determination include improved accuracy in financial statements, better tracking of revenues by different criteria (e.g., product line or region), and streamlined auditing processes since all relevant information is captured within the system itself.

The Tcode for revenue recognition in SAP SD

1. Open SAP and log in with your credentials.

2. Go to the main menu and navigate to “Sales and Distribution” > “Billing” > “Revenue Recognition” > “Recognize Revenue”.

3. Enter Tcode VF42 in the command field and press Enter.

4. The system will display a selection screen where you can specify various criteria for revenue recognition.

5. Fill in the necessary details such as company code, billing document number, or customer/vendor information based on your requirements.

6. Click on the execute button (F8) to initiate the search for all open revenue lines that match your specified criteria.

By following these steps, you will be able to recognize all open revenue lines using Tcode VF42 in SAP SD module.