Accounting for Sales and Purchasing

SAP Business One, Version 9.2

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Objectives

At the end of this topic, you will be able to:

 Discuss some general accounting conventions
 Give examples of the automatic journal entries created
during the sales, purchasing and inventory processes
 Review the financial settings that affect the processes of
automatic journal entries.

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Business Scenario

You are implementing SAP Business One at a new customer,

OEC Computers:
 Your main contact in the customer site is the accountant, Maria.
 Maria asks about the way SAP Business One handles the
financial accounting processes.
 She wants to make sure she understands the big picture so she
can report on business results.

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Agenda

 Finance Basics
 Business transactions and values exchange.

 Financial Settings
 How journal entries are automatically posted by
documents.
 Automatic journal Entry value.

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Finance Basics

System Configuration

Master data

Warehouse management
Marketing &
Inbound Outbound
Purchasing Service
logistics logistics
Sales
Production

Financial controlling

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Automatic Journal Entries: Reflection Question

Standard

Sales Quotation Sales Order Delivery A/R Invoice Incoming Payment Deposit

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Automatic Journal Entries: Answer

Standard

Sales Quotation Sales Order Delivery A/R Invoice Incoming Payment Deposit

When managing perpetual Inventory

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A/R Invoice Journal Entry

Sales Quotation Sales Order Delivery A/R Invoice

Debit Credit

Customer
105
account

Tax account 5

Revenue
100
account
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The Account Balance

Customer
Debit Credit Origin
XXXX7

105 Debit A/R Invoice

600 Debit A/R Invoice

400 Debit A/R Invoice

705 Credit Incoming

Payment

200 Debit A/R Invoice

100 Debit A/R Invoice

Account
Balance
700 Debit

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Account Types

Debit Accounts Credit Accounts

▲= ▲=
increase Typical increase Typical
▼= Balance ▼= Balance
decrease decrease
Bank Account,
Assets ▲ Accounts ▼
Receivable
Balance Sheet
Accounts

Accounts
Liabilities ▼ ▲
Payable
Equity/
▼ ▲ Reserves
Capital

Rent,
Expenses ▲ ▼
Electricity
Profit and

Accounts
Loss

Sales
Revenues ▼ ▲
Revenue

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Value Exchange: Reflection Question

A/R Invoice

Debit Credit

Customer
440
account
Revenue
440
account

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Value Exchange: Answer

A/R Invoice

Debit Credit

Customer
440
account
Revenue
440
account

The two accounts increase their values: ▲

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Agenda

 Finance Basics
 Business transactions and values exchange.

 Financial Settings
 How journal entries are automatically posted by
documents.
 Automatic journal Entry value.

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Financial Settings: Which Accounts to Use Automatically?

Delivery A/R Invoice Incoming Payment Deposit

 G/L Account Determination

 Control Accounts

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G/L Account Determination
For Items Used in Documents

 Traditional Solution –
 Default G/L method for an
item
 G/L Account Determination Window
 Sales
 Purchasing
 General (for example, Period End
Closing)
 Inventory  Advanced G/L Account
Determination

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Control Accounts
The Link Between the BP Sub-Ledger and the General Ledger

Accounts Receivable = Control Account

Control
Debit Credit
Account
Accounts
Customer 105
A/R Invoice Receivable
Tax Tax
5
account account
Revenue Revenue
100
account account

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Chart of Accounts
Level 1
Assets Accounts
Receivable Account Financial Reports
Liabilities
Accounts Payable
Account
Cap. + Res.
General Ledger

Turnover

Cost of Sales
Balance
Operating C. Sheet

Non-Operating

Tax + Extr.

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Automatic Journal Entry Value

A/R Invoice

Debit Credit

Customer
440
account
Revenue
440
account

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Value Calculation – Sales

Purchasing Price List = 100

Reseller Price List = 110

Retail Price List = 120

Star Trek Computers = Reseller

Price List

Reseller Price List

= 110 Unit Price * Quantity = Total Value 110 * 4 = 440

Sales Quotation Sales Order Delivery

A/R Invoice
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Value Calculation – Purchasing
Purchasing Price List = 100

Reseller Price List = 110

Retail Price List = 120

Coconut Devices = Purchasing Price List

Purchasing Unit Price * Quantity = Total Value

Price List = 100* 10 = 1000
100

Purchase Order Good Receipt PO A/P Invoice

Debit Credit

Vendor 1000

Clearing acc. 1000

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Value Calculation – Inventory

Purchase Order Good Receipt PO A/P Invoice Debit Credit

Clearing acc. 1000
100 * 10 = 1000 Unit Price * Quantity = Total Value Inventory
1000
acc.

Calculated Value* Item Cost

= 90 *Calculated Value based
on moving average item
cost.

Debit Credit

Sales Quotation Sales Order A/R Invoice Cost of Goods

Delivery 360
Sold acc.

90 * 4 = 360 Item Cost * Quantity = Total Value Inventory acc. 360

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Summary
Here are some key points:
The account balance represents:
In each journal entry:
Assets, Expenses, and Drawings
accounts are generally in:
Liability, Revenue, and Capital (Equity)
accounts are generally in:
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• The difference between the total debit
transactions and the total credit
transactions recorded for that account.
• A certain account increases value and
another decreases value
• The debit side and the credit side balance.
• Debit
• Credit
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Summary
In automatic journal entries the system
‘knows’ which accounts to use because:
The Business Partner Master Data
balances are represented in the chart of
accounts in:
In an A/R Invoice the system ‘knows’ the
value to be credited and debited in the
automatic journal entry using the:
In a Delivery the system ‘knows’ the
value to be credited and debited in the
automatic journal entry using the:
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• You defined default G/L accounts in the G/L
Account Determination window (including
control accounts that link the business
partner sub-ledger accounts to the general
ledger).
• The receivable and payable control
accounts that accumulate the customer and
vendor transactions in their balances.
• Default price list as defined in the customer
master record.
• And the item price in this price list.
• Item cost value that is calculated
automatically, behind the scenes, according
to the valuation method chosen for the
item.
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