How does FI integrate with SD and what is their account determination?

FI SD account determination:All Billing transactions happening in the Sales and Distribution module will result in FI
postings. All accounting entries with respect to the billing will have one side of the account
as a Customer or receivable and the other side to be a revenue account.
For e.g.
Customer Dr.
To Revenue Account- Cr.
You have to bear in mind that the customer account gets picked up from the customer
master data. All we need to do is to configure the revenue account or the discounts and
surcharges
Where and how do we do this?
You make the allocation for each of these through access sequences. Access sequence is
nothing but SAPs terminology of determining the Gl accounts. SAP provides the following
six ways of determining the Gl accounts in SD.

Application (key for the Sales and Distribution application)

Account determination type

Chart of accounts (from the FI System

Customer account assignment group

Materials account assignment group

Account key

The allocated accounts are used to post revenues, surcharges and discounts automatically.
The account determination in SD happens through an access sequence which can be seen in
the below table.

The system goes about checking for the gl account from more specific criteria to less
specific criteria.
Thus you can maintain different GL codes for each combination of the above table entry.
This is how SAP will determine the revenue account:
It will go through first table entry CustGrp/Material grp/ account key. If any Gl account is
maintained here the system will then go to the transaction data of the particular billing
document and see whether such a combination of Customer group and material group
exists if it does it will pick that relevant Revenue account and post the accounting
document.
If it does not it moves to the next combination in the table which is Customer
group/account key and so on and so forth Customer grp is maintained in the Sales view of
the customer master. Material grp is maintained in the Sales view of the material master.
Account key is maintained in the pricing procedure for that condition type.
The last option it checks is account key entry. We will now maintain the Gl account for the
combination of Material Grp/account key
Double Click
AAG is the material grp. We maintain this since we want it to post to a different GL code as
Sales 3rd parties. That's it. The system will look into this table see this combination and if
the relevant combination exists in the transaction it will debit the customer account and
credit this account
As simple as it is. So basically the SAP FI-SD integration is for picking up the revenue
accounts or the discounts and surcharges. The account key determines whether it is revenue
or a surcharge or discount.

FI-SD INTEGRATION

Process Flow in SD
Step 1 Receipt of enquiry from customers (only SD is involved)
Step 2 Sending quotations (SD)
Step 3 Receipt of sales order (SD)
Step 4 Delivery of finished goods (SD, MM and FI are involved)
Entry will be
Change in stock a/c Dr
Finished goods inventory a/c Cr
Step 5 Billing and invoicing to customer (SD and FI)
Entry will be
Customer a/c Dr
Sales a/c Cr
For this step create number ranges for document type RV in t code OBA7
Step 6 Receipt of payment (SD-FI)
cash a/c Dr
Customer a/c Cr

Customization Steps
In T-code VKOA assign sales account to account key ERL depending upon the pricing
procedure in SD we have to assign accounts in VKOA
1) Insert regions OVK2
2) Define sales organization OVX5
3) Define distribution channel OVX1
4) Define shipping point OVXD
5) Assign sales organization to co. code OVX3
6) Assign distribution channel to sales organization OVXK
7) Assign division to sales org OVXA
8) Assign sales org/distribution channel to plant OVX6
9) Assign shipping point to plant OVXC
10) Setup sales area OVXG
11) Define rules by sales area OVF2
12) Define pricing procedure determination
13) Define tax determination rules
14) Creation of G/L accts FS00
15) Assign G/L accts VKOA
16) Setup partner determination
17) Assign shipping points OVKC
18) Creation of SD customer master XD01
19) Creation of finished goods material master MM01

20) Maintain condition types VK11

FI-MM Integration
Process Flow in MM
Step 1 Generating purchase requisition( PP-MM involved)
Step 2 Making inquiries (MM)
Step 3 Raising purchase order (MM)
Step 4 Release of purchase order ( MM)
Step 5 Goods received from vendor ( MM and FI )
Entry will be
Raw Material Inventory a/c Dr.
GR/IR clearing a/c Cr.
Step 6 Invoice verification and quality assurance (FI and MM)
Entry will be
GR/IR clearing a/c Dr
Vendor a/c Cr
Step 7 Goods issued for consumption(MM, FI and PP)
Entry will be
Raw material consumption a/c Dr
Raw material inventory account Cr
Step 8 Production receipt( FI, MM & PP)
Entry will be
Finished goods inventory a/c Dr
Change in stock Cr
Step 9 Finished goods delivered to customer(MM, SD & FI)
Entry will be
Change in stock Dr
Finished goods inventory a/c Cr

Step 10 Raising invoice on customers( SD & FI)

Customers a/c Dr
Sales a/c Cr
Step 11 Receipt of payment from customers( Same as SD-FI integration)
CUSTOMIZATION STEPS
Main screen of FI-MM integration is OBYC
Here we have to link the MM movement types to FI G/L accounts
Assign Following G/L accounts to movement type according to valuation class.
BSX- Raw material Inventory account
GBB- Raw material consumption account
WRX- GR/IR clearing account

FI -sd integration

Account Determination is an important integration between SD & FICO modules. whenever

a sale takes place, the system automatically posts the various prices and discounts and
freights to the respective GL accounts through the account keys.

The account key is assigned to the respective GL account. Also in the pricing procedure we
have a column called as account key(second last column). There we assign the account key.
For eg., in Std SAP for basic price we have acct key ERL, for discounts ERS, for Output tax
MWS, for freight ERF, etc. These account keys are basically defined by the FICO consultant
and then the SD consultant assigns the respective account keys against the respective
condition type in the pricing procedure.

The customer group is nothing but the grouping of various customers like wholesaler, retailer,
subsidairies, etc. This is basically useful while maintaining pricing like for X group basic
price is 10Rs, for Y group it is 15Rs. like that. Similarly material group is a grouping of
materials like Ball pens, ink pens, gell pens, etc.

When you create the condition table and select these fields and save it and when you assign
this table to your access sequence, the system searches for the condition record according to
this key combination. For that you have to maintain the condition record in VK11.

Now you are done with pricing. you create the sales order. delivery and invoice. Now for the
system to generate an accounting document when you save the invoice in VF01 you have to
maintain the account determination correctly otherwise the system will give an error - "error
in account determination."

For doing account determination you have to go to :

IMG-sales & distribution-basic functions-account assignmentcosting-revenue account
determination.

In this you first have to maintain the customer account assignment group and material
account assignment group. This group for the customer means for which customer whether
domestic or foreign etc. For material whether finished, semi finished, raw material, etc. You
can also maintain as per name of the division.

This account assignment group you have to assign in customer master as well as material
master. In customer master (XD01) -sales area data- billing you have customer acct asst
group, make an entry here. In material master (MM01)-sales:sales org.2 you have account
asst group, make a proper entry here also.

Note: Regarding condition types KOFI & KOFK

KOFK: KOFK is used when ever we are posting the document where a cost is involved that
can be checked via the Requirment class in the Sales order in the Procurment step. In the
requirements class there is "E" in account assignment category & hence you have to use
KOFK.

KOFI: If there is no "E" in the account assignment category then use KOFI.

Now in the above IMG path only you have access sequence, condition type, procedure.
maintain everything and assign properly the procedure to the billing document type.

Define the account keys & assign them properly in the pricing procedure.

Now go to transaction code VKOA. You will see 5 tables. first is customer group/material
group/acct key. When you double click on this it will show as following:
Application, condition type, chart of accounts, sales org., customer acct asst group, material
acct asst group, acct key, G/L acct, provision acct. depending upon your customer type and
material type you have to maintain all the columns and the respective G/L accounts. The first
table is for more specific assignments & the other tables are for general assignments.

Now whenever you make a sales order, delivery and invoice and when you save the incoice
the system will automatically post the price, discount, tax, freight to the respective G/L
accounts. This will make an accounting document which will show the exact value of price,
discount, tax, freight for that particular transaction.

Apart from this when you do PGI in the delivery the system updates various G/L accounts
related to inventory.

Also as far as profitability analysis is concerned it is an important integration between SD &

FICO basically known as "profitability analysis - CO-PA".
Now the link between SD and FI :-

1. Whenever you create a delivery with reference to a sales order, goods movement takes
place in the bacgground. eg. In case of standard sales order, you create an outbound goods
delivery to the customer.
Here movement 601 takes place. This movement is configured in MM. Also, this movement
hits some G/L account in FI. Every such movement of good s hits some G/L account.

2. The accounts posting in FI is done with reference to the billing documents (invoice, debit
note, credit note etc) created in SD. Thus this is a link between SD and FI

3. Tax determination: In case of a tax determination also, there is a direct link between SD
and MM

SD Integration points with other modules

SD module is highly integrated with the other modules in SAP.

Sales Order
Integration Points

Module

Availability Check

Credit Check
Costing

MM

FI

CO/ MM

Tax Determination

Transfer of Requirements

FI
-

PP/ MM

Delivery & Goods Issue

Integration Points

Module

Availability Check

MM

Credit Check

FI

Reduces stock

MM

Reduces Inventory $
Requirement Eliminated

FI/ CO
-

PP/ MM

Billing Integration Points

Debit A/R

Module
-

FI/ CO

Credit Revenue
Updates G/ L

FI/ CO

FI/ CO

(Tax, discounts, surcharges, etc.)

Milestone Billing

PS

Return Delivery & Credit Memo Integration Points

Module

Increases Inventory

MM

Updates G/ L

FI

Credit Memo

FI

Adjustment to A/R

FI

Reduces Revenue

FI

Accounting Entries:
1. Sales Order Created
-No Entry-

2. PGI done (Goods issue)

Cost of Goods Sold

Dr (Configured in OBYC GBB T-Key)

To Inventory Account

3. Billing document released to Accounting

Customer Account Dr.
To Sales Revenue Account (ERL T-key in Pricing procedure)
Note : The GL account is assigned to this ERL in VKOA

4. Payment Received
Bank Clearing A/c Dr
Customer A/c Cr.
Points to Know : Good to understand the pricing procedure and how the different transaction
keys are used like ERL, ERS etc.
FI-SD Integration:

Rev AC determination

1. Sales Order Created

-No Entry-

2. PGI done (Goods issue)

Cost of Goods Sold

Dr (Configured in OBYC GBB T-Key)

To Inventory Account

3. Billing document released to Accounting

Customer Account Dr.

To Sales Revenue Account (ERL T-key in Pricing procedure)

Note : The GL account is assigned to this ERL in VKOA

4. Payment Received

Bank Clearing A/c Dr

Customer A/c Cr.