SAP FICO Interview Questions and Answers

SAP FICO stands for FI (Financial Accounting) and CO (controlling).  In SAP FICO, SAP FI take cares about accounting, preparation of financial statements, tax computations etc. while SAP CO take cares of inter orders, cost sheet, inventory sheet, cost allocations etc. It is the software that stores data, and also computes them and retrieves the result based on the current marketing scenario. SAP FICO prevents data lost and also does the verification and reporting of data.

The other modules to which ‘Financial Accounting’ is integrated are

1. Sales and Distribution
2. Material Management
3. Human Resource
4. Production Planning
5. Controlling of financial transaction

The organizational elements in SAP FI are:

1. Company Code
2. Business Area
3. Chart of Account
4. Functional Area

In order to determine the transaction type which is entered in the line item, a two-digit numerical is used known as ‘Posting Key’

Posting key determines

1. Account Types
2. Types of posting. Debit or Credit
3. Field status of transaction

To generate financial statements like Profit and Loss statement, Balance sheets etc. company code is used.

You can have one Chart of Account for one company code which is assigned.

There are three currencies that can be configured for a Company code, one is a local currency and two are the parallel currencies.

Fiscal year in SAP is the way financial data is stored in the system.  In SAP, you have 12 periods and four special periods.

These periods are stored in fiscal year variant that is:

1. Calendar Year: From Jan-Dec, April-March
2. Year dependent fiscal year

SAP system does not know what is broken fiscal year.

In a year dependent fiscal year variant, the number of days in a month is not as per the calendar month.  For example, in year 2016, month January end on 29th, month Feb ends on 26th etc…

For each country tax procedure is defined, and tax codes are defined within this.  There is a flexibility to either expense out the Tax amounts or capitalize the same to stocks.

For each functional area in SAP Validation or Substitution is defined eg, Assets, Controlling etc. at the following levels

• Document Level
• Line item Level

• FI- Financial accounting
• CO-Cost accounting
• AM-Asset accounting
• GL-Special purpose ledger
• CS-Consolidation
• PS-Project system
• RE-Real estate
• PC-Profit center accounting

FSV (Financial Statement Version) is a reporting tool. It can be used to extract final accounts from SAP like Profit and Loss Account and Balance Sheet.  The multiple FSV’s can be used for generating the output of various external agencies like Banks and other statutory authorities.

‘Field status groups’ control the fields which come up when the user does the transactions.  In FIGL (Financial General Ledger) master, the field status group is stored.

To get an overview of external accounting and accounts, G L (General Ledger) accounting is used.  It does the recording of all business transactions incorporated with all other operational areas in a software system and also ensures that the accounting data is always complete and accurate.

For all SAP transaction, the default exchange rate is M (Average Rate).

• Manual payment without the use of any output medium like cheques etc.
• Automatic payments like DME (Data Medium Exchange), cheques, Wire transfer.

The problem faced when a business area is configured, is splitting of account balance which is more pertinent in the case of tax accounts.

The customizing pre-requisite for document clearing is to check the items cleared and un cleared, and this is done by open item management.  Open item management manages your outstanding account, i.e. account payable and account receivable. For instance, an invoice item that has not yet been paid is recorded as open account until it is paid.

GR/IR (Good Received/ Invoice Received) is an interim account.  In the legacy system, if the goods are received and the invoice is not received, the provision is made, in SAP at the goods receipt. It passes the accounting entry debiting the Inventory and crediting the GR/IR account.  Similarly, when an invoice is received the vendor account is credited, and the GR/IR account is debited, the GR/IR will show as an un-cleared item till the time the invoice is not received.

Each company code can have two additional currencies, in addition to the company code, currency entered to the company code data.  The currency entered in the company code creation is called local currency and the other two additional currencies are called parallel currencies. Parallel Currencies can be used in foreign business transactions.  In order to do international transaction, parallel currency can be used. The two parallel currencies would be GROUP CURRENCY and HARD CURRENCY.

To track the cost, internal orders are used; they are proposed to be incurred over on a short-term basis.

Yes, it is possible to calculate depreciation, to do that you have to switch on the indicator Dep. to the day in the depreciation key configuration.

In Asset Accounting, chart of depreciation is rated as the highest node, and this is assigned to the company node. All the depreciation calculations are stored under the chart of depreciation.

The asset class is the main class to classify assets.  Every asset must be assigned to only one asset class.  Example of asset class is Furniture & Fixtures, Plant & Machinery, and Computers etc. The asset class also contains G1 account, when any asset is procured, G1 account is debited. Whenever you create and asset master, it becomes mandatory to mention the assets class for which you are creating the required assets. So, whenever any asset transaction occurs, the G1 account attached to the asset class is automatically picked up and the entry is passed.  You can also specify the default values for calculating the depreciation values and other master data in each asset class.

‘Capital WIP’ is referred to as Assets under construction in SAP and is represented under specific asset class.  Depreciation is not charged under ‘Capital WIP’ usually.  The cost incurred on building a capital asset can be booked to an ‘internal order’ and through the settlement procedures and can be posted onto an ‘Asset Under Construction’.

The major components of Chart of Accounts are:

• Chart of account key
• Name
• Maintain Language
• Length GL account number
• Controlling Integration
• Consolidation-Group chart of accounts
• Block indicator

To immune your company from the risk of bad debts and multiple outstanding receivable, you can set a credit limit for your customer by using credit control area in SAP. With the help of SAP, you can block the deliveries to your customer based on the credit limit and the accounts receivable balance in their account which is maintained by you.

By using transaction code OB45 or path you can create Credit Control Area in SAP

SPRO > enterprise structure > maintain structure > definition > financial accounting > maintain credit control area and then enter the following description

1. Update
2. Name of the credit control area in SAP
3. Currency
4. Description
5. Credit Limit
6. Risk Category
7. Fiscal Variant
8. Rep group

In fiscal year posting period is a period for which the transactions figures are updated.  The posting period variants in SAP is accountable to control which accounting period is open for posting and ensures that the closed periods remain balanced.

Field status group is a group configured in FSV (Field Status Variant) to maintain field status for G/L (General Ledger) accounts.  It controls which field should suppress, display, optional and required.

A short-end fiscal year results when you change from a normal fiscal year to a non-calendar fiscal year, or other way around. This type of change happens when an enterprise becomes part of a new co-corporate group.

To control the data that needs to be entered at the time of the creation of a master record an account group is used.  Account group exist for the definition of GL account, Customer Master and Vendor.

The purpose of “Document type” in SAP is

1. Number range for documents are defined by it
2. Types of accounts that can be posted are controlled by it, e.g. Assets, Vendor, Customer, Normal GL account
3. It is used for the reversal of entries

No. Business area is at client level which means other company codes can also be posted to the same business area.

APP stands for ‘Automatic Payment Program’; it is a tool provided by SAP to companies to pay its vendors and customers.  APP tools help to avoid any mistakes taken place in posting manually. Also, when number of employees is more in the company, payment through APP becomes more feasible.

Country Chart of Accounts contains G/L (General Ledger) accounts needed to meet the country’s legal requirements.

Tolerance determines whether the payable places matching or tax hold on the invoice. The following are the instances of tolerance can be defined for Logistic Invoice Verification.

• Small differences
• Moving average price variances
• Quantity variances
• Price variances