FICO module in SAP is used for managing and
analyzing the financials of the organization.
This module helps the financials managers of the organization to analyze
the financial position of the company in real time compared to other legacy
systems. This module is divided into two main components.
FI – Financials
CO- Controlling
The FI component allows the financial transactions
to be captured in real time and comprises of following sub modules.
1.
General
Accounting
2.
Accounts
receivables
3.
Accounts
Payables
4.
Special
Ledger Accounting
5.
Asset
accounting
6.
Bank
Accounts
7.
Funds
management
8.
Legal
consolidations
9.
Travel
management etc.
The CO component allows the analysis on the
financial data’s and comprises of following sub module.
1.
Cost
Element Accounting
2.
Cost
Controlling
3.
Cost
Center Accounting
4.
Internal
Orders
5.
Activity-Based
Costing
6.
Product
Cost Controlling
7.
Profitability
Analysis
8.
Profit
Center Accounting etc.
The FI module is integrated with other SAP Modules
such as MM (Material Management), SD (Sales and Distribution), PP (Production
Planning), PM (Plant Maintenance) ,PS (Project Systems), and HR (Human Resources).
As the first part of the tutorials we will go
through the FI components and the CO part will be cover in the latter parts.
General
Accounting:
Definition:
GENERAL ACCOUNTING involves the basic principles, concepts and accounting
practice, recording, financial statement preparation, and the use of accounting
information in management.
General accounting is a process of recording all the
financial transaction of the company on a day to day basis and measurable in
terms of monetary value.
Accounts
Receivables:
Definition:
Money
which is owed to a company
by a customer
for products
and services
provided on credit.
This is often treated as a current asset
on a balance sheet.
A specific sale
is generally only treated as an account
receivable
after the customer is sent an invoice.
Accounts receivables is the money owed by the
business to its customers which means the company is supposed to receive some
amount from its customers on behalf of sales or services. These amounts are shown in the balance sheet
as Assets.
Accounts
Payables:
Definition:
Money
which a company
owes
to vendors
for products
and services
purchased on credit.
This item appears on the company's
balance sheet
as a current liability,
since the expectation is that the liability will be fulfilled in less
than a year.
When accounts payable
are paid
off, it represents a negative cash flow
for the company.
Accounts payables is the money the company is
supposed to pay to its vendor or its supplier for the purchase of raw materials
etc. These amounts are shown in the balance sheet as liabilities.
General
Ledger:
Definition:
A
general ledger is a complete record of financial transactions over the life of
a company. The ledger holds account information that is needed to prepare
financial statements, and includes accounts for assets, liabilities, owners'
equity, revenues and expenses.
A general ledger is typically used by businesses
that employ the double-entry bookkeeping method - where each financial
transaction is posted twice, as both a debit and a credit, and where each
account has two columns. Because a debit in one account is offset by a credit
in a different account, the sum of all debits will be equal to the sum of all credits
Special
Ledger accounting:
Special Ledger,
as the name suggests, a specialized version of the General Ledger. Special
ledgers that could adopt a different set of accounting rules and could derive
data directly from other ledgers.
As the graphic suggests, the significant advantage of using special ledgers is that they could be derived from general ledger or other specialized ledgers. When transiting the amounts to one ledger to another, specific rules could also be defined to modify attributes or amounts. In this way, it is possible to build an accounting system in parallel, with an official General Ledger accounting representing, for example, the local accounting rules, and other specialized ledgers that represent the international accounting principles or other purposes.
Asset
Accounting:
Definition:
Asset
accounting is the accounting of the asset accounts such as: cash, accounts
receivable, inventory, buildings, land, equipment and intangible assets.
Assets are divided into two categories--current
assets and long-term assets. Current assets will be depleted within one year
and include cash, accounts receivable and inventories. Long-term assets will be
owned and held for more than one year and include land, buildings, equipment
and intangible assets.
Bank
Accounting:
Bank Accounting allows for management of bank
transactions in the system including cash management.
Consolidation:
Consolidation enables the combining of financial
statements for multiple entities within an organization. These statements
provide an overview of the financial position of the company as a whole.
Funds
Management:
Funds Management allows management to set budgets for revenues and expenses within your company as well as track these to the area of responsibility.
Funds Management allows management to set budgets for revenues and expenses within your company as well as track these to the area of responsibility.
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