FINANCIAL ACCOUNTING OVERVIEW
The Financial Accounting (FI) module is the core module within the
financials application. Almost all functionality that resides in the
other financial application modules relies on the implementation of at
least parts of the FI module. Financial Accounting is designed to
provide financial information from an external view. The main FI components offer
functionality for the general ledger, accounts receivables and accounts
payables, asset management, a special ledger used to meet user specific
requirements, funds management, and legal consolidations. The general ledger (G/L) houses
the chart of accounts as well as the account balances and line items.
The G/L tracks all transactional postings, such as inventory updates,
sales revenues, bank accounts, and expenses. Accounts Receivable (AR) and Accounts Payable (AP) are subledgers of the G/L that support the processes involved with the collection of revenues and payments of expenses. Combined AR and AP facilitate
maintaining customer or vendor records, account balances and line
items, payments, clearing, advice notices, dunning, interest
calculations, check releases, and over/underpayment management. The
AR/AP information systems support reporting for due date breakdown,
payment history, days sales outstanding, overdue items, and currency
risk. Asset management is another subledger to the G/L that focuses on the management of the fixed assets in an organization. Asset management maintains
the master records for the assets, special valuations, country-specific
requirements, and four types of depreciation calculations, one of which
is for cost depreciation. The special ledger functionality
supports the ability to create other ledgers or subledgers for specific
user requirements. Special ledgers can pull information from other
modules and can support simplistic allocations. In addition to the
ledgers and subledgers, FI contains functionality supporting funds
management and legal consolidations. Funds management provides
the capabilities to define planned revenues and expenses for the
management areas, monitor these transactions as compared to available
funds, and prevent exceeding the budget. Once all transactions have been
completed, consolidations can be performed. Legal consolidations
functionality supports providing consolidated financial information for
companies and business areas. Business areas are utilized primarily for
external reporting of business segments across companies.
CONTROLLING OVERVIEW
The Controlling (CO) module is the symbiotic counter to the FI module and is designed to provide financial information from an internal managerial accounting view. To support this view of accounting, the CO module offers functionality for cost center accounting, activity-based costing, order and project accounting, product costing, and profitability analysis. Cost center accounting focuses on showing the expenses of the organization from a departmental view for the purpose of supporting responsibility accounting. Cost center accounting also supports
the planning, budgeting, controlling, and allocation of departmental
expenses. Additionally, many organizations desire to show the expenses
of the organization within a process view. This process-oriented view is
supported by the activity-based costing component. Within
organizations, costs might be incurred to support events and
overheadrelated projects. The order and project accounting capabilities
of CO support planning, monitoring, capturing, and allocating the
expenses related to these events. For production-related organizations,
many of the cost centers capture expenses that later will be attributed
to products to determine product costs. The product costing component of the CO module focuses on
the creation of the standard product cost estimates, charging of
overhead to production, capturing actual costs of production,
calculating production variances, and settling production expenses to
the appropriate profitability market segment. All of the expense objects
—cost center, process, event or project, and products—allocate or
settle costs to the profitability analysis component, which supports the
generation of market profit and loss (P/L) statements at a gross and
contribution margin level. The next section provides more details on the
CO module components, especially for ABC.