4 Accounting

Information Systems

Module 3 Assignment Hand-In Version Purchasing Example Using SAP ERP

Last revised 12/01/2007 Name: _______________________ SAP # (XX): ____ Step 1: Tasks 1.1 1.6 For each of the above accounts under the first tab (Type/description) examine the entries in the Control in chart of accounts box including the Account group and radio button that is selected. Now explain why each account has the values that are present. (Note: The answers to these questions are very straightforward, but we want you to think about why the system needs to know this information in order to function properly.) 1.1 1001 Cash: This is a balance sheet account and it is a liquid funds account because it is an asset and the most liquid asset of any account. 1.2 2001 Accounts Payable: This is a balance sheet account that is a liability and is an account where the company pays outstanding balances on vendor accounts 1.3 Before going to the next account, lets analyze the Accounts Payable account closer. This account is special. Look at the Control data tab and note what the Reconciliation account is. What is this all about? This is because the vendors decide what we pay for their products and accounts payable is dependent on that 1.4 5001 Cost of Goods Sold: This account is a profit/loss account because it subtracts from income 1.5 1115 Goods Rcvd/ Invoice Rcvd: This account is a balance sheet account and is that is used for 1.6 Now lets analyze the Goods Rcvd/ Invoice Rcvd account closer. This account is necessary because of timing differences in the real world. This is what is termed a suspense or holding account. Briefly explain how entries would be made to this account (i.e. What transactions happen and how are they recorded?) and why all transactions in the account should eventually be zeroed out. (If you dont grasp this concept yet, you may wait to answer this part until you do some of the later transaction steps.) Entries for this account occur when the order is placed and then it is back out when the order is finally purchased Step 2: Examine System Settings Write down the fiscal year variant for your company code. _K4____ 2.1 What is the fiscal year variant for your company code (90XX) and what does this mean from the point of view of the accounting system?

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The fiscal year variant is K4 and this determines how many posting periods the fiscal year has and how the system determines the posting periods when posting. 2.2 The university would use fiscal year variant V6. Explain why this is the fiscal year variant for the university. The university would use this because the school year ends in June. Step 3: Create a Material Master record for a Finished Product 3.1 What type of application control is used on the field Base Unit of Measure? (Pick from the list of controls on pages 1 & 2 of this assignment.) Validity Check 3.2 What type of application control is used on the field Gross Weight? Field Check 3.3 How is the standard price used in the accounting system? (Think about what you did in your cost/managerial accounting class.) It allows for the system to process what the standard price is and then it can apply it to the correct fields Write down the message on the status bar. Material BIG_TROPHY01 created Step 4: Create a Vendor Master record (we will buy the finished product from this vendor) 4.1 What did the system do as an application control? That is, how did the system know that this was wrong?

4.2 The Rec. Account is a very important entry. Explain this entry. (Hint: This links back to the account you looked at in the chart of accounts.) This is important because it links back to the accounts payable and this is the vendor that we are buying from 4.3 What is a tolerance group and how would it be used as an application control? What type of application control is tolerance group? It is an activity that you predetermine various amount limits for your employees with which you determine. Ex: the maximum document amount the employee is authorized to post. The application control associated with a tolerance group is a limit check 4.4 What are the payment terms from this vendor? Since we are a new customer for this vendor, we may be able to negotiate changing these terms in the future.

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What factors would probably be important to getting more favorable terms? The payment terms are that the payment is due immediately Write down the message on the status bar. Vendor 0000009601 has been created for company code 9001 purchasing organization 9001 Step 5: Create an Information record for Vendor/Material 5.1 What is this telling us? What kind of a system control is this particular message? This is just checking to make sure that the information that was put in is the information that is wanted. This a validity check. 5.2 Explain how the above data can be a strong control in the purchasing process. This is a strong control because the system knows the minimum and standard quantity for the item and wont let orders happen out of this range. This is a range check. Write down the Information record number shown on the status bar. Purchasing info record 5300005522 9001 9001 created. Step 6: Check status of various accounts. MM Inv. Qty 50000 50000 0 0 50000 GL Cash 0 0 0 0 -1500 GL Inv. 0 0 0 0 1500 GL AP 0 0 0 1500 0 GR/IR 0 0 1500 0 0 Vendor Subledger 0 0 0 1500 0

After Step 5 After Step 7 After Step 9 After Step 11 After Step 13

Step 7: Create a Purchase Order to buy the Finished Product Write down purchase order number 4500017095 Step 8: Repeat the checks in step 6 and record in that table. Step 9: Receive the Product from the Vendor Write down Material document number 5001200009 Step 10: Repeat the checks in step 6 and record in that table. Step 11: Receive the Invoice from the Vendor Write down Invoice number 5105608660.

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Step 12: Repeat the checks in step 6 and record in that table. Step 13: Make the Payment by Cash to the Vendor Write down the document number. 1500000000 Step 14: Repeat the checks in step 6 and record in that table. Step 15: Write down the journal entries the system made By using the information contained within the table in step 6, construct all of the journal entries that were made by SAP for these transactions. For each journal entry show the step number of the transaction, the accounts debited and credited and the dollar amounts involved. Use the following format: Step #: Step #: etc. End of Assignment Account 1 Account 2 Account 3 Account 4 $$$ $$$ $$$ $$$

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