Finance & Accoun ng - Interview Ques ons & Answers

1. What are Intangible Assets? What are the recogni on criteria for Intangible assets?

Intangible assets are those that do not have physical existence. Like fixed assets future economic benefits must flow
from Intangible assets.

E.g. - Patents, Copyright, Goodwill

For recogni on of Intangible assets:

a. future economic benefits must flow and

b. cost of the asset can be reliably measured.

2. What are Fic ous Assets?

Fic ous assets are

a. not assets indeed,

b. these are simply debit balances shown in the asset side of the balance sheet.

c. these are losses and expenditures which are to wri en off in future years.

d. Examples - Debit balance of P&L account, pre-incorpora on expenses, preliminary expenses etc.

3. What are Preliminary expenses? What is deferred revenue expenditure, give an example?

Preliminary expenses are expenditures incurred before incorpora on of the business. These are incurred to bring
business into existence. They have to be wri en off over a period of not more than 5 years.

Deferred revenue expenditure is

a. revenue expenditure by nature

b. but the benefit of these will be derived in more than one accoun ng year.

c. It is thus wri en off in as many years or five years’ me.

4. What are Con ngent Assets and liabili es?

Con ngent Assets and liabili es are poten al assets and liabili es however the ming and amount is uncertain.

a. It may or may not come into existence upon happening or non-happening of future event.

b. These are not recognized in financial statements but shown in the notes to financial statements. Example of
con ngent liability – outstanding lawsuit

5. What is subsidiary book, name them?

Subsidiary books are the books of original entry thus books where first me recording takes place from vouchers.

a. Ledger pos ngs take place from subsidiary books.

b. These are – Purchase Book, Sales Books, Purchase Returns, Sales Return, Cash Book, Journal, Bills Receivable and
Bills Payable.
6. What are Sub-ledgers?

a. A subsidiary ledger is a group of similar accounts that work as an itemiza on of pos ng to General Ledger.

b. Subsidiary ledgers facilitate recording of complete financial and other informa on related to the transac on.

c. The General ledger Account the summarizes a subsidiary ledgers account balances is called the Control account

e.g.- Accounts Payable, Receivable, Assets, Inventory.

7. What is a ledger?

a. A ledger is a principal book or book of final entry. It is where all the accounts (Assets/ Liabilities/ Expenses/
Income) It is a book of permanent record from where Trial balance can be drawn and financial statements are
prepared.

b. are maintained and transactions are transferred from books of original entry.

8. What is the difference between P&L and Balance sheet?

a. P&L is an Account or Balance sheet is a statement.

b. P&L is prepared to analyze profitability of business from operating, non-operating activities. Balance sheet
reflects statement of financial position of business.

c. P&L is made from Expense/ losses and Income/ Gain account. Balance sheet is made from asset, liability and
capital account.

d. Accounts shown in P&L are not carried forward to next year. Accounts shown is balance sheet are carried
forward to next year.

e. Net balance of P&L Account goes to Balance sheet in Reserves/ Surplus/ Capital/ P&L A/c.

9. What is the difference between accoun ng and bookkeeping?

a. Accounting is preparation of financial statements, Analyzing, Compliance with GAAP.

b. Bookkeeping is recording of Ledgers and Subledgers.

c. Accounting starts where bookkeeping ends.

d. Bookkeeping is clerical.
 10. What is Balance sheet? Why is it prepared? Why does Balance sheet match?

a. Balance sheet is statement of financial position. Balance sheet summarizes & equates Assets against Liabilities
and Shareholder’s equity on a specified date.

b. Balance sheet is essential since it gives snapshot of financial health for business. It shows Sources from where
funds were raised (i.e. Liabilities+ Equity) in the business and Application of funds (i.e. Assets).

c. Balance sheet should always match since

i. All Accoun ng transac ons are posted with Accoun ng Equa on balanced i.e. Assets = Equity + Capital.

ii. All transac ons posted follow dual aspect of accoun ng that is Debit = Credit.

11. What are Accruals? What are deferrals?

a. Accruals are Income Accrued i.e. Income earned but not received and Outstanding Expenses i.e. expenses
incurred but not paid. When closing a month/ year these are required to be considered and posted
correspondingly. E.g. Rent due but not paid.

b. Deferrals are Income received in advance/ Unearned Income and Prepaid Expenses. Thus, all amounts received
in advance for an Income that has not been earned and all payments made in advance against an expense that
has yet not been incurred are categorized as deferrals. These are accumulated in prepayment account and later
charged/ carried to respective accounts as periods.

12. Provide, origina ng entries and Reversal entries for?

Sol. Originating Reversal

Debit - Prepaid expense Debit - Expense
Prepaid expense
Credit - Cash/ Bank Credit - Prepaid expense
Debit - Expense Debit - Outstanding expenses
Outstanding expense
Credit - Outstanding expense Credit - Cash/ Bank
Unearned Income/ Debit - Cash/ Bank Debit - Income Received in advance
Income received in Advance Credit - Income received in Advance Credit - Income
Debit - Income Accrued Debit - Cash/ Bank
Accrued Income
Credit - Income Credit - Income Accrued
13. Define & Categorize these Accounts in Balance sheet both on Tradi onal and Modern approach?

a. Prepaid expense – Expenses paid but not yet incurred for.

e.g. - Insurance paid for 12 months in advance.
Current Asset.
Personal.

b. Outstanding expenses A/c – Expenses incurred but not paid for.

e.g.– Rent for month of March paid in May.
Current Liabili es.
Personal.

c. Income Accrued – Income earned but not received.

Current Liabili es.
Personal.

d. Personal Unearned Income – Current liabilities. Personal.

e. Deferred revenue expenditure – non-current fictitious Asset. Personal.

14. If Purchase is made from Mr. Kumar for list price Rs. 1,00,000 and trade discount is of 10% also cash discount given
is 2%. Please give the journal entry?

Purchase A/c Debit 90,000

Cash Credit 88,200

Discount A/c Credit 1,800

15. If Purchase is made from Mr. Kumar for list price Rs. 1,00,000 and trade discount is of 10% also cash discount given
is 1%. Half of the amount was paid by cheque immediately. Please give the journal entry?

Purchase A/c Debit 90,000

Mr. Kumar/ AR A/c Credit 45,000

Bank Credit 44,550

Discount A/c Credit 450

16. If Asset was purchased or historical cost of asset was Rs. 50,000; Accumulated deprecia on is Rs. 35,000. If the
Asset is disposed what is the journal entry?

Accumulated Deprecia on A/c Debit 35,000

Loss of Asset disposal A/c Credit 15,000

Asset A/c Credit 50,000

17. If in the above situa on the Asset is sold for Rs. 20,000 what will be the J. Entry?

Bank A/c Debit 20,000

Accumulated Deprecia on A/c Debit 35,000

Profit on sale of Asset A/c Credit 5,000

Asset A/c Credit 50,000

18. In an Intercompany transac on A ltd. Purchases Fixed Assets Rs. 50,000 for & on behalf of sister company B ltd.
Journalize the transac on?

In the books of A ltd.-

B ltd A/c Debit 50,000

Bank A/c Credit 50,000

In the books of B ltd. –

Fixed Asset A/c Debit 50,000

A ltd. A/c Credit 50,000

19. Goods/ stock of Rs. 30,000 were destroyed in fire and Insurance company admits 60% of the claimed value?

Loss of stock due to fire A/c Debit 12,000

Insurance Company A/c Debit 18,000

Purchase A/c Credit 30,000

Profit & Loss A/c - debit 12,000

Loss of stock due to fire - credit 12,000

20. If in the above ques on salvage value of stock is 5,000 what will be the journal?

Cash A/c Debit 5,000

Loss of stock due to fire A/c Debit 7,000

Insurance Company A/c Debit 18,000

Purchase A/c Credit 30,000

21. What is a Suspense A/c?

A Suspense A/c is an account in which the amount of difference in Trial balance is posted ll such me errors are
iden fied and rec fica on entries are posted.

A Suspense account is an outcome of accoun ng errors that affect trial balance. Normally a Suspense account should
stand balanced a er all errors have been rec fied a er before prepara on of Balance sheet.

22. What are errors of commission?

Errors of commission that arise due to

a. Wrong recording, errors of posting- (these does not affect agreement of trial balance).

b. Wrong casting (subsidiary books), wrong carry forward, wrong balancing – (these affect T.B.).

23. What is accrual basis of accoun ng?

a. Income is recognized and recorded when they are earned.

b. Expenses are recognized and recorded when they are incurred.

24. What is a matching concept?

According to this principle expenses incurred in an accoun ng period to earn a revenue should be recognized and
matched with the revenue so earned is recognized in that period. E.g.- If revenue is recognized on all goods sold during
the period, cost (COGS) of those goods sold should also be charged to that period.

Matching concept = Accrual concept + Revenue recogni on concept.

25. What is the principle of prudence or conserva sm?

According to this principle “An cipate no profits and gains” however “provide for all possible losses”.

a. Do not overstate Assets and Profits/ Income.

b. Do not understate Liabilities and losses/ expenses.

26. What is Revenue Recogni on principle / AS-9?

Revenue from Sale of goods and services should only be recognized

a. If the transaction has actually taken place i.e. goods sold or service rendered.

b. The ownership and risk for the goods have been transferred to the buyer.

c. There is no uncertainty as to collectability of amount.

27. How do we make accruals/ provision at period end/ year end?

Accruals are made for

a. Accrued Income – Income earned but not received.

b. Outstanding expenses – Expenses incurred but not paid.

28. How do we make deferrals at period end/ year end?

Deferrals are made for

a. Unearned Income – Income received in advance i.e. not yet earned.

b. Prepayment of expenses- Expenses paid for but not yet incurred.

29. What are the source documents to record transac ons in following books?

a. Purchase book - Invoice from Vendor

b. Sales book - Invoice issue to customer

c. Purchase returns - Debit note issued

d. Sales returns - Credit note sent out

30. What is the difference between Trade discount and Cash discount?

Trade Discount Cash Discount

It is given to promote Sales It is given to encourage prompt payment

It is reduced from the list price It is reduced from the Invoice price

It is shown by way of deduc on from Invoice It is not shown on Invoice

It is not account for in ledger It is accounted for in ledgers (Cash book)

30. Is it possible to debit –>Cash/ Bank and Credit -> Unearned Income/ Income received in advance A/c, In what
condi ons?

Yes, when at the me of receiving the payment, it known that Income is received in advance and amount is
ascertainable then Unearned Income A/c is credit instead of concerned Income A/c.
31. Is it possible to debit – prepaid expenses and credit Cash/ Bank A/c, In what condi ons?

Yes, when at the me of making the payment, it known that expense is a pre-payment and the amount is
ascertainable then Prepaid account is debited instead of the concerned expense.

32. What is the difference between Reserves and provisions?

Reserves Provisions

Reserves are created as an appropria on of Profits Provisions are created as charge against profits

Reserves are created to strengthen financial posi on and Provisions are created against specific assets the
to meet any future losses & liabili es.
loss or liability of which is uncertain e.g.- Provision for
Doub ul debts, Provision for deprecia on

Reserves are shown in liabili es side of Balance Provisions are shown on Assets side of balance

sheet sheet as deduc on from the concerned asset.

Reserve can be created only if sufficient profits. Provisions are created even if losses in business.

Reserves can be distributed as dividend to shareholders. Provisions cannot be distributed as dividend to

shareholders.

33. How do we account for Goods sent by HO to Branch, at both places?

In the books of Head Office –

Branch A/c - debit

To Goods sent to Branch A/c - credit

In the books of Branch –

Goods received from HO A/c - debit

To H.O. A/c - credit

34. How do we account for expenses incurred by HO on behalf of Branch, at both places?

In the books of Head Office –

Branch A/c - debit

To Cash - credit

In the books of Branch –

Expenses A/c - debit

To H.O. A/c - credit

35. Where does Closing stock show in Trial balance?

Normally closing stock shows outside the TB since stock valua on completes a er prepara on of TB. In that case
Closing stock has two effects in financial statements – Credit to Trading A/c & shown as Current asset in Balance sheet.

If closing stock shows in T.B i.e. stock taking has been done before prepara on of T.B. Then following adjustment entry
has been passed.

Closing stock - debit

To Purchases A/c - credit

Thus, closing stock is debit balance in T.B. and purchases a/c in T.B. has been adjusted for closing stock. Closing stock in
this case has only one effect i.e. shown as Current asset in Balance sheet.

36. What are adjusted purchases?

Adjusted purchases are – Net Purchases (Purchases less: returns) + Opening stock - Closing stock

37. What is Window dressing in Balance sheet or books?

Act of falsifica on in accoun ng records so that it shows a posi on be er than it actually exist.

E.g. Overcas ng Assets and Income and Under cas ng – losses and liabili es.

38. What are Real / Personal / Nominal Accounts?

Real – these are all Tangible and Intangible Assets except debtors and banks

Personal – the amount due to or due from persons that can be Natural, Ar ficial and Representa ve Persons.

Nominal – are all A/cs that are Expenses/ losses and Income/ gains

39. What are the three Golden rules in accoun ng?

Real – Debit what comes in / Credit what goes out

Personal – Debit the receiver / Credit the giver

Nominal – Debit all expenses / losses Credit all Income/ Gains

40. What is the Accoun ng Equa on?

The accoun ng equa on is fundamental in accoun ng and represents the rela onship between a company's assets,
liabili es, and owner's equity.

Assets = Liabili es + Owner’s Equity

41. What all transac ons come on debit side of Asset A/c?

a. Purchase.
b. Additions.
c. Upward revaluation.
d. Capitalization of expenses (installation etc.).

42. What transac ons come on credit side of Asset A/c?

a. Depreciation.
b. Impairment.
c. Sale of assets.
d. Disposal of assets.
e. Transfer.
f. Downward revaluation.

43. What are different methods of accoun ng for Deprecia on?

a. Directly charging deprecia on to Asset A/c

b. Accumula on of deprecia on Accumulated deprecia on A/c (normally used in corporates)

c. Sinking fund method

44. In which method -deprecia on is high in the beginning and declines later?

Wri en down value method

45. Which type of errors does not affect the trial balance?

Errors that do not affect the Trial balance.

a. Error of Complete omission

i. Omission in recording of a transac on in Subsidiary books

ii. Omission of pos ng in all related accounts of transac ons.

b. Error of Commission

Related to subsidiary:

i. Error of recording a wrong amount in the correct book.

ii. Error in recording a correct amount in wrong book

Related to ledger book:

i. Posting of a correct amount on the correct side of wrong account.

c. Error of principle.

d. Compensatory errors
46. What is error of commission, give example?

If an amount is recorded on the wrong side or in wrong account or the totals are wrong or a wrong balance is struck, it
will be a case of error of commission.

47. Which type of errors affect Trial Balance?

1. Error of Par al Omission

2. Error of Commission

Related to subsidiary:

a. Error of casting
b. Error in carrying forward

Related to ledger book:

a. Error of posting on the wrong side of a correct account

b. Error of posting of wrong amount
c. Wrong balancing/ totaling of an account
d. Error in carrying forward / totaling of an account

48. What is return on capital employed? What is cost of equity?

ROI or Return on Capital Employed = EBITD / Capital Employed

Capital employed = {Share capital (Equity + Preference) + Reserves & surplus + Long term loans}

less: - [Fic ous assets + Working capital i.e. current assets- current liabili es]

Or,

Capital employed = (Total assets – fic ous assets) – current liabili es Total assets

= Fixed assets + Investments + Current assets

49. What is difference in Normal stock loss and Abnormal stock loss?

Normal stock loss Abnormal stock loss

1. Related to the ordinary ac vi es of the business 1. Caused by an excep onal event

2. e.g. Obsolete stock, damaged stock 2. e.g. fire loss, burglary loss

3. No entry needed 3. Accoun ng recorded needed

50. What is Inventory Turnover ra o?

Inventory Turnover = Cost of goods sold / Inventories (average)

This ra o measures the efficient use of inventories. A firm should have a high turnover ra o, which is managed
through a small number of inventories.
51. Define the concept of deferred tax assets and liabili es?

When accoun ng profit/loss is higher than taxable profit/loss: Deferred Tax liability is created or Deferred tax asset is
reversed.

When accoun ng profit/loss is less than taxable profit/loss: Deferred tax asset is created or Deferred Tax Liability is
reversed.

52. Differen ate between permanent and ming difference?

Permanent Differences are the differences between taxable income and accoun ng income for a period that originate
in one period and do not reverse subsequently.

Examples:

Expenditure disallowed as per Income Tax Act (Forever)

Excess expenditure allowed by Income Tax Act,1961 in respect of Scien fic Expenditure

Timing Differences are the differences between taxable income and accoun ng income for a period that originate in
one period and are capable of reversal in one or more subsequent periods.

Examples:

Deprecia on rate/method different as per Accounts and Income tax Calcula on

53. What is the difference between Provision for taxa on and Deferred tax liability?

Provision for taxa on is provision for Current year taxa on. Deferred Tax liability is a provision for future taxa on.

54. Under what circumstances goodwill is recognized and recorded in books?

Internally generated or Self- generated Goodwill is not recognized in books/ Financial statements. As the cost cannot
be reliably measured, the self-generated is not recognized in Books/ financial Statements. Only purchased goodwill or
that arising during amalgama on should be recognized in Books.

Value of Goodwill in Amalgama on in the nature of Purchase = Purchase considera on – fair value of the net assets
acquired

55. How do we amor ze goodwill?

Goodwill recognized in Books should be amor zed and wri en off in period not more than 10 years. Amor za on
method should be reviewed at the end of each financial year. Intangible Assets (including Goodwill) need to be tested
for Impairment at each Balance sheet date as per AS – 28.
56. Give Accoun ng entries for Share applica on, allotment?

a. On receipt of the applica on money

Bank Account Dr. (with the actual amount received)

To Shares Applica on Account

b. On allotment of shares

Share Allotment Account Dr. (with the amount due on allotment)

Share Applica on Account Dr. (with the applica on amount received on allo ed shares)

To Share Capital Account (with the amount due on allotment and applica on)

57. What is the journal entry for debenture issued at discount and to be redeemed at premium?

Profit and Loss A/c - Dr

To Loss on Issue of Debentures A/c

58. What are Journal entries for VAT at me of purchase and Sale?

a. When there is a purchase of goods involving different VAT: Goods Purchase X (with 12.5% VAT)

VAT Credit receivable (inputs) - Dr.

To Bank/ Cash

b. When Sale of Goods takes place:

Bank A/c Dr. - Dr.

To Goods Sold A (with 4% VAT)

To VAT payable/ Output VAT

c. Journal to record VAT payable liability met by using balance in VAT Credit receivable (inputs) A/c Input VAT/
VAT:

Payable A/c - Dr.

To VAT Credit Receivable (inputs) A/c

d. For VAT payment:

VAT payable A/c - Dr.

To Bank
59. What is revalua on and impairment of asset, give journal entries?

Revalua on of Assets

a. When revalua on is made upward

Fixed Assets A/c-Dr.

To Revalua on Reserve

b. When revalua on is made downward

P&L A/c -Dr.

To Fixed Assets

Impairment of Assets

Impairment loss A/c -Dr.

Revalua on Reserve A/c-Dr. (if exist for the asset previously) To Fixed Asset A/c

60. What is foreign currency valua on on Balance sheet date?

Foreign currency valua on is to be done for preparing the financial statements at a key date. There are normally two
types of foreign currency balances

a. Open Invoices in foreign currency

b. GL Account balance in foreign currency (e.g. Bank)

Conversion is performed at the exchange rate on the valua on date (e.g. Balance sheet date). Any gain or loss is
calculated and posted to exchange rate gain/loss accounts.

61. What are capital expenditures and Revenue Expenditure?

Capital expenditure is incurred to

a. Acquire or bring into existence new asset (E.g. Purchase of new Plant)

b. Bring into existence any benefit of enduring nature (E.g. Purchase of

c. Increase the produc vity and earning capacity of business (e.g. construc on of addi onal floor in building)

Revenue expenditure is incurred to

a. Meet essen al expenses for running expenses.

b. The benefits of expenses may extend maximum for a period of 1 year.

62. What expenses get capitalized during acquisi on Assets?

a. Purchase price.

b. Import du es and other non-refundable taxes.

c. Cost of bringing the asset to the working condi on like: - Site prepara on, Delivery cost, Installa on cost,
Expenditure on test runs, administra ve overheads on construc on/acquisi on/installa on.
63. How to charge deprecia on on Land and building?

Cost of Land and cost of building should be segregated. Deprecia on should be provided only on cost of building.

64. Difference between P&L and cash flow?

Profit & Loss Cash Flow

1 This is an Account prepared for a period 1 This is statement, prepared for a period.

2 P&L shows profitability of business from opera ng 2 Cash Flow Statement is a statement which shows the
and non-opera ng ac vi es. Changes in the Cash Posi on of an organiza on
during the period from – Opera ng

, Financing and Inves ng ac vi es

3 P&L is considering only revenue Income and expenses 3 Cash flow considers both Capital and Revenue
payments involving both cash and cash equivalents

4 P&L is prepared on Accrual basis 4 This is prepared only on Cash basis.

65. What is the difference between Trading A/c and P&L?

Trading provides G.P or G.L, whereas P&L provides N.P. or N.L

Trading takes into only Direct Income and Direct Losses, whereas P&L takes into account Indirect Expenses, losses and
indirect Income, gains.

Balance of Trading is carried forward to P&L, whereas balance of Trading is carried forward to Reserves.

66. What are COGS? How it can be calculated?

COGS is cost of goods sold which is = opening stock + net purchases + direct expenses – closing stock in trading
account COGS is compared against Net sales to arrive at Gross profit i.e. COGS = Net Sales – GP

67. Differen ate between Horizontal analysis and Ver cal Analysis of financial statements?

Horizontal Ver cal

1 It requires compara ve financial statements of two or 1 It requires a statement of one period

more accoun ng periods

2 It deals with the same item of different periods 2 It deals with different items of same period

3 It provides informa on in 3 It provides informa on in percentage form.

absolute and percentage form

4 It is generally used for me series analysis 4 It is generally used for cross sec onal analysis

5 Compara ve Financial statements are 5 Common size financial statements are an example of
an example of this. this
68. Differen ate between Intra firm analysis and Inter firm Analysis of financial statements?

Intra firm Analysis is a comparison of financial variables of a firm over a period of me. It is also known as me series
or trend analysis. It analyses the performance of a business over a number of years and shows trend of financial
factors.

Inter firm analysis is a comparison of two or more business firms. It analyses and compares financial variables of two
or more business firms to determine the compe ve posi on of these firms. When single set of statements of two
firms is compared, it is known as cross- sec onal analysis.

69. What are Compara ve Financial statements, Common size financial statements, Trend percentages?

Compara ve Financial statements are statements in which figures for two or more periods are placed side by side
along with changes in figures in absolute and percentage terms to facilitate comparison. Both P&L and Balance sheet
are prepared in form of compara ve financial statements.

Common size financial statements express figures of a financial statement as a percentage of common base. In the
P&L Sales figure is assumed to be 100 and all percentages are expressed as a percentage of sales. In Balance sheet
total of assets or liabili es is taken as 100 and all figures are expressed as a percentage.

Trend percentages are used in compara ve study of financial statements for several years. The method of calcula ng
trend percentages is calcula on of percentage rela onship that each item bears to same item in the base year. Each
item in the base year is taken as 100 and on that basis percentages of each item of each of the years is calculated.
 70. Differen ate between Cash flow statement and Fund flow statements?

Basis of Funds Flow Statement Cash Flow Statement

Difference

Fund flow states the changes in the A Cash Flow Statement is a statement showing changes in
working capital of the business in cash position of the firm from one period to another. It
Definition
relation to the operations in one time explains the inflows (receipts) and outflows (disbursements)
period. of cash over a period of time

Funds flow statement is based on Cash flow statement is based on narrow concept
Basis of Analysis broader concept
i.e. working capital. i.e. cash, which is only one of the elements of working
capital.
Funds flow statement talks about the
Cash flow statement stars with the opening balance of cash
various sources from where the funds
Source and reaches to the closing balance of cash by proceeding
generated with various uses to which
through sources and uses.
they are put.

Funds flow statement is more useful in Cash flow statement is useful in understanding the short-
Usage assessing the long-range financial term phenomena affecting the liquidity
strategy.
of the business.

Principal of Funds flow statement is in alignment In cash flow statement data obtained on accrual basis are
Accounting with the accrual basis of accounting. converted into cash basis.

71. Differen ate between Cash flow statement and Cash budget?

A cash flow statement shows the cash inflows and ou lows which have already taken place during a past me period.
On the other hand, a cash budget shows cash inflows and ou lows which are expected to take place during a future
me period. In other words, a cash budget is a projected cash flow statement.
 72. Differen ate between Revised Schedule VI and Old Schedule VI?

Revised Schedule VI Old Schedule VI

It prescribes only Ver cal form of balance sheet It prescribes two forms of Balance sheet – Horizontal 7
Ver cal

Informa on under each head is to be shown in the Broad informa on e.g. Capital Reserves, Securi es
Notes to accounts Premium & Gen Res etc. were shown on face of BS and
details in Notes to Accounts

Assets are classified into Current Assets and Non- Assets are classified into Fixed Assets, Investments, Current
current Assets. Assets, Loans & advances, Miscellaneous exp& P&L A/c.

Fixed Assets are classified into Tangible, Intangible, There is one head of Fixed Assets under which all kinds of
Capital WIP & Intangible Assets under Development Fixed Assets are stated there is no such sub- classifica on.

It does not recognize Miscellaneous expenditure; It recognizes Miscellaneous expenditure to be shown

thus, it has to be adjusted against securi es premium separately in assets side.
reserve.

Specified format ‘Statement of Profit & losses has Old schedule does not specify any format for P&L
been adopted.

73. Differen ate between Capital and Revenue reserves?

Revenue Reserve Capital Reserve

Funds derived from non-operational activities or
Accumulated profits retained from business operations
capital transactions
To fund future growth, investments, or cover unexpected Earmarked for specific purposes like capital expenditures,
losses issuing bonus shares, or writing off capital expenses
Capital gains, donations, sale of assets, or
Retained earnings from normal business operations
revaluation of assets
High; can be used for general business purposes Restricted; often designated for specific uses
General business activities, reinvestment, or to cover Specific capital projects, issuing bonus shares, or
operational losses covering capital losses
Subject to fewer legal restrictions Often governed by specific regulations or company articles
Can be used to pay dividends to shareholders Typically, not used for dividend payments
General reserve, retained earnings, Revaluation reserve, capital redemption reserve, securities
profit and loss account premium reserve

74. Does existence of reserves indicate a fund of cash?

Mere existence of reserves does not indicate a fund of Cash in Business. Crea on of reserves may simply be a
bookkeeping transac on.
75. What Control Accounts. Explain the purpose of Control Accounts?

Control Accounts are a means of controlling a complete ledger or group of ledger accounts, by containing duplicate
informa on in total or summary form.

The balance in control account should equal the balance on the individual ledger accounts that it controls.

It can be used as a means of checking the accuracy of the entries, and assists in the speedy produc on of final
accounts.

76. Differen ate between Capital/ Finance lease and Opera ng lease?

Finance/ Capital Lease Opera ng Lease

Lessee will get ownership of leased Asset at the end of Lessor retains the Asset a er lease term.
lease term.

All risks and rewards incident to ownership of an asset Risks and rewards of ownership do not transfer to lessee.
is transferred to lessee

Leased Asset is recognized as an Asset and provided Leased Asset is recognized as an Asset and provided
deprecia on in books of Lessee. deprecia on in books of Lessor

Lessor recognizes lease receipts as Income in P&L Lease payment should be recognized as an expense in P&L
Account. Account of Lessee.

77. Provide Journal Entries for crea ng Deferred tax Assets and Deferred tax liabili es?

Deferred Tax Assets Account Debit

To Profit & Loss Account Credit

Profit & Loss Account Debit

To Deferred Tax Liabili es Credit

78. What do you understand by reconcilia ons?

a. Authen city - of account balances.

b. at a specific point in me

c. documented by relevant calcula ons, clear and complete explana ons

d. Verified with an independent source

e. prepared in compliance with organiza on policy and that of Regulatory authori es (e.g. SOX)

“Recs is key to achieving balance sheet integrity”

79. How is it performed i.e. please give steps?

a. to compare two set of records originating from different sources or systems

b. verifying General Ledger (GL) account balances with supporting documents
c. Investigating the differences
d. Identifying the underlying causes
e. Rectifying & reporting them

80. Purpose of reconcilia ons?

a. Accuracy – of the GL balances

b. Integrity – of financial statements.
c. Reliability – Data given to regulatory authorities is true.
d. Control – detecting & preventing financial misstatements.

81. Why is reconcilia on necessary? i.e. significance of reconcilia on?

a. Good Accounting process

b. Mandatory in compliance with Sarbanes Oxley (SOX)
c. Internal Control measure

82. What are three stages of recs? Or what are three par es involved in Recs?

The 3 Stages of Reconcilia ons are

1. Prepare
2. Review
3. Approval

83. What are different approaches to Reconcilia on?

1. Third Party reconciliations e.g. Bank, Debtors, Creditors.

2. GL to SL Recons. e.g. AR, AP, GL, FA, IC, etc.
3. Scheduling or detailed Reconciliation – verifying from source docs, calculations, compliance.
84. Define the below items?

1. Reconciled item
2. Open items
3. Recorded item
4. Aged open item
5. Un-reconciled item

1. Reconciled item

Variance has been itemized and root cause has been established

2. Open Item

Open item is an item of variance, which requires an ac on to remove the balance from the account.

3. Recorded Item

An item of variance which does not require an ac on to remove the balance from the account is called as Recorded
item

4. Aged Open Item

a. If an open item is not resolved or ac on not taken within a required me frame (quarter) it is termed as an
Aged open item.

b. Aged open item results an account as Un-reconciled.

c. Normally open items should be resolved in the quarter these are iden fied.
5. Un-reconciled Item

It is an item of variance for which the reason is not yet iden fied or is yet to be reconciled.

85. Enumerate steps for Reconcilia on process?

The following are the steps in reconciling an account: -

Step 1 - Gather all Suppor ng Documents.

Step 2 - Analyze and performs reconcilia ons.

Step 3 - Itemize variances

Step 4 - Root cause analysis for variance

Step 5 - Resolve variances

Step 6 - Report the results

Step 7 - Perform Review

Step 8 - Finalize Reconcilia ons and Approve.

86. What are un-reconciled accounts?

An Account will be rendered as Un-reconciled Account due to either.

a. Un-reconciled Items

b. If an open item does not have a valid ac on plan

c. Aged open item remains unresolved

87. How do we perform un-reconciled accounts?

a. Bank Reconciliation.

b. Fixed Assets Reconciliation.

c. Intercompany Reconciliation.

d. Accounts Payable Reconciliation.

e. Accounts Receivable Reconciliation.

88. What is the importance of having Cash/ Bank reconcilia on?

a. Keeps control over cash disbursements.

b. Helps detect and prevent fraudulent ac vi es.

c. Ensures accuracy of Cash / Bank accounts while repor ng B/S

d. Helps to assess cash posi on & cash planning

89. What are inter-company transac ons? Why is intercompany reconcilia on important?

Inter-company transac ons are those that happen between two legal en es within same group. Intra company
transac ons that two business units within a legal en ty.

Intercompany reconcilia on is important at the me of group consolida on.

Intercompany reconcilia on requires GL to SL recs & third-party recs between en es, objec ve is to:

• Eliminate difference in Intercompany balances both short term and long term

• Eliminate Unrealized gains on intercompany transac ons e.g. sale- purchase, dividend etc.
 90. Give some examples that cause difference in Bank Reconcilia on?

Timing differences: -

a. Check deposited but not cleared

b. Check paid but not presented for payment

c. Interest credited or charged by Bank not entered in cash book.

Error of recording: -

a. Check paid of Rs, 1600 was recorded in Cash book for Rs 1060.

b. Check received from a customer and deposited in bank was recorded on credit side of the cash book.

91. Define the term 'Depreciation.'?

Deprecia on and amor za on are accoun ng methods used to allocate the cost of tangible and intangible assets over their
useful lives.

These methods help match the expenses of using assets with the revenue generated by those assets, adhering to the
matching principle in accoun ng.

92. Define the term ‘Amor za on.’?

Amor za on applies to intangible assets (such as patents, copyrights, trademarks, and goodwill) and is similar to
deprecia on in that it spreads the cost of the asset over its useful life.

Intangible assets o en have finite useful lives and are amor zed using the straight-line method.

93. What is a Contra Account?

It's an account employed to reduce or balance the value of a related account. In the case of a specific kind of account, it
holds the opposing sign.

A credit balance will exist in a contra account if an account has a debit balance (such as an asset account). In contrast, a
liability account is correct.

94. What are Con ngent Liabili es?

Con ngent liabili es are debts that a company may or may not suffer, depending on the outcome of a future event. The
happening of this type of duty is en rely dependent on the events of a likely future event.

Assume Dell begins a patent viola on ac on against Asus, and Asus not only know that it may be required to pay for
viola ons but also evaluate the overall amount. In this situa on, Asus will record the expected amount as a Con ngent
Liability in their records.
95. What is Accounts Payable?

Accounts Payable (AP) refers to the amount of money a company owes to its suppliers or vendors for goods and services
purchased on credit.

Accounts Payable is recorded as a liability on the balance sheet and is an essential component of a company's working
capital management.

96. What is Accounts Receivable?

Accounts Receivable (AR) refers to the amount of money owed to a business by its customers for goods or services provided
on credit.

Accounts Receivable represents a current asset on the balance sheet, as the company expects to receive cash from
customers within a relatively short period, typically 30 to 90 days, depending on the agreed-upon credit terms.

97. What are Fixed Assets?

Fixed Assets, also known as property, plant, and equipment (PP&E), are tangible assets held by a company for long-term use
in generating income.

Examples of fixed assets include land, buildings, machinery, vehicles, furniture, and equipment.

98. What is Intercompany?

Intercompany refers to transac ons or rela onships between two or more en es that are part of the same corporate group
or organiza on.

These en es could be subsidiaries, sister companies, or divisions opera ng under common ownership or control.

99. What is Month End Close?

Month End Close, also known as monthly closing or month-end accoun ng, refers to the process of finalizing all financial
transac ons, adjustments, and repor ng ac vi es for a specific accoun ng period, typically a month.

This process is crucial for accurately capturing and repor ng financial results and ensuring compliance with accoun ng
standards and regulatory requirements.

a. Financial Transactions
b. Adjusting Entries
c. Reconciliation
d. Financial Reporting
e. Review and Analysis

100. Which accoun ng so ware is commonly used?

SAP, Oracle, Net Suite, Quick Books, Zoho Books, Xero, Wave, Yardi, Bill.com, Great Plains, Cargo Wise, Tally, etc.
101. What is the purpose of a trial balance in R2R?
It ensures that debits and credits are balanced before preparing financial statements.

102.How do you handle intercompany reconciliation discrepancies?

Identify and resolve mismatches through detailed analysis of transactions and communication with involved entities.

103. What is the significance of period-end close in R2R?

It ensures accuracy and completeness of financial records by finalizing all transactions for a given period.

104. How do you address unrecorded liabilities during financial close?

Accumulate all pending invoices and transactions to ensure they are recorded before the period-end close.

105. What is the role of the general ledger in the R2R process?
It serves as the central repository for recording all financial transactions and balances.

106. How do you handle fixed asset depreciation in R2R?

Apply depreciation methods consistently and record depreciation expenses in accordance with accounting standards.

107. What is the purpose of reconciliations in R2R?

To ensure that financial records match external statements and identify discrepancies.

108. How do you perform bank reconciliation?

Compare bank statements with ledger entries to identify and rectify discrepancies.

109. What are the challenges in managing master data in R2R?

Ensuring data accuracy, consistency, and completeness across different systems.

110. How do you ensure compliance with accounting standards during R2R?
Regularly review and update processes and records to align with relevant standards and regulations.
111. What is the role of audit trails in R2R?
To provide a documented history of transactions for verification and auditing purposes.

112. How do you handle foreign currency adjustments in R2R?

Apply appropriate exchange rates and revalue transactions as necessary to reflect accurate financial statements.

113. What are the key considerations for month-end close?

Timeliness, accuracy of recorded transactions, and completeness of all financial entries.

114. How do you manage user authorizations in R2R?

Implement role-based access controls and regularly review user permissions to ensure proper segregation of duties.

115. What is the importance of the Chart of Accounts (COA) in R2R?

It categorizes financial transactions and ensures consistent recording of financial activities.

116. How do you manage reconciliation of intercompany transactions?

Coordinate with intercompany partners to match and reconcile transactions and resolve discrepancies.

117. What is the impact of incorrect journal entries on financial reporting?

It can lead to inaccurate financial statements, affecting decision-making and compliance.

118. How do you handle adjustments for accrued expenses?

Record expenses in the period incurred, even if the cash flow occurs in a different period.

119. What steps are involved in a financial statement close?

Finalize all transactions, reconcile accounts, and prepare and review financial statements.

120. How do you address discrepancies in financial reporting?

Investigate root causes, correct errors, and implement controls to prevent recurrence.
121. What is the role of automated tools in the R2R process?
To streamline processes, reduce errors, and improve efficiency in financial reporting.

122. How do you ensure accuracy in financial consolidation?

Validate data sources, apply consistent consolidation methods, and review consolidated reports thoroughly.

123. What are the key components of a comprehensive R2R process?

Transaction recording, reconciliation, financial close, and reporting.

124. How do you manage the complexities of multi-currency transactions?

Utilize robust systems for currency conversion and ensure accurate recording of gains and losses.

125. What is the role of financial reporting in R2R?

To provide stakeholders with accurate and timely financial information for decision-making.

126. How do you ensure timely and accurate financial reporting?

Follow a structured close schedule, use automated tools, and conduct regular reviews.

127. What are the common challenges in financial statement preparation?

Ensuring data accuracy, adherence to standards, and integration of information from various sources.

128. How do you handle post-close adjustments?

Record adjustments promptly, communicate with stakeholders, and update financial statements as needed.

129. What is the significance of variance analysis in R2R?

To identify and understand deviations from budgets or forecasts and make necessary adjustments.

130. How do you ensure the integrity of financial data?

Implement strong internal controls, conduct regular audits, and validate data inputs and processes.
131. What are the best practices for managing the R2R cycle?
Establish clear procedures, use technology effectively, and continuously improve processes.

132. How do you manage complex journal entries?

Ensure thorough documentation, review for accuracy, and reconcile entries with supporting data.

133. What is the role of the R2R team in compliance and governance?
To ensure financial processes and reporting adhere to regulatory requirements and internal policies.

134. How do you manage financial data across different systems?

Use integration tools and ensure data consistency through regular reconciliation and validation.

135. What are the key performance indicators (KPIs) for R2R?
Accuracy of financial reports, timeliness of the close process, and efficiency of reconciliations.

136. How do you handle changes in accounting standards or regulations?

Stay informed about updates, train staff, and adjust processes to ensure compliance.

137. What is the impact of effective documentation in R2R?

It ensures transparency, supports audits, and provides clarity for financial reporting.

138. How do you address issues in financial statement accuracy?

Investigate discrepancies, correct errors, and implement controls to prevent future issues.

139. What are the challenges in financial data migration?

Ensuring data accuracy, completeness, and integrity during the transfer process.

140. How do you ensure efficient account reconciliation?

Use automated tools, establish clear processes, and perform regular reviews.
141. What is the role of internal controls in R2R?
To safeguard assets, ensure accuracy of financial reporting, and prevent fraud.

142. How do you handle complex accounting adjustments?

Document the rationale, review for accuracy, and ensure compliance with accounting principles.

143. What are the key considerations for year-end close?

Ensure all transactions are recorded, complete reconciliations, and prepare comprehensive financial statements.

144. How do you manage financial statement disclosures?

Ensure disclosures are complete, accurate, and in accordance with relevant accounting standards.

145. What is the role of technology in streamlining R2R processes?

It automates tasks, reduces errors, and improves efficiency in financial reporting.

146. How do you manage financial reporting for multiple entities?

Consolidate financials using consistent policies and systems for accurate reporting.

147. What is the importance of process documentation in R2R?

It provides clarity, ensures consistency, and facilitates training and auditing.

148. How do you address issues in financial consolidation?

Ensure accurate data aggregation, eliminate intercompany transactions, and review consolidated reports.

149. What are the best practices for managing the financial close process?
Follow a detailed checklist, use automation, and conduct regular process reviews.

150. How do you handle discrepancies between internal and external financial reports?
Investigate the differences, reconcile discrepancies, and adjust reports as needed for accuracy.
Month End Close – Checklist

Sl. Task Description

1 Review & Reconcile Accounts Reconcile all balance sheet accounts and ensure accuracy of data.
2 Process Journal Entries Record all necessary journal entries and adjustments.
3 Review & Approve Transactions Ensure all transactions are properly authorized and recorded.
4 Reconcile Bank Statements Match bank statements with company records to identify discrepancies.
5 Verify Fixed Assets Ensure all fixed asset transactions are recorded and accurate.
6 Update Financial Statements Prepare & update financial statements including IS, BS & CF.
7 Review Intercompany Ensure all intercompany transactions are properly recorded and reconciled.
8 Prepare Management Reports Compile and prepare reports for management review.
9 Complete Tax Filing Ensure all necessary tax filings are completed and submitted.
10 Review & Resolve Exceptions Investigate and resolve any issues identified during the close process.
11 Conduct Financial Close Meeting Review close process, address issues, and discuss improvements.
12 Document Close Process Ensure all procedures & adjustments are well-documented.
Accoun ng Important Journal Entries

In accoun ng, journal entries are crucial for recording financial transac ons. Here are some important types of journal
entries:

1. Opening Entries

 These entries are made at the beginning of an accoun ng period to open the books.

Example:

Dr. Assets

Cr. Liabili es

Cr. Owner's Equity

2. Closing Entries

 These entries are made at the end of an accoun ng period to close temporary accounts.

Example:

Dr. Revenue

Cr. Income Summary

Example:

Dr. Income Summary

Cr. Expenses

3. Adjus ng Entries

 These entries are made to update the accounts before financial statements are prepared.

Example:

Dr. Deprecia on Expense

Cr. Accumulated Deprecia on

Example:

Dr. Accounts Receivable

Cr. Revenue

4. Compound Entries

 These involve more than two accounts.

Example:

Dr. Cash

Dr. Discount Allowed

Cr. Accounts Receivable

5. Reversing Entries

 These entries are made to reverse an adjus ng entry from a previous period.

Example:

Dr. Accrued Expenses

Cr. Expense Account

6. Accrued Revenue Entries

 These are made when revenue is earned but not yet received.

Example:

Dr. Accounts Receivable

Cr. Revenue

7. Accrued Expense Entries

 These are made when expenses are incurred but not yet paid.

Example:

Dr. Expense

Cr. Accrued Expenses

8. Deferred Revenue Entries

 These are made when cash is received before revenue is earned.

Example:

Dr. Cash

Cr. Unearned Revenue

9. Deferred Expense Entries

 These are made when expenses are paid in advance.

Example:

Dr. Prepaid Expense

Cr. Cash

10. Sales Entries

 These record sales transac ons.

Example:

Dr. Accounts Receivable/Cash

Cr. Sales Revenue

11. Purchase Entries

 These record purchase transac ons.

Example:

Dr. Purchases/Inventory

Cr. Accounts Payable/Cash

12. Cash Receipts Entries

 These record cash received.

Example:

Dr. Cash

Cr. Accounts Receivable

13. Cash Disbursements Entries

 These record cash paid.

Example:

Dr. Accounts Payable

Cr. Cash

14. Payroll Entries

 These record payroll expenses.

Example:

Dr. Salaries Expense

Cr. Salaries Payable

15. Deprecia on Entries

 These record deprecia on of fixed assets.

Example:

Dr. Deprecia on Expense

Cr. Accumulated Deprecia on

Key Points to Remember

 Debits and Credits: Always ensure debits equal credits in each entry.

 Double-Entry System: Every transac on affects at least two accounts.

 Accuracy: Review entries for accuracy to avoid errors in financial statements.

Using SAP T Codes for Journal Entries

 FB50: Enter G/L account document.

 FB60: Enter vendor invoice.

 FB70: Enter customer invoice.

 F-02: General ledger account pos ng.

 F-03: Clear G/L account.

Adjus ng Journal Entries

Adjus ng journal entries are made at the end of an accoun ng period to update account balances before financial
statements are prepared. These entries ensure that revenues and expenses are recognized in the period in which they occur,
aligning with the accrual basis of accoun ng.

Here are common types of adjus ng journal entries:

1. Prepaid Expenses

Prepaid expenses are payments made for expenses that will benefit future periods. As me passes, these need to be
expensed.

Example:

 Prepaid Insurance:

Dr. Insurance Expense

Cr. Prepaid Insurance

2. Accrued Expenses

Accrued expenses are expenses that have been incurred but not yet paid or recorded.

Example:

 Accrued Salaries:

Dr. Salaries Expense

Cr. Salaries Payable

3. Deprecia on

Deprecia on spreads the cost of a fixed asset over its useful life.

Example:

 Deprecia on of Equipment:

Dr. Deprecia on Expense

Cr. Accumulated Deprecia on

4. Unearned Revenue

Unearned revenue is money received before the revenue has been earned. As services are performed or goods delivered,
revenue needs to be recognized.

Example:

 Unearned Service Revenue:

Dr. Unearned Revenue

Cr. Service Revenue

5. Accrued Revenues

Accrued revenues are revenues that have been earned but not yet received or recorded.

Example:

 Accrued Interest:

Dr. Interest Receivable

Cr. Interest Revenue

6. Supplies

Adjus ng for supplies used during the period.

Example:

 Supplies:

Dr. Supplies Expense

Cr. Supplies

7. Bad Debts

Es ma ng uncollec ble accounts receivable.

Example:

 Allowance for Doub ul Accounts:

Dr. Bad Debt Expense

Cr. Allowance for Doub ul Accounts

Example Adjus ng Entries in SAP (T-Code F-02)

1. Prepaid Expenses:

 T-Code: F-02

 Entry:

Dr. Expense Account

Cr. Prepaid Expense Account

2. Accrued Expenses:

 T-Code: F-02

 Entry:

Dr. Expense Account

Cr. Accrued Liabili es Account

3. Deprecia on:

 T-Code: F-02

 Entry:

Dr. Deprecia on Expense Account

Cr. Accumulated Deprecia on Account

4. Unearned Revenue:

 T-Code: F-02

 Entry:

Dr. Unearned Revenue Account

Cr. Revenue Account

5. Accrued Revenues:

 T-Code: F-02

 Entry:

Dr. Receivables Account

Cr. Revenue Account

6. Supplies:

 T-Code: F-02

 Entry:

Dr. Supplies Expense Account

Cr. Supplies Account

7. Bad Debts:

 T-Code: F-02

 Entry:

Dr. Bad Debt Expense Account

Cr. Allowance for Doub ul Accounts

Key Points to Remember

 Accrual Basis Accoun ng: Adjus ng entries ensure that financial statements reflect revenues when they are earned
and expenses when they are incurred, not necessarily when cash is received or paid.

 Accuracy: Carefully review adjus ng entries to ensure accuracy and completeness.

 Timing: These entries are typically made at the end of an accoun ng period before financial statements are
prepared.
Accounts Reconcilia on

Accounts reconcilia on involves comparing internal financial records with external statements to ensure accuracy and
consistency. Here are common types of account reconcilia on:

1. Bank Reconcilia on

Purpose: To ensure the cash balance in the company's records matches the bank statement.

Process:

 Compare the company's cash ledger with the bank statement.

 Iden fy discrepancies such as outstanding checks, deposits in transit, and bank fees.

 Adjust the cash ledger for any errors or omissions.

Documents:

 Company cash ledger.

 Bank statement.

 Deposit slips and cancelled checks.

2. General Ledger Reconcilia on

Purpose: To ensure the accuracy of account balances in the general ledger.

Process:

 Verify the balance of each account in the general ledger.

 Compare with suppor ng documents such as invoices, receipts, and subsidiary ledgers.

 Adjust entries for any discrepancies.

Documents:

 General ledger.

 Suppor ng documents (invoices, receipts).

 Subsidiary ledgers.
3. Intercompany Reconcilia on

Purpose: To ensure transac ons between different en es within the same group are accurately recorded.

Process:

 Compare intercompany transac ons recorded by both en es.

 Iden fy and resolve any discrepancies.

 Adjust entries to ensure consistency.

Documents:

 Intercompany transac on records.

 Intercompany invoices and statements.

 General ledgers of both en es.

4. Vendor Reconcilia on (Accounts Payable Reconcilia on)

Purpose: To ensure the company's records of amounts owed to vendors match the vendor statements.

Process:

 Compare the company's accounts payable ledger with vendor statements.

 Iden fy any missing invoices, duplicate payments, or payment errors.

 Adjust entries to correct any discrepancies.

Documents:

 Accounts payable ledger.

 Vendor statements.

 Invoices and payment records.

5. Customer Reconcilia on (Accounts Receivable Reconcilia on)

Purpose: To ensure the company's records of amounts receivable from customers match customer statements.

Process:

 Compare the accounts receivable ledger with customer statements.

 Iden fy any missing receipts, incorrect charges, or payment discrepancies.

 Adjust entries to reconcile differences.

Documents:

 Accounts receivable ledger.

 Customer statements.

 Invoices and payment receipts.

6. Inventory Reconcilia on

Purpose: To ensure the inventory records match the physical inventory count.

Process:

 Perform a physical inventory count.

 Compare the physical count with inventory records.

 Inves gate and resolve any discrepancies.

 Adjust inventory records accordingly.

Documents:

 Inventory records.

 Physical inventory count sheets.

 Inventory adjustment forms.

7. Fixed Assets Reconcilia on

Purpose: To ensure the fixed assets recorded in the books match the actual assets owned by the company.

Process:

 Compare the fixed asset register with physical assets.

 Iden fy any missing or unrecorded assets.

 Adjust the fixed asset register to reflect actual assets.

Documents:

 Fixed asset register.

 Physical asset verifica on reports.

 Purchase invoices and disposal records.

8. Credit Card Reconcilia on

Purpose: To ensure credit card transac ons recorded in the books match the credit card statements.

Process:

 Compare the company's credit card ledger with credit card statements.

 Iden fy any unrecorded transac ons or errors.

 Adjust entries to reconcile the differences.

Documents:

 Credit card ledger.

 Credit card statements.

 Receipts for credit card transac ons.

Key Points to Remember

 Regular Reviews: Conduct reconcilia ons regularly to iden fy and correct discrepancies promptly.

 Documenta on: Maintain comprehensive documenta on to support reconcilia on ac vi es.

 Automa on: Use accoun ng so ware to automate reconcilia on processes where possible, improving accuracy and
efficiency.

 Segrega on of Du es: Ensure different individuals perform reconcilia on and approval to enhance internal controls.

 Training: Provide adequate training to staff involved in reconcilia on processes to ensure they understand and follow
best prac ces.
Trial Balance

A trial balance is a bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account
column totals that are equal. It is an important step in the accoun ng cycle and helps ensure the accuracy of the financial
records before financial statements are prepared.

Purpose of a Trial Balance

1. Check Mathema cal Accuracy:

o Ensure that total debits equal total credits in the ledger accounts.

2. Iden fy Errors:

o Detect errors in ledger pos ng, such as transposi ons, incorrect amounts, and omissions.

3. Financial Statement Prepara on:

o Serve as the basis for preparing financial statements, including the income statement and balance sheet.

4. Internal Control:

o Act as an internal control measure to verify the integrity of the financial records.

Types of Trial Balances

1. Unadjusted Trial Balance:

o Prepared before adjus ng entries are made.

o Lists the balances of all accounts before adjustments.

2. Adjusted Trial Balance:

o Prepared a er adjus ng entries are made.

o Includes the effects of adjustments, such as accruals and deferrals.

3. Post-Closing Trial Balance:

o Prepared a er closing entries are made.

o Contains only the balance sheet accounts since temporary accounts (revenues, expenses) are closed.

Format of a Trial Balance

A trial balance typically includes three columns:

1. Account Name:

o Lists all the accounts from the ledger.

2. Debit Column:

o Shows the total debits for each account.

3. Credit Column:

o Shows the total credits for each account.

Example of a Trial Balance:

Account Name Debit Amount Credit Amount

Cash $10,000

Accounts Receivable $5,000

Inventory $15,000

Equipment $25,000

Accounts Payable $8,000

Notes Payable $10,000

Owner's Equity $32,000

Revenue $30,000

Expenses $15,000

Totals $70,000 $70,000

Steps to Prepare a Trial Balance

1. List All Accounts:

o Extract balances of all ledger accounts.

2. Classify Accounts:

o Place each account in the debit or credit column based on its balance.

3. Calculate Totals:

o Sum the debit and credit columns separately.

4. Compare Totals:

o Verify that the total debits equal total credits.

5. Inves gate Discrepancies:

o If totals do not match, inves gate and correct errors.

Common Errors Detected by a Trial Balance

1. Transposi on Errors:

o When two digits are reversed in an amount (e.g., $540 recorded as $450).

2. Slide Errors:

o When digits are misplaced (e.g., $1000 recorded as $100).

3. Omission Errors:

o When an entry is completely omi ed from the ledger.

4. Incorrect Amounts:

o When an incorrect amount is posted to the ledger.

5. Double Pos ng:

o When an entry is posted twice.

Limita ons of a Trial Balance

1. Errors Not Detected:

o A trial balance does not detect all types of errors, such as:

 Errors of omission (entries not recorded).

 Errors of commission (entries recorded in the wrong account).

 Errors of principle (entries viola ng accoun ng principles).

 Compensa ng errors (offse ng errors that cancel each other out).

2. Adjustments Required:

o Does not reflect adjustments for accruals, deferrals, and other adjustments needed for accurate financial
repor ng.

Importance of a Trial Balance

 Founda on for Financial Statements:

o Provides the basis for preparing accurate financial statements.

 Financial Accuracy:

o Ensures that the financial records are mathema cally correct.

 Error Detec on:

o Helps in detec ng and rec fying errors in the ledger accounts.

Income Statement

An income statement, also known as a profit and loss statement, is a financial report that summarizes the revenues, costs,
and expenses incurred during a specific period, usually a fiscal quarter or year. It provides insight into a company's financial
performance, indica ng how much profit or loss was generated.

Purpose of an Income Statement

1. Measure Performance:

o Assess the company's profitability over a specific period.

2. Inform Decision-Making:

o Provide valuable informa on for management, investors, and stakeholders to make informed decisions.

3. Financial Analysis:

o Evaluate opera onal efficiency and cost management.

4. Compliance:

o Meet regulatory requirements for financial repor ng.

Example of an Income Statement

XYZ Corpora on Income Statement For the Year Ended December 31, 2023

Descrip on Amount

Revenue:

Sales Revenue $500,000

Service Revenue $100,000

Total Revenue $600,000

Cost of Goods Sold (COGS):

Raw Materials $150,000

Direct Labor $50,000

Total COGS $200,000

Gross Profit $400,000

Opera ng Expenses:

Salaries and Wages $100,000

Rent and U li es $20,000

Marke ng and Adver sing $30,000

Deprecia on Expense $10,000

Total Opera ng Expenses $160,000

Opera ng Income $240,000

Non-Opera ng Income and Expenses:

Interest Income $5,000

Gain on Sale of Equipment $3,000

Interest Expense $8,000

Total Non-Opera ng Income/Expenses $0

Net Income Before Tax $240,000

Descrip on Amount

Income Tax Expense $60,000

Net Income $180,000

Key Points to Remember

 Revenue Recogni on: Ensure revenue is recorded in the period it is earned.

 Expense Matching: Match expenses to the revenues they helped generate within the same period.

 Accrual Accoun ng: Use accrual basis accoun ng to reflect true financial performance.

 Compara ve Analysis: Compare with previous periods to iden fy trends and areas for improvement.

 Regulatory Compliance: Follow accoun ng standards and regulatory requirements for financial repor ng.
Balance Sheet

A balance sheet, also known as a statement of financial posi on, is a financial statement that provides a snapshot of a
company's financial condi on at a specific point in me. It summarizes a company's assets, liabili es, and shareholders'
equity.

Purpose of a Balance Sheet

1. Assess Financial Posi on:

o Provides an overview of what the company owns and owes, and the equity invested by shareholders.

2. Evaluate Liquidity:

o Helps in understanding the company’s ability to meet its short-term obliga ons.

3. Analyze Capital Structure:

o Offers insights into how a company is financed, whether through debt or equity.

4. Inform Decision-Making:

o Assists investors, creditors, and management in making informed decisions.

Key Components of a Balance Sheet

1. Assets:

o Resources owned by the company that are expected to provide future economic benefits.

2. Liabili es:

o Obliga ons the company owes to outside par es.

3. Shareholders' Equity:

o The residual interest in the assets of the company a er deduc ng liabili es.

Format of a Balance Sheet

A balance sheet is typically structured in two main sec ons:

1. Assets

o Current Assets

o Non-Current Assets

2. Liabili es and Shareholders' Equity

o Current Liabili es

o Non-Current Liabili es

o Shareholders' Equity
Example of a Balance Sheet

ABC Corpora on Balance Sheet As of December 31, 2023

Descrip on Amount Descrip on Amount

Assets Liabili es and Equity

Current Assets: Current Liabili es:

Cash $20,000 Accounts Payable $15,000

Accounts Receivable $30,000 Short-term Loans $10,000

Inventory $25,000 Total Current Liabili es $25,000

Prepaid Expenses $5,000

Total Current Assets $80,000 Non-Current Liabili es:

Long-term Loans $30,000

Non-Current Assets: Total Non-Current Liabili es $30,000

Property, Plant, and Equipment (PPE) $70,000

Intangible Assets $10,000 Total Liabili es $55,000

Total Non-Current Assets $80,000

Shareholders' Equity:

Total Assets $160,000 Common Stock $50,000

Retained Earnings $55,000

Total Shareholders' Equity $105,000

Total Liabili es and Equity $160,000

Detailed Explana on

1. Assets:

o Current Assets:

 Cash: Money available for immediate use.

 Accounts Receivable: Money owed by customers for sales made on credit.

 Inventory: Goods available for sale.

 Prepaid Expenses: Payments made in advance for services or goods to be received in the future.

o Non-Current Assets:

 Property, Plant, and Equipment (PPE): Long-term assets used in opera ons.

 Intangible Assets: Non-physical assets like patents and trademarks.

2. Liabili es:

o Current Liabili es:

 Accounts Payable: Money owed to suppliers for purchases made on credit.

 Short-term Loans: Loans and obliga ons due within one year.

o Non-Current Liabili es:

 Long-term Loans: Loans and obliga ons not due within the next year.

3. Shareholders' Equity:

o Common Stock: Value of shares issued to shareholders.

o Retained Earnings: Accumulated profits retained in the company for reinvestment.

Key Points to Remember

 Double-Entry Accoun ng: The balance sheet follows the accoun ng equa on: Assets = Liabili es + Shareholders'
Equity.

 Time-Specific: The balance sheet reflects the financial posi on at a specific date.

 Liquidity and Solvency: Helps assess the company's liquidity (ability to meet short-term obliga ons) and solvency
(ability to meet long-term obliga ons).

 Compara ve Analysis: Comparing balance sheets from different periods helps iden fy trends and assess financial
health.
Cash Flow Statement

A cash flow statement, also known as the statement of cash flows, is a financial statement that summarizes the amount of
cash and cash equivalents entering and leaving a company. It provides insights into a company’s cash inflows and ou lows
over a specific period, usually categorized into opera ng, inves ng, and financing ac vi es.

Purpose of a Cash Flow Statement

1. Assess Liquidity:

o Determine the company’s ability to generate cash to meet its obliga ons.

2. Evaluate Financial Health:

o Provide insights into the company’s financial stability and cash management prac ces.

3. Inform Decision-Making:

o Assist management, investors, and creditors in making informed decisions about the company's financial
posi on.

4. Analyze Cash Flow:

o Understand the sources and uses of cash, differen a ng between opera ng, inves ng, and financing
ac vi es.

Key Components of a Cash Flow Statement

1. Opera ng Ac vi es:

o Cash flows from the core business opera ons.

2. Inves ng Ac vi es:

o Cash flows from the purchase and sale of long-term assets and investments.

3. Financing Ac vi es:

o Cash flows related to borrowing, repaying, and equity financing.

Example of a Cash Flow Statement

XYZ Corpora on Cash Flow Statement For the Year Ended December 31, 2023

Descrip on Amount

Cash Flows from Opera ng Ac vi es:

Net Income $180,000

Adjustments for Non-Cash Items:

Deprecia on Expense $10,000

Amor za on Expense $5,000

Changes in Working Capital:

(Increase) Decrease in Accounts Receivable $3,000

(Increase) Decrease in Inventory ($2,000)

Increase (Decrease) in Accounts Payable $4,000

Net Cash Provided by Opera ng Ac vi es $200,000

Cash Flows from Inves ng Ac vi es:

Purchase of Property, Plant, and Equipment (PPE) ($30,000)

Sale of Investments $15,000

Net Cash Used in Inves ng Ac vi es ($15,000)

Cash Flows from Financing Ac vi es:

Issuance of Common Stock $50,000

Repayment of Long-Term Debt ($20,000)

Dividends Paid ($10,000)

Net Cash Provided by Financing Ac vi es $20,000

Net Increase in Cash and Cash Equivalents $205,000

Cash and Cash Equivalents at Beginning of Year $50,000

Cash and Cash Equivalents at End of Year $255,000

Detailed Explana on

1. Opera ng Ac vi es:

o Net Income: Profit or loss for the period from the income statement.

o Adjustments for Non-Cash Items: Include deprecia on, amor za on, and other non-cash expenses.

o Changes in Working Capital: Adjustments for changes in accounts receivable, inventory, accounts payable,
and other current assets and liabili es.

2. Inves ng Ac vi es:

o Purchase of PPE: Cash ou lows for purchasing property, plant, and equipment.

o Sale of Investments: Cash inflows from selling investments or long-term assets.

3. Financing Ac vi es:

o Issuance of Common Stock: Cash inflows from issuing new shares.

o Repayment of Long-Term Debt: Cash ou lows for repaying borrowed funds.

o Dividends Paid: Cash ou lows for dividend payments to shareholders.

Key Points to Remember

 Direct and Indirect Methods:

o The statement of cash flows can be prepared using either the direct method (showing actual cash receipts
and payments) or the indirect method (adjus ng net income for changes in balance sheet accounts).

 Posi ve vs. Nega ve Cash Flow:

o Posi ve cash flow indicates more cash is coming in than going out, sugges ng good liquidity.

o Nega ve cash flow may indicate financial difficul es but can also result from investments in growth.

 Importance of Cash Flow:

o Even profitable companies can face liquidity issues if they do not manage their cash flows effec vely.

 Link to Other Financial Statements:

o The cash flow statement complements the income statement and balance sheet, providing a comprehensive
view of a company's financial health.
SAP T Codes – Finance

AP SAP T Codes

Master Data

FK01: Create Vendor

FK02: Change Vendor

FK03: Display Vendor

Invoice Processing

FB60: Enter Vendor Invoice

FB65: Enter Vendor Credit Memo

MIRO: Enter Incoming Invoice

MR8M: Cancel Invoice Document

MRBR: Release Blocked Invoices

Payment Processing

F-53: Post Outgoing Payments

F-58: Payment with Printout

F110: Automa c Payment Program

F111: Payment with Bill of Exchange

F-59: Payment with Clearing

Repor ng and Analysis

FBL1N: Vendor Line Items

FK10N: Vendor Balance Display

S_ALR_87012082: Vendor Payment History

S_ALR_87012078: Due Date Analysis for Open Items

Reconcilia on and Clearing

F-44: Clear Vendor

FB1S: Post with Clearing

F-44: Clear Vendor Account

F-03: Clear G/L Account

Special Process

FBRA: Reset Cleared Items

FB08: Reverse Document

F-02: General Pos ng

Configura on (Customizing)

OBD3: C FI Maintain Table T052

OBYR: C FI Table T030

OBBP: Define Tolerance Groups for Employees

AR SAP T Codes

Master Data

FD01: Create Customer (Centrally)

FD02: Change Customer (Centrally)

FD03: Display Customer (Centrally)

XD01: Create Customer (Sales)

XD02: Change Customer (Sales)

XD03: Display Customer (Sales)

VD01: Create Customer (Sales View)

VD02: Change Customer (Sales View)

VD03: Display Customer (Sales View)

Transac ons

FB70: Enter Customer Invoice

FB75: Enter Customer Credit Memo

F-28: Post Incoming Payments

F-32: Clear Customer

FD10N: Customer Balance Display

FBL5N: Customer Line-Item Display

Repor ng

S_ALR_87012177: Customer Open Items

S_ALR_87012178: Customer Due Date Analysis

S_ALR_87012179: Customer Payment History

S_ALR_87012182: Customer Balances

Account Management

F-22: Enter Customer Invoice

F-29: Post Customer Down Payment

F-30: Clear Customer Account

F-36: Change Customer Payment Data

F-37: Customer Down Payment Request

Period-End Closing

F.13: Automa c Clearing

F101: Receivables Reclassifica on

F103: Write-Offs

F110: Automa c Payment Transac ons

Integra on with General Ledger

FB01: Post Document

FB02: Change Document

FB03: Display Document

FB08: Reverse Document

Configura on (Customizing)

OBD2: Customer Account Groups

OBXR: Revenue Accounts Determina on

OBXE: Automa c Pos ngs (AR)

OBXL: Maintain Default Values

Billing process SAP T Code

VF01 - Create Billing Document

VF02 - Change Billing Document

VF03 - Display Billing Document

VF04 - Maintain Billing Due List

VF06 - List of Billing Documents

VF21 - Revenue Account Determina on

VF31 - Output from Billing Documents

VF44 - Maintain Billing Output

VF52 - Change Billing Index

VF11 - Cancel Billing Document

Cash Applica on in SAP T Code

FBL5N - Display Customer Line Items

F-28 - Post Incoming Payments

F-32 - Clear Customer Accounts

F-44 - Clear Customer

F-30 - Post with Clearing

F-03 - Clear G/L Account

F-27 - Credit Memo

F-32 - Automa c Clearing

Collec on SAP T Codes

FBL5N - Display Customer Line Items

FD32 - Change Customer Credit Management

FD33 - Display Customer Credit Management

FD20 - Customer Evalua on

FD27 - Display Credit Management

F.27 - Display/Change Customer Account

F150 - Dunning

F.27 - Credit Memo

F.37 - Post Processing of Payments

F.38 - Post Processing of Collec ons

Fixed Assets SAP T Codes

Asset Master Data

AS01: Create Asset Master Record

AS02: Change Asset Master Record

AS03: Display Asset Master Record

AS04: Create Asset Master Record (in mass)

AS05: Change Asset Master Record (in mass)

AS06: Delete Asset Master Record

Asset Transac ons

ABZON: Asset Acquisi on

ABUMN: Asset Transfer

ABAVN: Asset Re rement by Scrapping

ABAON: Asset Re rement with Revenue (Without Customer)

ABZP: Post-Capitaliza on

Asset Deprecia on

AFAB: Deprecia on Run

AW01N: Asset Explorer

AW01: Asset Value Display

Periodic Processing

AFAMA: Change Deprecia on Key

AJAB: Close Fiscal Year

AJRW: Recalculate Values

Repor ng

S_ALR_87011964: Asset Balances

S_ALR_87012048: Asset History Sheet

S_ALR_87011990: Deprecia on List

S_ALR_87011965: Assets Acquired

Configura on

OA02: Create/Change Chart of Deprecia on

OAY1: Specify Account Determina on

OAYZ: Asset Classes

Integra on with General Ledger

AO90: Account Determina on

OABW: Define Deprecia on Areas

Intercompany SAP T Codes

Financial Accoun ng (FI)

FB50 - Enter G/L Account Document

FB70 - Enter Customer Invoice

FB60 - Enter Vendor Invoice

F-02 - General Ledger Pos ng

F.05 - Foreign Currency Valua on

F-44 - Clear Vendor

F-32 - Clear Customer

Controlling (CO)

KB11N - Enter Intercompany Pos ng

KB21N - Enter Ac vity Alloca on

KE21N - Enter Profitability Segment Adjustment

KO02 - Change Order

KOB1 - Actual Costs for Orders

Materials Management (MM)

ME21N - Create Purchase Order

ME22N - Change Purchase Order

MIGO - Goods Movement

MIRO - Enter Incoming Invoice

Sales and Distribu on (SD)

VA01 - Create Sales Order

VA02 - Change Sales Order

VL01N - Create Outbound Delivery

VF01 - Create Billing Document

VFX3 - List Blocked Billing Documents

Cross-Module Func ons

OBYA - Configure Automa c Pos ngs (Cross-Company Code Transac ons)

OBA7 - Define Document Types for Intercompany Pos ngs

Master Data Management

XD01 - Create Customer (Centrally)

XD02 - Change Customer (Centrally)

XK01 - Create Vendor (Centrally)

XK02 - Change Vendor (Centrally)

General Ledger

FS00 - G/L Account Master Record Maintenance (Centrally)

OB52 - Maintain Pos ng Periods

Others

MR21 - Price Change

MR22 - Material Debit/Credit

Inventory SAP T Codes

Stock Overview and Analysis

MMBE: Stock Overview

MB52: List of Warehouse Stocks on Hand

MC.9: Inventory Analysis Report

Goods Receipt

MIGO: Goods Movement (most comprehensive for goods receipt, issue, transfer)

MB01: Post Goods Receipt for Purchase Order

MB31: Goods Receipt for Produc on Order

VL32N: Change Inbound Delivery

Goods Issue

MIGO: Goods Movement

MB1A: Goods Issue

MB1B: Transfer Pos ng

MB1C: Other Goods Receipts

Stock Transfers

MIGO: Goods Movement

MB1B: Transfer Pos ng

MB5T: Stock in Transit

Inventory Count

MI01: Create Physical Inventory Document

MI04: Enter Inventory Count with Document

MI07: Post Inventory Differences

Reserva ons and Reversals

MB21: Create Reserva on

MB22: Change Reserva on

MB23: Display Reserva on

MBST: Cancel Material Document

MBVR: Management Program: Reserva ons

Batch Management

MSC1N: Create Batch

MSC2N: Change Batch

MSC3N: Display Batch

Serial Number Management

IQ01: Create Material Serial Number

IQ02: Change Material Serial Number

IQ03: Display Material Serial Number

Repor ng

MB5B: Stocks for Pos ng Date

MB51: Material Document List

MB59: Material Document Evalua on

Plant Maintenance

IW32: Change Maintenance Order

IW38: Change PM Orders

Quality Management

QM01: Create Quality No fica on

QM02: Change Quality No fica on

QM03: Display Quality No fica on

Pe y Cash SAP T Codes

FBCJ: This transac on code is used for pos ng cash journal entries, including pe y cash transac ons. You can use FBCJ to
record cash receipts and payments, including pe y cash replenishments and disbursements.

FBCJC0: This is another transac on code for cash journal entry. It allows you to post cash transac ons directly to the cash
journal without going through the general ledger.

FBCJC1: Similar to FBCJC0, this transac on code is used to post cash journal entries but with reference documents.

FBCJX: This transac on code is used to display cash journal documents. You can use FBCJX to view posted cash transac ons,
including those related to pe y cash.

FBCJC2: This transac on code allows you to reverse cash journal documents. If you need to reverse a posted cash
transac on, including pe y cash transac ons, you can use FBCJC2.

FBCJC3: This is the transac on code for changing cash journal documents. If you need to make correc ons to a posted cash
transac on, you can use FBCJC3.
Payroll SAP T Codes

Payroll Processing and Data Entry

PC00_MXX_CALC - Payroll Calcula on

XX represents the country version, e.g., PC00_M10_CALC for the US.

PC00_MXX_CEDT - Payroll Editor

PC00_MXX_PA03 - Control Record for Payroll

PC00_MXX_PBS - Payroll Status

Payroll Reports

PC00_MXX_HIST - Payroll Results History

PC00_MXX_RPCL - Payroll Journal

PC00_MXX_RCLJ - Payroll Log

PC00_MXX_RPTR - Payroll Pos ng to Accoun ng

Configura on and Master Data

PA03 - Payroll Control Record

PA30 - Maintain HR Master Data

PA40 - Personnel Ac ons

PE51 - HR Form Editor

Special Func ons

PU03 - Ini alize Payroll

PU12 - HR Data Exchange

PU19 - Tax Reporter

P0011 - Payroll Encashment

Others

S_PH9_46000172 - Payroll Results

S_ALR_87012004 - Employee Payroll Results

S_AHR_61016406 - Payroll Reconcilia on Report

PC_PAYRESULT - Display Payroll Results

GL SAP T Codes

Master Data

FS00: G/L Account Master Record Maintenance

FS01: Create G/L Account

FS02: Change G/L Account

FS03: Display G/L Account

Pos ng

F-02: Enter G/L Account Pos ng

FB50: G/L Account Pos ng

F-04: Post with Clearing

FB01: Post Document

F-05: Post Foreign Currency Valua on

Display and Repor ng

FBL3N: G/L Account Line Items Display

FS10N: G/L Account Balance Display

S_ALR_87012301: G/L Account Balances

S_ALR_87012282: G/L Account Transac on Figures

Periodic Processing

F.01: Financial Statements

F.05: Foreign Currency Valua on

F.13: Automa c Clearing

Closing Opera ons

F.03: Reconcilia on of FI and CO

F.07: G/L Account Carry forward

Special Ledger

GB01: Create Special Ledger

GB02: Change Special Ledger

GB03: Display Special Ledger

Configura on

OB52: Maintain Pos ng Periods

OBY6: Company Code Global Data

OBC4: Define Tolerances (Employees, G/L Accounts, etc.)

SAP T Codes – Record to Report – RTR – R2R

1. FBL3N: Display G/L Account Line Items to display line items of a specific G/L account, providing detailed informa on
about transac ons and balances.
2. F.01: Financial Statements generates financial statements, It helps in analysing the financial performance of a company.

3. FB50: Enter G/L a/c Document commonly used for journal entries.
4. F.07: Reconcilia on of G/L a/c enables you to reconcile G/L acct, ensuring that the account balances in the SAP system
match the corresponding balances in external systems or bank statements.
5. FBL1N: Vendor Line Items displays line items related to a specific vendor, providing a detailed overview of transac ons,
invoices, and payments. helps vendor account analysis.
6. F.28: Customer Account Balance displays the a/c balance of a specific customer, showing outstanding invoices,
payments, and credit memos. It helps in managing AR.
7. F.44: Clear Vendor Account clear open items in a vendor account, reconciling payments and invoices. It helps in
managing outstanding balances and maintaining accurate AP records.
8. F.19: Reverse Sta s cal Pos ng reverses sta s cal pos ngs made in the system. Sta s cal pos ngs don't have a
financial impact but are used for repor ng and analysis purposes. The T-code helps in correc ng any erroneous sta s cal
pos ngs.
9. F.05: Foreign Currency Valua on performs valua on of foreign currency balances, revaluing them based on current
exchange rates.
10. F.52: Post Outgoing Payments to post outgoing payments, such as vendor payments or payroll disbursements. It helps
in maintaining accurate payment records and managing cash flow.
11. FB03: Display Document to display accoun ng documents, such as invoices or journal entries. You can view the
details of a specific document, including its line items, dates, and reference numbers.
12. F.13: Automa c Clearing of Open Items automa cally clears open items in the AR or AP sub ledger. It matches debits
and credits, reducing the number of outstanding items and streamlining the reconcilia on process.
13. FS10N: Display G/L Account Balances an overview of the balance in a specific G/L account. It shows the current
balance, as well as informa on about open items, cleared items, and line-item details.
14. F-53: Post Outgoing Payments is used to post outgoing payments made to vendors or suppliers. You can allocate the
payment to specific vendor invoices or against open items in the vendor account.
15. F.80: Mass Reversal of Documents allows you to reverse mul ple accoun ng documents simultaneously. It helps
correct errors or undo transac ons in bulk, saving me and effort.