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Closing Activities

1. GR/IR Clearing Account Analysis ensuring that the balance is zero (goods delivered, notinvoiced/goods invoiced, not delivered: RFWERE00).

2. Material Stocks are usually valuated at year end. Any changes in price of thematerial vs market price is posted. (LIFO FICO rules are used). Inhousematerials via product costing, purchased materials via price difference)

DB: Value adjustment expenseCR: Stock Value adjustment:

3. Balance confirmations: Reports SAPF130D and SAPF130K create correspondence toand from your customers and vendors to enable you to check the balance of receivables andpayables.

4. Forigen currency valuation: You carry out the foreign currency valuation before youcreate the financial statements

a) Foreign currency balance sheet accounts, that is, G/L accounts that you run in foreigncurrency (the balances of the G/L accounts in foreign currency are valuated)

b) Open items (customers, vendors, G/L accounts) posted in foreign currency (the lineitems are valuated)

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5. Regrouping of receivable and payables: (???) learn more..ALSO what aretransfer postings.

a) credit memos from customerb) vendor is also customerc) any change in recon accounts

d) 6. ACCRUAL and DIFFERAL postings:7. Reconciliation ledger8. Adjustment postings for TAX, profit centers etc etc

Balance sheet format:

P&L Format

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P&L Statement has two methods. ( Cost of sales accounting or period accounting)Cost of sales accountingThe emphasis with this method is on matching the revenues for goods and/or services provided (salesrevenue) against the related expenses for those items (cost of goods sold). Therefore, this accountingmethod displays revenues and expenses in a manner optimized for conducting profit margin analyses,and as such it is ideal for the sales, marketing, and product management areas.

Cost of sales accounting requires the use of organizational units called functional areas to divide costsposted to the same expense account to separate report items. As illustrated above, this allows you topresent the same type of expense in different sections of your financial statements (for example,

personnel expenses associated with production are included in Gross results while personnel costs

incurred for ot her purposes would be included in the Cost of goods sold section). By groupingexpenses by function (production, sales, administration), cost of sales accounting also defines thebusiness transaction that each individual expense in the company results from.

Period accountingThe emphasis here is on summarizing the total output of a period and the total costs of this period,

grouped by expense type. Therefore, this accounting method presents the revenues and expenses of aspecific period and the changes in stock, work in process, and capitalized activities. As such, it is idealfor the production and profit center areas.

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