Retained Earnings GL Account in relation to Carrying Forward Balances
We may notice that for certain Balance Sheet General Ledgeraccounts the opening balance of a fiscal year does not equal the closing balance of the same account for the previous fiscal year. It may be the case that the account in question is a Retained Earnings account and therefore the carry forward logic is not the same as for other all other GL accounts. Profit & Loss accounts behave differently to Balance Sheet accounts as we will shortly see.
First determine if the account in question is a Balance Sheet account or not by checking in transaction FS00 (FS03 also). Just enter the company code and account number in the selection and click on the “Type/Description” tab:
You will be able to determine whether the account is a “Balance Sheet Account” or not. Additionally It may also be the case that you can determine if the account is related to Retained Earnings by checking the description of the account in the “Short Text” and/or “G/L Account Long Text” as in the example above.
Next determine the Chart of Accountsrelated to the company code you are working with. This can be quickly checked in transaction OBY6 and selecting the company code
Next, open transaction OB53. You first enter the Chart of Accountsand then press Enter. On the next screen you will see what Retained Earnings account is defined for your Chart of Accouts and Company code:
Now you know for sure whether the account in question is indeed a Retained Earnings account or not.
Balances are not carried forward in a normal way for the Retained Earnings account. The opening balance for a Retained Earnings account is calculated using the closing balance for the account and the sum of the closing balances of all the Profit & Loss accounts using the following formula:
Opening Balance of a Retained Earnings Account = Closing Balance of previous year for Retained Earnings Account + Sum of Earnings from Profit & Loss Accounts
As a result of this, the opening balance of a Retained Earnings account will not equal the closing balances of the previous fiscal year. Consequently, the balance of the Retained Earnings account will not match the sum of line item items since balances are carried forward to the Retained Earnings accounts from other Profit & Loss Accounts without any line items generated.
Sample Account Assignment in G/L AccountSample Account Assignment is a master record containing data that is transferred when you create G/L account master records in the company code area.When you create a G/L account master […]
How to do Fiscal Year Variant Change in SAP?Fiscal Year Variant
The fiscal year variant determines the posting periods to be used by the client's company. SAP allows a maximum of 16 posting periods each fiscal year - normally 12 […]
SAP FI-APAccounts Payable
AR & AP are sub ledgers of GL for managing customer & vendor balances. Most of AR comes from SD modules & AP data from MM module.Define Acct group with […]
SAP Clearing in Local CurrencySAP Clearing in Local Currency
Transaction OBY6 Effect of clearing in Local currency : Purchase USD 1000 at 1 USD = 2 SGD.The accounting entry in Local Currency […]
General Ledger Master Data in SAP FICOGeneral Ledger Master Data in SAP FICO: In SAP, the basic element of the master data structure in the General Ledger is the chart of accounts, which is assigned to a company code and […]