Sap Fico Interview Questions

Top 57 Frequently Asked SAP FICO Interview Questions And Answers

1. What is SAP FICO?

Answer:

The term SAP FICO can actually be divided in to 2 for understanding. FI means Financial Accounting and CO stands for Controlling. SAP FICO is a software that takes in and computes information that has been loaded, and in turn, offers the needed results in line with the marketing situation. SAP FI is the part of the software that deals with the accounting of the business while SAP CO deals with all the individual sheets and segments that contribute to the final account.

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2. What are the other modules to which ‘Financial Accounting’ is integrated?

Answer:

The other modules to which ‘Financial Accounting’ is integrated are:

a) Sales and Distribution

b) Material Management

c) Human Resource

d) Production Planning

e) Controlling of financial transaction

3. Explain the use of Financial General Ledger Accounting (FI-GL).?

Answer:

The Financial General Ledger Accounting feature is one of the major parts of the SAP software. Basically what it does is that it records all of the business and financial transactions of the company and merges them with the other functional segments in the software, thus creating a complete and overall record of the transactions done by the company.

4. How capital WIP (Work In Process) and Assets accounted for in SAP?

Answer:

‘Capital WIP’ is referred to as Assets under construction in SAP and is represented under specific asset class. Depreciation is not charged under ‘Capital WIP’ usually. The cost incurred on building a capital asset can be booked to an ‘internal order’ and through the settlement procedures, and can be posted onto an ‘Asset Under Construction’. (e learning Portal)

5. What are posting keys? State the purpose of defining posting keys?

Answer:

Posting keys determine whether a line item entry is a debit or a credit
as well as the possible field status for the transaction. Posting keys
are SAP delivered. If u want changes like making additional fields
optional on payment type posting keys then the best possible action is
to copy the posting key that needs to be modified and then modify it.

6. What is the purpose of payment methods and when are they stored?

Answer:

Generally payment methods are one digit alphanumeric identifiers that indicate the type of payments made to vendors or received from customers. There are many standard delivered SAP entries for each country. The payment methods are stored in the vendor / customer master record as well on vendor / customer line items. (The default from master record can be changed during manual postings)

7. What are correspondence types in AR / AP?

Answer:

Correspondence types are different outputs which can be printed and sent to your business partners based around either customer vendor or GL information. Popular correspondence types include customer statements, payment notices and line items lists. Within the most common AP/AR functions (such as ‘Display vendor line items’ below there is the option to generate correspondence requests. At the end of the working day these can be printed together as a batch and sent out.

8. Why Asset classes are important in SAP?

Answer:

Asset class is the primary class that is used for the purpose of justifying the assets. The entire asset category are generally assigned or integrated to the one asset class. It is also possible for the users to use the default values for the same.

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9. How do you manage credit limit for the customer in FI?

Answer:

Credit control in FI is used to check the credit limit for the customer and it can use one or more codes. It is used for credit management in Application components- Account Receivable (AR) and Sales and Distribution.

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The credit control area is determined in the following sequence:

  • User exit
  • Distribution channel
  • Customer master
  • Company code for the sales organization

10. What do you understand by company and company code?

Answer:

A company is the organizational unit used in the legal consolidation module to roll up financial statements of several company codes. The Company Code is the smallest organizational unit for which a complete self-contained set of accounts can be drawn up for purposes of external reporting.

11. What is the use of Account payable in FI? How it is related to G/L?

Answer:

SAP FI Accounts payable is used to manage and record accounting data for all the vendors. All invoices and deliveries are managed as per vendor requests. Payables are managed as per payment program and all payments can be made using checks, transfer, electronic transfers, etc.

All the postings that are made in Account Payable are also updated in General Ledger simultaneously and system also maintains forecasts and standard reports that can be used to keep track of all the open items.

12. What do you understand by cost center, profit center in Controlling?

Answer:

A Cost center is defined as a component in an organization that adds to the cost and indirectly adds to profit if the organization. Examples include Marketing and Customer Service.

A company can classify business unit as profit center, cost center or an investment center. The simple and straight forward division in an organization can be classified as cost center as cost is easy to measure.

SAP CO-Profit center is used for managing internal controlling. When you dividing your company into profit centers, it allows you to delegate responsibility to decentralized units and allows you to treat as separate companies in a company.

13. Define relationship between controlling area and company code?

Answer:

A controlling area may include one or more company codes which must use the same operative chart of accounts as the controlling area. A Controlling Area can contain multiple company code assignments but a single company code can be assigned to only one controlling area.

14. What Are Posting Periods?

Answer :

The Posting period variant controls which posting periods, both normal and special, are open for each company code. It is possible to have a different posting period variant for each company code in the organization. The posting period is independent of the fiscal year variant.

15. What Is The Use Of Sales Returns In Fi?

Answer:

Sales Returns in SAP FI is used to manage full products that the customer has returned due to a complaint. These are used in consumer good industry.

All returns are related to quality defects and not incorrect deliveries. The path that the returned merchandise takes often has to be tracked in detail. Returned item has to be sent for inspection.

16. Explain the Fiscal Year dependent of the particular year in the SAP software?

Answer:

This feature of SAP basically is an arrangement for years in which, for the business perspective, the months did not have the same number of days. Thus, to tweak the SAP calendar according to the calendar of the business, this feature has been provided.

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17. Highlight the importance of Goods/ Invoice Received clearing account?

Answer:

GR/IR (Great Received/ Invoice Received) can be an interim account. In the legacy program, if the products are received and the invoice isn’t received, the provision is manufactured, in SAP at the receipt of the product. The Accounting is passed because of its entry debiting the Inventory and crediting the GR/IR account. Likewise, when an invoice is normally received owner accounts is normally credited, and the GR/IR accounts are debited, the GR/IR will show as uncleared items till the proper time the invoice isn’t received. (SAP FICO Online Training)

18. In Accounts Receivable, what’s the difference between the ‘residual payment’ and ‘part payment’ methods of allocating cash?

Answer:

These are the two methods for allocating partial payments from customers.

As an example, lets say invoice A123 exists for $100 and a customer pays $60. With partial payment, the $60 simply offsets the invoice leaving a remaining balance of $40.

With residual payment, invoice A123 is cleared for the full value $100 and a new invoice line item is booked for the remaining balance of $40.

19. Tell something about the credit control area in the SAP?

Answer:

The credit control is in the SAP enable the organization to impose a strict upper limit on the credit for the customers. This can be done by using the option controls are in the SAP. It simply makes sure of avoiding the situation such as risk of bad debts and outstanding receivables.

20. What is the use of Account Receivables in FI?

Answer:

SAP FI Accounts Receivable component records and manages accounting data of all customers. It is also an integral part of sales management.

All postings in Accounts Receivable are also recorded directly in the General Ledger. Different G/L accounts are updated depending on the transaction involved (for example, receivables, down payments, and bills of exchange).

21. How Do You Manage Relationship Between Two Currencies In Sap Fi?

Answer :

Exchange Rates are used to define relationship between two currencies and also to maintain exchange rates are used to translate an amount into another currency.

You define exchange rates in the system for the following purposes:

Posting and Clearing : To translate amounts posted or cleared in foreign currency, or to check a manually entered exchange rate during posting or clearing.

Exchange Rate Differences : To determine gains or losses from exchange rate differences.

Foreign Currency Valuation : To valuate open items in foreign currency and foreign currency balance sheet accounts as part of the closing operations.

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22. At What Level Are The Customer And Vendor Code Stored In Sap?

Answer:

The customer and vendor code are at the client level. That means any company code can use the customer and vendor code by extending the company code view.

23. How Are Tolerance Group For Employees Used?

Answer:

Tolerance group stores Posting amount defaults. Tolerance groups are
assigned to User ID’s that ensures only authorized persons can make
postings.

24. How can you link customer and vendor master records and what is the purpose of doing so?

Answer:

On the customer master there is a field “vendor” and likewise on the vendor master there is a field “customer”. By entering these master data numbers, a link can be created between the AP/AR sub ledgers for use in the payment program, dunning routine and the clearing of open items. For example in the payment program, if a specific business partner is your vendor but also your customer, linking their master records together will allow the open AR invoices to be offset against the outstanding AP invoices.

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25. What Is The Difference Between Company And Company Code?

Answer:

A company is the organizational unit used in the legal consolidation module to roll up financial statements of several company codes.The Company Code is the smallest organizational unit for which a complete self-contained set of accounts can be drawn up for purposes of external reporting.

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26. Why the financial statements are important for any business?

Answer:

Well, it simply enables them to keep an eye on the purposes for which a specific amount was send including all its information. The users can simply keep a digital record of all the funds received or transferred to any other account. This enable them to prepare documents for the future on which some important plans and decision making strategies are based on. Financial statements also enable business to get reducation in taxes in a few cases. In addition to this, the users can access the record of all the financial transactions anytime the same is required.

27. What are the common reasons of errors in the accounting and what impact do they actually have on the organization?

Answer:

Errors are of lot of types and can be due to a diverse array of reasons. The users can often made mistake. A single wrong entry of only one digit can bring a lot of issues in the organization and can mislead about the profits and losses. Errors can be due to negligence of users, fault in the system, wrongly prepared bills or claims, gross errors, basic accounting errors, errors due not updating the sheets and so on.

28. How the system identifies a ‘Posting Period’?

Answer:

Based on the posting date entered into the system while posting a document, the system automatically determines the period, by looking at the document date and the year. However, for this to occur .you should have properly defined the fiscal year valiant.

29. What is the number of configured currencies per Company Code?

Answer:

A total number of three currencies are possible to configure for every Company Code. The first currency is the business’s local currency. The other two are foreign currencies running parallel to the home currency.

30. What are the prerequisites in order to customize a document in SAP?

Answer:

The customizing prerequisite for record clearing is to check on the things uncleared and cleared, and this is performed by open item management. Open up item administration manages your excellent accounts, i.e. accounts payable and accounts receivable. For example, an invoice item which has not however been paid is normally documented as open accounts until it really is paid.

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31. In Asset Accounting what is the organizational assignments?

Answer:

In Asset Accounting, chart of depreciation is rated as the highest node, and this is assigned to the company node. All the depreciation calculations are stored under the chart of depreciation.

32. What Are Substitutions And Validations? What Is The Precedent?

Answer:

Validations are used to check settings and return a message if the prerequisite check condition is met. Substitutions are similar to validations; they actually replace and fill in field values behind the scenes without the user’s knowledge unlike validations that create on-screen msgs to the user.

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33. What Are The Customizing Prerequisites For Document Clearing?

Answer:

Account must be managed on the open item management. This tick is there in the General Ledger Master Record called open item Management. it helps you to manage your accounts in terms of cleared and uncleared items. A typical example could be GR/lR Account in SAP(Goods Received/invoice Received Account).

34. What exactly do you know about the SAP FICO?

Answer:

FICO stands for Financial Accounting and Controlling. It is basically an important tool which is useful in preparing the statements about the finance related to an organization or a business. In addition to this, FICO can also be considered for the purpose of accounting, tax computations, preparing the inventory sheets, financial data storage. The users need not to worry about the security of the data and in addition to this, it simply make sure of managing and utilizing the data in a reliable manner.

35. What exactly posting key is in FICO and what is its significance?

Answer:

It is basically an approach that enables users to determine the transaction type among the various possible options in the domain. Generally, it is a two digit number when is entered during defining of item. It simply give idea about the type of posting which can either be credit or debit as well as the type of accounts. Also, the status of transactions can also be recorded through it.

36. Why it is not able to post to a customer a/c in a previously closed ‘Period’?

Answer:

When you want to selectively ‘close’ or ‘open’ posting period of some &cants (account range), there will be no problem with that if you an doing it for GI accounts. But. if it is a sub-ledger account (like the customer), the same has to be achieved via opening or closing the account interval of the ‘reconciliation account’ of that account type.

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37. What is the purpose of a “Document type” in SAP?

Answer:

A Document type is specified at the Header level during transaction entry and serves the following purposes :

  • It defines the Number range for documents
  • It controls the type of accounts that can be posted to eg Assets, Vendor, Customer, Normal GL account
  • Document type to be used for reversal of entries
  • Whether it can be used only for Batch input sessions

38. Explain the term SAP FICO?

Answer:

SAP FICO stands for SAP Finance and Controlling is module that is used for accounting processes internally as well as externally. It is a module of SAP processes where financial transactions are incorporated with several parallel SAP modules for better outputs. It offers highly complex methods of financial transaction reporting and better handling of accounts.

39. Why do we use SAP FI?

Answer:

SAP Financials accounting module enables you to manage financial accounting data within an international framework of multiple companies, currencies, and languages.

SAP FI module mainly deals with the below financial components :

  • Fixed asset
  • Accrual
  • Cash journal
  • Accounts receivable and payable
  • Inventory
  • Tax accounting
  • General ledger
  • Fast close functions
  • Financial statements
  • Parallel valuations
  • Master data governance

40. What are the benefits of using Business areas in a company?

Answer:

  • You can use these business areas if other company codes require the same areas
  • It is easy to configure if you use Business Area as you just need to attach to the company code and the other details in business area will get attach itself.
  • By using Business areas in controlling, you can create Profit and loss statement, Balance sheet, etc. for business areas so this is used for management accounting in few companies.

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41. Explain the relationship between company code and controlling area?

Answer:

A controlling area may include one or more company codes which must use the same operative chart of accounts as the controlling area. A Controlling Area can contain multiple company code assignments but a single company code can be assigned to only one controlling area.

42. How do you manage outgoing partial payment for vendor in FI?

Answer:

In SAP FI, you can also post outgoing partial payments for vendor. Partial payment from vendor will be open as open item and no clearing document will be generated.

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43. What is year Specific fiscal year variant?

Answer:

Periods can vary from year to year ie :

A fiscal year variant has to be defined as year specific if one of the following conditions is fulfilled.

1) Some fiscal years use a different number of posing periods.

2). the start and end dates of the posing periods for some fiscal years are different to the dates for other fiscal years.

44. WHAT IS A ‘YEAR SHIFT’ IN SAP CALENDAR?

Answer:

SAP system does not know what is broken fiscal year e.g April 2012 to March 2013 and only understand the calendar year. If, for any business, the fiscal year is not a calendar year but the combination of the different months of two different calendar year and then one of the calendar year has to classified as a fiscal year for SAP and the month falling in another year has to be adjusted into the fiscal year by shifting the year by using the sign -1 or +1. This shift in the year is known as ‘year shift’.

Example: April 2012 to Dec 2012 is our first calendar year, and Jan 2013 to March 2013 is our second year, now if you are taking April-12 to Dec-12 as your fiscal year, then Jan-13 to March-13 automatically becomes the second year, and you have to adjust this year by using -1 shift, and vice versa if the scenario is reversed, here you will use +1 shift.

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45. Explain the usage of the Financial Statement Version tool in SAP software.

Answer:

The Financial Statement Version tool or the FSV tool is used in order to procure the various types of financial statements for a particular institution or business. Some examples of the type of financial statements that can be generated are Profit and Loss Accounts, Balance sheet, etc.

46. What are the problems when the business area is configured?

Answer:

The nagging problem faced whenever a business area is configured, is normally splitting of balance which is normally more pertinent in the entire case of taxes accounts.

47. Explain the importance of asset classes in the SAP software?

Answer:

The asset class is the primary class to classify assets. Every asset must be assigned to only one asset class. Example of asset class is Furniture & Fixtures, Plant & Machinery, and Computers etc. The asset class also contains a G1 account, when any asset is procured, the G1 account is debited. Whenever you create an asset master, it becomes mandatory to mention the asset class for which you are creating the required assets. So, whenever any asset transaction occurs, the G1 account attached to the asset class is automatically picked up and the entry is passed. You can also specify the default values for calculating the depreciation values and other master data in each asset class.

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48. What is account group and what does it control?

Answer:

Account group determines which fields you can configure on the G/L master record. It is necessary to have at least two one for B/S and another one for P&L a/c.

It controls the Number ranges of GL A/C.

The status of fields of the master record of GL belongs to company code area.

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49. What is meant by a “baseline date” in SAP AR and AP?

Answer:

The baseline date is the date from which the payment terms (specific in IMG transaction OBB) apply. Usually this is the document date on the invoice but can also be the date of entry or posting date from the ledger.

50. Explain briefly how you can import electronic bank statements into SAP?

Answer:

A text file is received from the bank which is then uploaded into the SAP system. The file contains details of the company’s bank movements e.g. cheques, bank interest, bank charges, cash receipts, etc. Depending on the system configuration SAP will attempt to book these transactions automatically to the correct accounts to avoid the need for manual entries by SAP users.

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Any postings which the system can not derive automatically can be booked through “post-processing”

51. What Are Document Types And What Are They Used For?

Answer :

Document type is the identifier of differentt account transactions like SA for G/L,AA for Asset Accounting etc.The doc. Types controls things like type of the account that can be posted to, the number range assigned to it, and required doc header fields.

52. How Many Chart Of Accounts Can Be Attached To A Company Code?

Answer:

One or more Operative Chart of Accounts can be assigned to a company code.

A COA must be aasigned to a company code. This COA is the operative COA and is used in both FI and CO. One Chart of Account can be assigned to many Company codes i.e., Multiple company codes can either share the same or have separate COA. But a company code (Country specific Company code or International Company code) can have a country specific COA also along with Operative COA. The link between the regular COA and the country COA appears in the alternate number field of the G/L master record.

Eg: If a company’s subdidiaries are located in both US & Mexico. We need to configure 2 Company codes – one for US and another for Mexico,for eg U100 and M100. The same way we create 2 COA’s one for US & one for Mexico, USCA and MXCA. Mexico has different govt reporting requirements than the US so we will need to define a company code specific to Country Mexico and also create a country specific COA to be used, in addition to normal COA. In tcode OBY6(Comp Code Global Parameters) of CC M100 we define normal COA i.e.,USCA in Chart of Accounts field and MXCA in Country Chart/Accts field.

53. What Are The Common Document Types In Fi?

Answer:

Common Document types Key are:

  • Document Type Document Type Description
  • AA Asset Posting
  • AN Net Asset Posting
  • DR Customer Invoice
  • DZ Customer Payment
  • KA Vendor Document
  • KG Vendor Credit Memo

54. What is chart of account and how many charts of accounts can be assigned to a company?

Answer:

Chart of account is a list of all G/L accounts used by one or several company codes.

For each G/L account, the chart of accounts contains the account number, account name, and the information that controls how an account functions and how a G/L account is created in a Company code.

You have to assign a chart of accounts to each company code. This chart of accounts is the Operating chart of accounts and is used for the daily postings in this company code.

You have the following options when using multiple company codes.

You can use the same chart of accounts for all company codes

55. What is APP in SAP Fico?

Answer:

APP stands for ‘Automatic Payment Program’; it is a tool provided by SAP to companies to pay its vendors and customers. APP tools help to avoid any mistakes taken place in posting manually. Also, when number of employees is more in the company, payment through APP becomes more feasible.

56. What are the major components of Chart of Accounts?

Answer:

The major components of Chart of Accounts are:

a) Chart of account key

b) Name

c) Maintain Language

d) Length GL account number

e) Controlling Integration

f) Consolidation-Group chart of accounts

g) Block indicator

57. Which of the fields you can display and log changes in FI?

Answer:

When you change a master record, the system logs these changes and generates change documents. For each field, it stores the time of change, the name of the user, and the previous field contents.

You can display all the changes for the following :

  • A certain field
  • A master record

For several vendor master records, following changes are displayed separately :

  • Overwritten field contents.
  • Any bank details and/or dunning areas entered after the master record was created.
  • Any bank details and/or dunning areas that have been deleted.
  • Using the change documents, you can find all the changes that are made and when they were made.