The cost incurred in or required for something an amount of money spent by a person or company.Į.g.: purchases, costs, expenses, overheads Income account: Liability account:Īn obligation, responsibility, or debt owned by a person or company.Į.g.: Loans, Creditors etc. In SAP we do the following classification of the GL accounts on the functional basis as below and also there is an account type configuration A-Asset D-Customer K-Vendor M-Material S-GL which are further linked to document types. However from a functional perspective the accounts are to be looked from a Balance sheet and P/L statement perspective only.Īn item of property owned by a person or company having value and available to meet debts, commitments, or legacies.Į.g.: Land, Vehicle, Cash, Bank, Debtors etc. The three golden rules for account entries when transaction happen are as follows Every year the balances are transferred to the retained earning account and they start the next year with zero balances. Usually they go up during the year and are not carried forward. Temporary accounts like Expenses, Incomes or gains. In Accounting there exists the following classification for all the accounts at a broader level. Types of FI accountsīefore we actually start checking entries in the SAP system for various processes a basic understanding is necessary on how the classification of the accounts in SAP is done and its treatment which is quite universally known nonetheless revisiting it again. During interviews many a times these questions are tried out to check out the basic understanding of the FI-CO consultant. In this article we shall go through the explanation of how and what debit credit entries are posted to the system in SAP for AP, AR, Assets, Product Costing and in Bank Communication Management.