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Display sap mm-fi automatic account assignment.

by John Jordan

Table of Contents

Introduction, display obyc accounts with se16n, more information.

You use configuration Transaction OBYC to assign SAP General Ledger (GL) accounts in Financial Accounting (FI) to movement types in Materials Management (MM), also known as SAP MM-FI Automatic Account Determination or Assignment.

End users do not typically have the authorization to run configuration Transaction OBYC. 

You can easily display automatic account assignments as follows:

View table T030, which stores OBYC configuration settings, with Transaction SE16N.

Type in Table T030 and press Enter to display the selection screen shown in Figure 1.

Figure 1 : Table T030 Selection Screen To Display SAP MM-FI Configuration Settings

You restrict the table entries displayed on the subsequent results screen by making entries in the Selection Criteria section. To display G/L accounts posted during goods issues (GI) to production orders, make the following entries:

• Chart of Accounts : Restrict your selection by your chart of accounts, INT in this example
• Transaction : You display inventory movements with Transaction  GBB
• Valuation Grouping Code : A group of company codes (set up with transaction OMWD)
• Account modifier : VBR for GI to production orders
• Valuation Class : You assign a valuation class in the Costing 2 view 

Click the execute icon to display the screen shown in Figure 2.

Figure 2 : Table T030 Entries Display SAP MM-FI Configuration Settings

This screen displays the G/L Accounts posted during goods issues to production orders.

For more information on entries in table T030, follow IMG menu path: 

Materials Management • Valuation and Account Assignment • Account Determination • Account Determination Without Wizard • Configure Automatic Postings

Figure 3 displays the menu path.

Figure 3 : Configure Automatic Postings Menu Path

Click the paper and glasses icon to the left of Configure Automatic Postings at the bottom to display standard SAP documentation on setting up automatic postings.

Activity Type

An activity type identifies activities provided by a cost center to manufacturing orders. The secondary cost element associated with an activity type identifies the activity costs on cost center and detailed reports

Alternative Hierarchy

While there can only be one cost center standard hierarchy, you can create as many alternative hierarchies as you like. You create an alternative hierarchy by creating cost center groups

Automatic Account Assignment

Automatic account assignment allows you to enter a default cost center per cost element within a plant with Transaction OKB9.

Condition Type

A condition type is a key that identifies a condition. The condition type indicates, for example, whether the system applies a price, a discount, a surcharge, or some other pricing, such as freight costs and sales taxes.

Cost Center Accounting

A cost center is a function within an organization that does not directly add to profit but still costs money to operate, such as the accounting, HR, or IT departments. The main use of a cost center is to track actual expenses for comparison to the budget.

Cost Estimate

A cost estimate calculates the plan cost to manufacture a product or purchase a component. It determines material costs by multiplying BOM quantities by the standard price, labor costs by multiplying operation standard quantities by plan activity price, and overhead values by costing sheet configuration.

Cost Object

An SAP Cost object such as a cost center or internal order describes where the cost occurs. A cost element or account describes what the cost is.

Costing Lot Size

The costing lot size in the Costing 1 view determines the quantity cost estimate calculations are based on. The costing lot size should be set as close as possible to actual purchase and production quantities to reduce lot size variance.

Goods Issue

A goods issue is the movement (removal) of goods or materials from inventory to manufacturing or to a customer. When goods are issued, it reduces the number of stock in the warehouse.

Goods Receipt

It is a goods movement that is used to post goods received from external vendors or from in-plant production. All goods receipts result in an increase of stock in the warehouse.

Internal Order

An internal order monitors costs and revenue of an organization for short- to medium-term jobs. You can carry out planning at a cost element and detailed level, and you can carry out budgeting at an overall level with availability control.

Production Variance

Production variance is a type of variance calculation based on the difference between net actual costs debited to the order and target costs based on the preliminary cost estimate and quantity delivered to inventory. You calculate production variance with target cost version 1.

Profit Center

A profit center receives postings made in parallel to cost centers and other master data such as orders. Profit Center Accounting (PCA) is a separate ledger that enables reporting from a profit center point of view. You normally create profit centers based on areas in a company that generate revenue and have a responsible manager assigned.

If PCA is active, you will receive a warning message if you do not specify a profit center, and all unassigned postings are made to a dummy profit center. You activate profit center accounting with configuration Transaction OKKP, which maintains the controlling area.

Purchasing Info Record

A purchasing info record stores all of the information relevant to the procurement of a material from a vendor. It contains the Purchase Price field, which the standard cost estimate searches for when determining the purchase price.

Scheduling Agreement

A scheduling agreement is a longer-term purchase arrangement with a vendor covering the supply of materials according to predetermined conditions. These apply for a predefined period and a total purchase quantity.

Standard Hierarchy

A standard hierarchy represents your company structure. A standard hierarchy is guaranteed to contain all cost centers or profit centers because a mandatory field in cost and profit center master data is a standard hierarchy node.

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Standard Price

The standard price in the Costing 2 view determines the inventory valuation price if price control is set at standard (S). The standard price is updated when a standard cost estimate is released. You normally value manufactured goods at the standard price.

You can apply surcharges to material prices and activity prices in order to take into account increases or decreases in item prices over time when calculating the lifecycle costs for a project.

Target Costs

Target costs are plan costs adjusted by the delivered quantity. For example, if the quantity delivered to inventory is 50% of the plan quantity, target costs are calculated as 50% of the plan costs.

Material Master

A material master contains all of the information required to manage a material. Information is stored in views, and each view corresponds to a department or area of business responsibility. Views conveniently group information together for users in different departments, for example, sales and purchasing.

Origin Group

An origin group separately identifies materials assigned to the same cost element, allowing them to be assigned to separate cost components. The origin group can also determine the calculation base for overhead in costing sheets.

Price Control

The Price control field in the Costing 2 view determines whether inventory is valuated at standard or moving average price.

The price unit is the number of units to which the price refers. You can increase the accuracy of the price by increasing the price unit. To determine the unit price, divide the price by the price unit.

Process Order

Process orders are used for the production of materials or provide services in a certain quantity and on a certain date. They allow resource planning, process order management control, and account assignment and order settlement rules to be specified.

Procurement Alternative

A procurement alternative represents one of a number of different ways of procuring a material. You can control the level of detail in which the procurement alternatives are represented through the controlling level. Depending on the processing category, there are single-level and multilevel procurement alternatives. For example, a purchase order is single-level procurement, while production is multilevel procurement.

Production Order

A production order is used for discrete manufacturing. A BOM and routing are copied from master data to the order. A sequence of operations is supplied by the routing, which describes how to carry out work-steps. An operation can refer to a work center at which it is to be performed. An operation contains planned activities required to carry out the operation. Costs are based on the material components and activity price multiplied by a standard value.

Product Drilldown Reports

Product drilldown reports allow you to slice and dice data based on characteristics such as product group, material, plant, cost component, and period. Product drilldown reports are based on predefined summarization levels and are relatively simple to setup and run.

Production variance is a type of variance calculation based on the difference between net actual costs debited to the order and target costs based on the preliminary cost estimate and quantity delivered to inventory. You calculate production variance with target cost version 1. Production variances are for information only and are not relevant for settlement.

Production Version

A production version determines which alternative BOM is used together with which task list/master recipe to produce a material or create a master production schedule. For one material, you can have several production versions for various validity periods and lot-size ranges.

Purchase Price Variance

When raw materials are valued at the standard price, a purchase price variance will post during goods receipt if the goods receipt or invoice price is different from the material standard price.

Profitability Analysis

Costing-based profitability analysis enables you to evaluate market segments, which can be classified according to products, customers, orders (or any combination of these), or strategic business units, such as sales organizations or business areas concerning your company’s profit or contribution margin.

SAP Profit Center is a management-oriented organizational unit used for internal controlling purposes. Segmenting a company into profit centers allows us to analyze and delegate responsibility to decentralized units.

A purchasing info record stores all the information relevant to the procurement of a material from a vendor. It contains the Purchase Price field, which the standard cost estimate searches for when determining the purchase price.

Raw Materials

Raw materials are always procured externally and then processed. A material master record of this type contains purchasing data but not sales.

A routing is a list of tasks containing standard activity times required to perform operations to build an assembly. Routings, together with planned activity prices, provide cost estimates with the information necessary to calculate labor and activity costs of products.

Sales and Operations Planning

Sales and operations planning (SOP) allows you to enter a sales plan, convert it to a production plan, and transfer the plan to long-term planning.

S&OP is slowly being replaced by SAP Integrated Business Planning for Supply Chain (SAP IBP), which supports all S&OP features. S&OP is intended as a bridge or interim solution, which allows you a smooth transition from SAP ERP to on-premise SAP S/4HANA and SAP IBP. See SAP Note 2268064 for details.

SAP Fiori is a web-based interface that can be used in place of the SAP GUI. SAP Fiori apps access the Universal Journal directly, taking advantage of additional fields like the work center and operation for improved variance reporting.

Work in process (WIP) and variances are transferred to Financial Accounting, Profit Center Accounting (PCA), and Profitability Analysis (CO-PA) during settlement. Variance categories can also be transferred to value fields in CO-PA.

Settlement Profile

A settlement profile contains the parameters necessary to create a settlement rule for manufacturing orders and product cost collectors and is contained in the order type.

Settlement Rule

A settlement rule determines which portions of a sender’s costs are allocated to which receivers. A settlement rule is contained in a manufacturing order or product cost collector header data.

You need setup time to prepare equipment and machinery for the production of assemblies, and that preparation is generally the same regardless of the quantity produced. Setup time spread over a smaller production quantity increases the unit cost.

Simultaneous Costing

The process of recording actual costs for cost objects, such as manufacturing orders and product cost collectors in cost object controlling, is called simultaneous costing. Costs typically include goods issues, receipts to and from an order, activity confirmations, and external service costs.

Source Cost Element

Source cost elements identify costs that debit objects, such as manufacturing orders and product cost collectors.

Source List

A source list is a list of available sources of supply for a material, which indicates the periods during which procurement is possible. Usually, a source list is a list of quotations for a material from different vendors.

You can specify a preferred vendor by selecting a fixed source of supply indicator. If you do not select this indicator for any source, a cost estimate will choose the lowest cost source as the cost of the component. You can also indicate which sources are relevant to MRP.

The standard price in the Costing 2 view determines the inventory valuation price when price control is set at standard (S). The standard price is updated when a standard cost estimate is released. You normally value manufactured goods at the standard price.

Subcontracting

You supply component parts to an external vendor who manufactures the complete assembly. The vendor has previously supplied a quotation, which is entered in a purchasing info record with a category of subcontracting.

Tracing Factor

Tracing factors determine the cost portions received by each receiver from senders during periodic allocations, such as assessments and distributions.

Universal Journal

The efficiency and speed of the SAP HANA in-memory database allowed the introduction of the Universal Journal single line-item tables ACDOCA (actual) and ACDOCP (plan). The Universal Journal allows all postings from the previous financial and controlling components to be combined in single items. The many benefits include the development of real-time accounting. In this book, we discuss both period-end and event-based processing.

Valuation Class

The valuation class in the Costing 2 view determines which general ledger accounts are updated as a result of inventory movement or settlement.

Valuation Date

The valuation date determines which material and activity prices are selected when you create a cost estimate. Purchasing info records can contain different vendor-quoted prices for different dates. Different plan activity rates can be entered per fiscal period.

Valuation Grouping Code

The valuation grouping code allows you to assign the same general ledger account assignments across several plants with Transaction OMWD to minimize your work. The grouping code can represent one or a group of plants.

Valuation Type

You use valuation types in the split valuation process, which enables the same material in a plant to have different valuations based on criteria such as batch. You assign valuation types to each valuation category, which specify the individual characteristics that exist for that valuation category. For example, you can valuate stocks of a material produced in-house separately from stocks of the same material purchased externally from vendors. You then select procurement type as the valuation category and internal and external as the valuation types.

Valuation Variant

The valuation variant is a costing variant component that allows different search strategies for materials, activity types, subcontracting, and external processing. For example, the search strategy for purchased and raw materials typically searches first for a price from the purchasing info record.

Valuation Variant for Scrap and WIP

This valuation variant allows a choice of cost estimates to valuate scrap and WIP in a WIP at target scenario. If the structure of a routing is changed after a costing run, WIP can still be valued with the valuation variant for scrap and WIP resulting in a more accurate WIP valuation.

Valuation View

In the context of multiple valuation and transfer prices, you can define the following views: – Legal valuation view – Group valuation view – Profit center valuation view

Work Center

Operations are carried out at work centers representing; for example, machines, production lines, or employees. Work center master data contains a mandatory cost center field. A work center can only be linked to one cost center, while a cost center can be linked to many work centers.

Work in Process

Work in process (WIP) represents production costs of incomplete assemblies. For balance sheet accounts to accurately reflect company assets at period end, WIP costs are moved temporarily to WIP balance sheet and profit and loss accounts. WIP is canceled during period-end processing following delivery of assemblies to inventory.

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In SAP MM, procurement process involves the cost of goods and services that needs to be paid to the vendor by an organization. The cost being paid must be posted in an organization necessarily in a correct general ledger (G/L) account. It is quite impossible to recollect and feed the correct G/L account every time during procurement. To avoid this inconvenience, the SAP system can be configured so that the system will automatically determine the correct G/L account that needs to be posted. G/L account is posted when goods receipt is done as well as during clearing the invoice verification. Account determination deals with the following terms−

Define Valuation Control

• Group together Valuation Areas

Define Valuation Classes

Configure automatic posting.

Valuation areas can be grouped together and can be assigned to one grouping code, if they belong to the same G/L account. For example, different plants under one company code can be assigned the same valuation grouping code and vice versa. Before this, valuation grouping code must be activated and this can be done by following the steps given below.

Path to Activate Valuation Grouping Code

IMG ⇒ Materials Management ⇒ Valuation and Account Assignment ⇒ Account Determination ⇒ Account Determination without Wizard ⇒ Define Valuation Control

TCode: OMWM

Step 1 − On the Display IMG screen, select Define Valuation Control by following the above path.

Step 2 − Select Valuation grouping code. Click on Save. Valuation grouping code is now activated.

Group Together Valuation Areas

In valuation grouping, valuation area and valuation grouping code are assigned to the company code. This can be done by following the below steps.

Path to Define Valuation Area and Valuation Grouping Code

IMG ⇒ Materials Management ⇒ Valuation and Account Assignment ⇒ Account Determination ⇒ Account Determination without Wizard ⇒ Group Together Valuation Areas

TCode: OMWD

Step 1 − On the Display IMG screen, select Group Together Valuation Areas by following the above path.

Step 2 − Here you can define a valuation area with grouping code, and assign them to a company code. Click on Save. Valuation area and valuation grouping code are now defined for a company code.

Valuation class categorizes the G/L account on the basis of material type. For example, raw material will have different G/L account than the finished material, as the costs will be different in both the cases. Account reference is also maintained along with the valuation class. Account reference and valuation class can be defined by following the steps given below.

Path to Define Account Reference and Valuation Class

IMG ⇒ Materials Management ⇒ Valuation and Account Assignment ⇒ Account Determination ⇒ Account Determination without Wizard ⇒ Define Valuation Classes

TCode: OMSK

Step 1 − On the Display IMG screen, select Define Valuation Classes by following the above path.

Step 2 − Click the Account Category Reference button.

Step 3 − Click New Entries.

Step 4 − Provide the name of ARef (Account reference) along with its description.

Step 5 − Now go to same screen and click Valuation Class.

Step 6 − Click New Entries.

Step 7 − Provide the name of valuation class, ARef (Account reference), and description of valuation class.

Step 8 − Now go to the same screen and click Material Type/Account Category Reference.

Step 9 − Here you can map material type with ARef (Account reference). Click on Save. G/L account can now be posted for different material types.

G/L account is automatically determined for each of the transactions. It happens so because automatic postings are configured in the SAP system. Automatic posting can be configured by following the steps given below.

Path to Configure Automatic Posting

IMG ⇒ Materials Management ⇒ Valuation and Account Assignment ⇒ Account Determination ⇒ Account Determination without Wizard ⇒ Configure Automatic Postings

TCode: OMWB

Step 1 − On the Display IMG screen, select Configure Automatic Postings by following the above path.

Step 2 − Click Account Assignment.

Step 3 − Here you can maintain the transaction for which automatic account determination is there. Click on Save. Automatic posting for transactions is now configured.

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OKB9: Change Automatic Account Assignment

OKB9 is a standard SAP tcode used to perform Change Automatic Account Assignment task in SAP ERP (or) S/4HANA system.

Availability

The SAP tcode OKB9 is available within SAP ECC, SAP S/4HANA On-premise and SAP S/4HANA Private Cloud systems depending on the version and release level.

People also ask

The following is the list of SAP transaction codes related to OKB9.

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ERProof » SAP CO » SAP CO Training » SAP CO Account Assignment

SAP CO Account Assignment

Normally, when a financial document is entered in SAP FI module , user has the option of entering the cost center in the financial document. However, when documents are entered from different modules or a cross-module financial transaction occurs, such as from MM or SD , there is no option of entering the cost center in the document. In this situation, the SAP system will derive the cost center through automatic SAP CO account assignment, substitutions, or through default settings made in the primary cost element.

Automatic SAP CO Account Assignment

The automatic account assignment has to be configured in the transaction code OKB9 . For posting made in external accounting, such as for price differences, exchange rate differences, etc., the SAP system automatically checks entries in the OKB9 settings and derives the cost center.

If you do not enter a CO object (order, cost center, or project) in external accounting postings made in FI, MM or SD modules and the posting is cost relevant, then the automatic account assignment checks the relevant cost center and makes the posting.

Here are examples of automatic account assignments:

• Banking fees, exchange rate differences and discounts in FI
• Minor differences and price differences in MM

The account assignment objects that can be maintained in the transaction OKB9 are:

• Cost center
• Profit center (profitability segment)

Normally, the automatic account assignment runs on the company code level along with the CO object. However, if the user wants to make the posting on the business area level, valuation area level or profit center level, it is also available in OKB9 settings. So basically it includes the following levels:

• Company code level
• Business area level
• Valuation area level
• Profit center level

The above 3 excluding the company code level are used in cases when the account assignment is needed below the company code level.

Prerequisites

Here are the prerequisites of activating automatic SAP CO account assignment:

• Activation of the cost center accounting
• Creation of cost centers
• Maintenance of cost elements

Additionally, you can also create orders and profit centers as per the business requirements.

Settings in Transaction OKB9

Let’s discuss settings that are possible for automatic SAP CO account assignment in OKB9 transaction.

Start SPRO transaction and navigate to the following path:

Controlling – Cost Center Accounting – Actual Postings – Manual Actual Postings – Edit Automatic Account Assignment (OKB9)

Alternatively, you can start OKB9 transaction directly from the command bar.

• If you want to have the setting on the company code level only, then enter the company code and the cost element along with the corresponding CO object, i.e. a cost center, an order or a profit center.
• If you want to have the settings on the valuation area level, then enter the company code and the cost element and chose the ‘valuation area’ option in the account assignment detail as ‘1’.
• Similarly, if you want to have the settings on the business area or profit center level, then choose the option ‘2’ or ‘3’ respectively.

If you have chosen account assignment detail ‘1’ or ‘2’, then click on ‘Detail per business area/valuation area’ on the left sidebar.

Default SAP CO Account Assignment

In order to determine the correct CO account assignment, the SAP system performs several checks in the following sequence. First it checks the document which a user is posting. If the cost center is empty in the document, then the system checks if any substitutions are maintained for the particular G/L account . Next, if the substitution is also missing, then the system moves on to the OKB9 settings for automatic SAP CO account assignments. Finally, if these settings are also missing, the SAP system checks master data of the primary cost element (G/L Account) under the tab of Default Account Assignment . You can display this master data using the transaction KA03 .

You can maintain the cost center and the order in the master data of the primary cost element.

So, basically the order of checks the system makes is:

• Financial document – Cost center
• Substitutions – transaction OKC9
• Automatic account assignments – transaction OKB9
• Default account assignments – transaction KA03 / KA02

Lastly, if any of the above is not maintained, then the SAP system throws an error ‘Account X requires an assignment to a CO Object’ and doesn’t allow posting of a document.

SAP CO Account Assignment using Substitution

In cases where you don’t need OKB9 or default account assignment, the user can go for user exits where a specific G/L account is mentioned under the company and the value in the cost center is substituted by the cost center given in the substitution.

The transaction for maintaining the substitution is GGB1 .

Usage of substitutions for SAP CO account assignment is justified by the business requirement and usually SAP CO account assignment requirements are fulfilled by OKB9 or default account assignments.

Did you like this tutorial? Have any questions or comments? We would love to hear your feedback in the comments section below. It’d be a big help for us, and hopefully it’s something we can address for you in improvement of our free SAP CO tutorials.

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4 thoughts on “SAP CO Account Assignment”

it is helpful material i ask for more clear details for using substitution method for Account Assignment. thanks in advance

Sir, I am not receiving the training mails from yesterday 7/1/2019. I have completed my training till here(SAP CO Account Assignment) please do send the rest of the training emails for SAP CO. Hope you will do the needful.

I am getting the same error “Account 500911 requires an assignment to a CO object”. In OKB9, we have given company code, Cost element and ticked the check box ‘Indicator: Find profitability segment using substitution’ (V_TKA3A-BSSUBST) and not filled anything like cost center, order and profit center. in OKC9 we have created substitution. All the process happening through Idoc Message Type SINGLESETTRQS_CREATE and inside BAPI BAPI_SINGLESETTREQS_CREATEMULT triggering and raising this error. Cost center is not maintained in 1. Financial document – Cost center 2. Automatic account assignments – transaction OKB9 and 3. Default account assignments – transaction KA03/KA02 But we have substitution in transaction OKC9 to determine cost centre.

Where woulbe be the issue?

good explanation

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Defining Default Account Assignments

After completing this lesson, you will be able to:

• Introduce posting controls
• Describe the account assignment settings
• Create a default account assignment
• Analyze the impact of the assignment during journal entry

Posting Controls

Meet Chris, an experienced management accounting employee at Bike Company SE. He's skilled at using SAP S/4HANA, having extensive knowledge of his department's processes and a comprehensive understanding of the company's operations. Apart from maintaining crucial applications that streamline work for others, Chris also acts as an administrator and business process configuration expert. He is the contact person for establishing and managing Overhead Cost Accounting processes within the company.

Chris loves discovering and utilizing new features and helping other users. Recently, Sarah, a colleague from the financial accounting department, sought his expertise for support and assistance. This is what they talked about:

Let’s now take a closer look at the tools that help streamline accounting data.

You'll learn how to define default values for cost assignment. In the next lessons, you will also delve into more sophisticated features like validation and substitution rules that can identify inconsistencies in account assignment objects and ensure precise postings.

We'll start with an in-depth exploration of the default account assignment.

Default Account Assignment

Application area.

The default account assignment is a tool that automatically proposes specific cost assignment objects, such as cost centers or profit centers during journal entry. You can determine which management accounting object is defaulted for each line item based on the combination of primary cost and revenue G/L account and company code.

As an example, consider recurring utility expenses, which should be charged to the Utilities cost center. For this purpose, a default account assignment can be established as shown in the figure below.

First, the cost element for Utilities for the relevant Company Code is connected to the respective cost center in the default account assignment configuration.

Now whenever you enter a utility expense in Financial Accounting, the system automatically proposes the Utilities cost center. You still have the option to manually overwrite the cost center if necessary.

This leads to a more efficient accounting workflow, as the account assignment object is entered automatically during the posting process, minimizing the need for manual input.

Default account assignments are especially useful when line items are automatically posted, such as when posting exchange rate differences and discounts in Financial Accounting, or price differences in Material Management.

In addition to cost centers, you can also indicate profit centers or profitability segments for allocating costs and revenues to.

In summary, the default account assignment establishes a default value for the controlling objects when posting costs or revenues, ensuring that these are automatically charged to the right entities.

Configuration

To configure a default account assignment, you perform the following steps:

• For each cost assignment, enter the company code and the cost element that should be included in the account assignment.
• Enter the corresponding account assignment object (cost center or profit center). If you want the system to determine a profitability segment instead, you can use the PrfSeg checkbox. This is used when transferring data, such as price differences, to Margin Analysis.
• You have the option to specify detailed account assignments, which can be differentiated by valuation area or profit center. To do this, enter the following values in the "Acct assignmt detail" column: 1 for valuation area or 3 for profit center. Then select the corresponding entry in the Dialog structure on the left and enter the relevant cost assignment.

Define a Default Account Assignment

Overall benefits.

The default account assignment feature suggests default values for specific accounts, improving the accuracy of financial data and streamlining the process through automatic assignment. This reduces the likelihood of errors in manual data entry and saves a considerable amount of time that would otherwise be spent repeatedly assigning these costs.

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Account Determination in SAP S/4HANA Materials Management

Various transactions in materials management (MM) are relevant for accounting, such as goods receipts, goods issues, and invoice receipts.

In such cases, the system always creates an accounting document and posts the amount in the appropriate general ledger accounts.

General ledger accounts are automatically determined with the help of automatic account determination settings. Consider, for example, a manufacturing enterprise that stores stock materials purchased from vendors. Whenever a material is received in a storage location with reference to a PO, the company wants its system to automatically determine and update the stock general ledger account. Similarly, whenever an invoice is posted, the system should automatically determine the vendor general ledger account and post the liability.

The SAP S/4HANA system provides automatic general ledger account posting via the automatic account determination process. When posting a goods receipt against a PO, the system creates an accounting document (along with the material document), and general ledger account postings are made. The system determines which general ledger accounts should be debited and credited based on configuration settings you’ve maintained for automatic account determination.

Essential Terms

Before discussing these configuration settings, let’s define a few essential terms:

Chart of Accounts

A chart of accounts provides a framework for recording values to ensure an orderly rendering of accounting data. The general ledger accounts it contains are used by one or more company codes. For each general ledger account, the chart of accounts contains the account number, the account name, and technical information.

Valuation Class

A valuation class is used to determine the general ledger account for the materials stock account. In automatic account determination, valuation classes must be created and then assigned to material types. While creating material master records, selecting the appropriate valuation class under the Accounting 1 tab is required. The valuation class list in the material master record will depend on the material type. For example, in a standard SAP system, material type ROH (raw material) has three valuation classes: 3000, 3001, and 3002.

Transaction Key

Transaction keys are used to determine accounts or posting keys for line items that are automatically created by the system. They’re defined in the system and can’t be changed.

Now that you have an understanding of the key terms in automatic account determination and understand how it can work in your business, we’ll move on to describe the configuration steps and business processes involved.

Configuration with the Automatic Account Determination Wizard

Automatic account determination can be configured either with or without the automatic account determination wizard, a tool provided by SAP to help you manage the automatic account determination functionality. To configure automatic account determination using the wizard, follow the configuration menu path SAP IMG > Materials Management > Valuation and Account Assignment > Account Determination > Account Determination Wizard .

The wizard will ask you a number of questions and, based on your answers, finds the correct settings and saves them in the corresponding SAP tables. Except for a few restrictions (as documented in the wizard), the wizard will perform the following steps:

• Defines valuation control
• Groups valuation areas
• Defines valuation classes
• Defines account grouping for movement types
• Manages purchase accounts
• Configures automatic postings

We’ll explain how to set up automatic account determination without the wizard because this manual and step-by-step approach to account determination will help you understand how to work with the wizard. Further, using account determination without the wizard enables the creation of more complex configurations. Once you’ve gained the concepts and the fundamentals behind account determination, you can use the automatic account determination’s wizard tool to quickly setup account determination processes in SAP systems.

Configuration without the Automatic Account Determination Wizard

We’ll now follow a step-by-step approach to setting up account determination in an SAP system. We’ll cover the necessary configuration steps involved, followed by steps for assigning the configured objects in the master data. Business processes involving account determination and that use the master data are covered next. We’ll also cover the accounting entries that occur as the result of a stock posting.

Let’s walk through the required steps next:

Define a Valuation Control

In account determination, you can group together valuation areas by activating the valuation grouping code (also known as the valuation modifier ), which makes configuring automatic postings much easier. A valuation grouping code can be made active or inactive by choosing the respective radio button.

To define a valuation control, follow the configuration menu path SAP IMG > Materials Management > Valuation and Account Assignment > Account Determination > Account Determination without Wizard > Define Valuation Control .

By default, the valuation grouping code is active in the standard SAP system.

Assign Valuation Grouping Codes to Valuation Areas

The valuation grouping code makes setting up automatic account determination easier. Within the chart of accounts, assign the same valuation grouping codes to the valuation areas you want assigned to that account. As shown in the figure below, valuation grouping code 0001 has been assigned to valuation area 1100 and company code 1100. If another valuation area also uses the same set of general ledger accounts as valuation area 0001, then assign valuation grouping code 0001 to that valuation area.

To assign valuation grouping codes to valuation areas, follow the configuration menu path SAP IMG > Materials Management > Valuation and Account Assignment > Account Determination > Account Determination without Wizard > Group Together Valuation Areas .

Define Valuation Classes

In this step, you’ll define the valuation classes allowed for each material type. Then, you’ll assign the account category reference to the material type. As shown in the second figure below, account category references 0001 and 0002 have been defined, and for each account category reference, one or more valuation classes can be assigned. Account category reference 0001 has been assigned to material type ROH, and valuation classes 3000, 3001, and 3002 have been assigned to account category reference 0001. Consequently, valuation classes 3000, 3001, and 3002 have been assigned to material type ROH. While creating the material master record for material type ROH, select any of these valuation classes. Similarly, for material type HALB, select valuation classes 7900 or 7901.

In this section, through an example, we’ll create the new valuation class 3004 and cover all the associated configuration settings required to ensure a working end-to-end business process.

To define which valuation classes are allowed for a material type, use Transaction OMSK or follow the configuration menu path SAP IMG > Materials Management > Valuation and Account Assignment > Account Determination > Account Determination without Wizard > Define Valuation Classes . On the screen that appears, you’ll see three options: Account Category Reference , Valuation Class , and Material Type/Account Category Reference . Follow these steps:

• Click on Account Category Reference and, if needed, create an account category reference, as shown here:

• Click on Valuation Class , shown below, and then click on the New Entries Create a new valuation class ( ValCl ) 3004 (with Description Raw Materials- Steel ) and assign the valuation class to account category reference ( ARef ) 0001 . 2

• Click on Account Category Reference and maintain a mapping between the material types and account references. For material type ( MType ) ROH , assign the account reference ( ARef ) 0001 , as shown here:

Define an Account Grouping for Movement Types

Now, assign an account grouping to movement types. The account grouping is a finer subdivision of the transaction/event keys for account determination. For example, during a goods movement, the offsetting entry for the inventory posting (Transaction GBB) can be made to different accounts, depending on the movement type. The account grouping is provided for the following transactions:

• Transaction GBB (Offsetting Entry for Inventory Posting)
• Transaction PRD (Price Differences)
• Transaction KON (Consignment Liabilities)

The account grouping in the standard system is only active for Transaction GBB. To define account groupings for movement types, follow the configuration menu path SAP IMG > Materials Management > Valuation and Account Assignment > Account Determination > Account Determination without Wizard > Define Account Grouping for Movement Types . Define the account grouping code, the movement type, and the transaction/event key combination, as shown in the next figure.

Note: Value strings group together the various transactions used in account determination. For example, the value string WE01 can be seen by following the configuration menu path SAP IMG > Materials Management > Valuation and Account Assignment > Account Determination > Account Determination Without Wizard > Define Account Grouping for Movement Types . On this screen, if you double-click on any entries that contain WE01, a list of transactions along with their descriptions will appear. The transactions that appear in the value string are hard coded in the system, so you should never try to change them.

Configure Automatic Postings

In this step, enter the system settings for inventory management and invoice verification transactions that result in automatic posting to general ledger accounts. A transaction/event key is a key to differentiate account determination by business transaction. For example, we must differentiate general ledger account posted by goods receipt transaction and posted by invoice receipt transaction.

You don’t need to define these transaction keys; they are determined automatically from the transaction of the movement type (inventory management) or from the transaction of invoice verification. All you need to do is assign the relevant general ledger account to each posting transaction.

To assign general ledger accounts to transaction/event keys, use Transaction OMWB or follow the menu path SAP IMG > Materials Management > Valuation and Account Assignment > Account Determination > Account Determination without Wizard > Configure Automatic Posting . Click on Cancel , as shown below.

To assign a general ledger account, on the screen shown above, click on Account Assignment (not shown). A list of transaction keys will appear; double click on the key for which setting the general ledger accounts is required. Next, define the valuation grouping code (also known as the valuation modifier ), valuation class, and general ledger account, as shown below. Then, check the settings function by using the simulation function.

Use Transaction BSX for inventory posting and for assigning general ledgers. In the popup window that appears, enter the Chart of Accounts 1100 , and the screen shown below will appear.

This figure shows the Transaction BSX screen for posting inventory. Click New Entries and enter the newly created Valuation Class 3004 and assign the Account 11020101 .

Go back to the screen shown when utilizing Transaction OMWB, and this time, use Transaction WRX (for the goods receipt/invoice receipt [GR/IR] clearing account) and maintain the general ledger account of the newly created Valuation class 3004 . Similarly, repeat the same steps for Transaction PRD (for price difference account).

Let’s now look at the business processes and the associated master data setup and transactions, not only to check that the newly created valuation class 3004 works correctly, but also that the associated general ledger accounts are correct.

Master Data Setup

Access the screen shown below via Transaction MM01. Under the Accounting 1 tab of the material master 157 , assign the newly created Valuation Class 3004 .

Now, let’s discuss the account determination for the general ledger as it relates to goods receipt and goods issue postings. Post a good receipt of the material 157 with reference to a PO via Transaction MIGO. Then, display the goods receipt document and go to the Doc. info tab. Click on the FI Documents button, which will display a list of financial documents created for the goods receipt document. Select Accounting document to see the details of that accounting document.

As shown below, you’ll see the general ledger account postings, which are determined based on the automatic account determination configuration. General ledger account 11020201 (inventory raw material stock account) is debited, and GR/IR account 22010202 is credited.

In this blog post, we covered the account determination process that is useful to those running materials management with SAP .

Editor’s note : This post has been adapted from a section of the book Materials Management with SAP S/4HANA: Business Processes and Configuration by Jawad Akhtar and Martin Murray.

Recommendation

Manage your materials with SAP S/4HANA! Whether your focus is on materials planning, procurement, or inventory, this guide will teach you to configure and manage MM in SAP S/4HANA. Start by creating your organizational structure and defining business partners and material master data. Then follow step-by-step instructions for your essential processes, from purchasing and MRP runs to goods issue and receipt. Discover how to get more out of SAP S/4HANA by using batch management, demand-driven MRP, SAP Fiori reports, and other built-in tools.

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