BPA

Question 1

Liability

Answer 1

Liabilities are settled over time through the transfer of economic benefits including money, goods, or services. They’re recorded on the right side of the balance sheet and include loans, accounts payable, mortgages, deferred revenues, bonds, warranties, and accrued expenses.

Question 2

Liabilities (key takeaways)

Answer 2

A liability is generally something that’s owed to someone else.
Liability can also mean a legal or regulatory risk or obligation.
Companies book liabilities in opposition to assets in accounting.
Current liabilities are a company’s short-term financial obligations that are due within one year or a normal operating cycle.
Long-term, non-current liabilities are listed on the balance sheet as obligations but they’re not due for more than a year.

Question 3

Trade payables

Answer 3

“liabilities to pay for goods or services that have been received or supplied and have been invoiced or formally agreed with the supplier”.
“Invoiced” includes invoices which are issued but in the post or in internal circulation. “Formally agreed” means a Purchase Order or a contract must exist in the accounting system.

Question 4

Accrual (IAS 37.11)

Answer 4

If no invoice has been issued nor a PO raised nor a contract signed, the liability is considered an accrual

Question 5

Revenue

Answer 5

Revenue is the inflow of economic benefits during a period, other
than increases relating to contributions from equity holders.

Question 6

Gross sales

Answer 6

Gross sales refer to the gross amount calculated before any sales
deductions

Question 7

Pricing
Conditions

Answer 7

A collection of material pricing records

Question 8

Cost Element

Answer 8

Corresponds to a cost-relevant item in the chart of accounts. It
represents the nature of cost.

Question 9

Profit Center

Answer 9

Profit centers represent areas of managerial responsibility and are
the backbone of reporting. Profit centers are used to record costs,
revenues, revenue deductions, balance sheet items, and cash flow.
The Alcon profit center structure contains the division, franchise, and
market.

Question 10

Cost Center

Answer 10

Cost Centers represent departments and carry most of the indirect
costs

Question 11

Chargeback

Answer 11

Sales price reduction for wholesalers based on customer pricing
agreements.

Question 12

Adjusting Entry

Answer 12

A manual entry to accrued revenue deductions based on analysis of
sales performance and settlements

Question 13

Sales Deferral

Answer 13

Invoiced sales are deferred until risk and reward have passed to the
customer or when services have been rendered.

Question 14

Accrued Revenue

Answer 14

Accrued revenue refers to revenue that has been earned by providing goods or services, but for which the payment has not yet been received. This is recorded as a receivable on the balance sheet.

Question 15

Deferred Revenue (or Unearned Revenue)

Answer 15

Deferred revenue occurs when payment is received before the goods or services are provided. It is considered a liability because it represents an obligation to deliver goods or services in the future.

Example: A software company receives payment in January for a one-year subscription, but the service is provided throughout the year. The revenue is deferred and recognized over the period the service is provided.

Question 16

The Revenue & Revenue Deductions process consists of the following:

Answer 16

Question 17

Quotation

Answer 17

Quotation presents the customer with a legally binding offer for delivering a product or provides a service within fixed conditions.

Question 18

Operating Concern

Answer 18

Operating Concern represents an organizational unit in a
company for which the sales market has a uniform structure.

Question 19

Controlling Area

Answer 19

The highest organizational unit in cost accounting

Question 20

Profitability

Answer 20

Combination of the values for the characteristics in an operating
concern.

Question 21

Value fields

Answer 21

Value fields are only required in costing‑based Profitability Analysis. These are the fields that contain the currency amounts and quantities that you want to analyze in CO‑PA. They represent the structure of your costs and revenues.
Value Fields are the line items within the income statement used
to carry quantities (e.g., sales volumes) or values (e.g., revenues,
sales deductions, COGS, freight, etc.)

Question 22

Cost Element
Group

Answer 22

A software solution for collecting financial information for
Sales by product, Costs of Goods Sold by product, Inventory
valuation and Advertising & Promotion expense by brand /
franchise.

Question 23

APMR

Answer 23

A software solution for collecting financial information for
Sales by product, Costs of Goods Sold by product, Inventory
valuation and Advertising & Promotion expense by brand /
franchise.

Question 24

Condition Types

Answer 24

Condition Types are values in billing documents that are
assigned in Sales Distribution and mapped to value fields in COPA to update characteristics in the system.

Question 25

Gross Sales

Answer 25

Determination of Alcon’s Gross Sales therefore is as follows:
Gross Sales 3rd party defined as “Quantity x List Price”.
Surgical franchise reporting will be based on the Invoice price. As part of
the report definition for surgical franchise information relating to list
price x quantity and the negotiated discounts values fields are
transparent to the user.

Question 26

Gross to Net

Answer 26

Additional sales deductions which are required uniquely to support
Alcon’s sales deductions will also be maintained

Question 27

COGS

Answer 27

Alcon’s recommendation is to breakdown COGS reporting based on
Alcon cost component structure (Material, Freight, Duty, Direct Labor,
and Other Overheads).
Production variances will be split into three broad categories (Material
Variance, Direct Labor Variance and Overhead Variance)

Question 28

Advertisement and
Promotion

Answer 28

Alcon uses Internal Order to track and report Advertisement and
Promotional activities.

Question 29

Profitability
Reporting for
Equipment
Financing
Arrangements (EFAs)

Answer 29

Alcon tracks profitability of EFAs using the profitability analysis (COPA) module.
CO-PA derives ‘Contract number’ for all EFA relevant transactions. The
Contract number in CO-PA forms the basis of all EFA profitability
reporting. Unique condition types are used to differentiate the various
kinds of equipment movement.
The following key decisions have been made with regards to this
process:
* Variable Installment Arrangement:
– Tracked as a regular sale.
* Operating Lease:
– Equipment sale (installation of equipment) is tracked as a statistical
only value in CO-PA in order to support the commission calculation
based on the quantity and value sold. Sales are not recorded on the
general ledger side.
– EFA charge with respect to the contract is reported on a separate line
in CO-PA.
– Equipment depreciation is reported in COGS Other for contract
related equipment in CO-PA

Question 30

Technical
Services

Answer 30

An integral part of the EFA process is the Technical Services
Operations.
Technical Services maintains the equipment that was either sold,
leased, considered a demo, or is rental or test equipment.
Alcon uses CO-PA to track and report service revenue, service costs
and service material costs for Technical Services operations.
Service revenue is captured in CO-PA at the time of customer invoice,
while service costs are captured at the time of service order
settlement.

Question 31

Profitability
Reporting for
Equipment
Financing
Arrangement
s (EFAs)2

Answer 31

Capital Lease:
Tracked as Regular Sale in CO-PA.
Revenue generated from the equipment lease (generally based on the
number of procedures performed or based on the contract terms) is
also tracked and reported in CO-PA.

Question 32

Custom Paks

Answer 32

Product bundling is a general term to describe the process of
combining inventoried finished goods into a package which is sold as a
new product. The main purpose of this strategic tool is to increase and
secure volume.
For product bundles, the price will be maintained at the header level in
the Bill of Material (BOM). This will be applicable for shipping or preassembled bundles.
Pricing will be determined for the overall bundle and will be distributed
to the individual component which is captured and reflected in CO-PA
for reporting.
A custom characteristic is maintained in Alcon CO-PA structure to
identify the parent/child of the product bundles.

Question 33

Examples of Value Fields

Answer 33

Gross SalesFree Goods DiscountCustomer Discounts-18 value fields for different typesSamplesDetailed breakdown of COGS componentsDetailed breakdown of Advertising & Promotion expenses

Question 34

Characteristics

Answer 34

Characteristics store values which describe dimensions against which reporting can be carried out

Question 35

Examples of characteristics

Answer 35

Material Account Assignment Group: provides details about the type of material(Standard, Toll)Customer Account Assignment Group:provides details about the type of customer(Domestic, 3rd party, Intercompany)Customer Classification: groups customers according to type(wholesalers, pharmacists, doctors, hospitals)Legal Status:separates public sector from private sector customersDistribution Channel:determines how material or services are sold(Intercompany, Trade)APMR Number: code that is used to group material of the same nature. Will be derived from the material master.Product Hierarchy: 7 levels (5-brand,6-Family/pack-size, 7- Model/Style/Product class/Pack Size)

Question 37

Record type

Answer 37

The data sourceis determined through a fixed characteristic called ‘record type’.*
F-billing data-SD*
B-direct posting from FI-FI journals*
C-Order/Project-Internal Orders

Question 38

goods issue

Answer 38

A goods issue is the movement (removal) of goods or materials out of the warehouse. In short, it means the issuing of goods or materials from the warehouse to the production or manufacturing process unit. When goods are issued, it reduces the number of stock in the warehouse.

Question 39

SD

Answer 39

Sales and distribution.

Question 40

Alcon performs detailed analysis of COGSin CO-PA based on this criteria:

Answer 40

Standard COGS from SD ModuleCost Component Structure (Material, Freight, Duty, Direct Labor, and Other Overheads)Production Variances (for manufacturing sites only)*For EFA Operating Leases, equipment depreciation is reported in COGS Other in CO-PA

Question 41

Data Source MM-FI-direct postings:

Question 42

MM

Answer 42

MM postings such as stock write offs

Question 44

Examples of Direct Postings to CO-PA

Answer 44

Certain Manual Accruals such as Sales Return AccrualCertain Manual Corrections such as Sales AdjustmentInventory write-offs such as Customer destruction and stock write-offs*Physical Inventory Adjustments

Question 45

Examples of what will not post to CO-PA from FI

Answer 45

Corporate expenses which include taxes, interest, dividendsDepreciation, salaries, travel which form part of G&APurchase Price Variance amortization*Anything which falls into the reporting category ‘Other Income and Expenses’

Question 46

Data Source-Internal Order type that settles to CO-PA

Question 47

Sales BOM

Answer 47

Question 48

Profitability Analysis Custom Paks– APMR & Exploded Sales Reporting

Answer 48

Question 49

Profitability Analysis – Custom Paks(CO-PA document posting)

Question 50

Key Customer and Product Profitability Analysis Transactions (1 of 2)

Answer 50

CO-PA Transaction code KE24: Actual Line Item Display in CO-PA.
*In Alcon CO-PA is used as a storage tool not a reporting tool.
*Enter CO-PA document # to avoid the search running for multiple hours.

Question 51

Direct Custom Pak(2,2)

Answer 51

The Core Pak and Add-Aftersare packaged together and inventoried as a bu

Question 52

Master Pak

Answer 52

Question 53

COGS

Answer 53

Cost of Goods Sold (COGS)
A line item in the Profit & Loss Statement which represents the
direct costs attributable to the production of the goods sold by a
company. This includes cost of the materials used in creating the
good along with the direct labor costs used to produce the good

Question 54

MTO

mdg

Answer 54

Master Data Governance