L1-Explaining Financial Accounting (FI) Flashcards
Financial has 2 parts
Financial Accounting (FI) & Management Accounting (CO)
Purpose of FI
Post all financial transactions, revenues, and expenses.
Keep the system unchanged for reporting purposes
Eg. Profit & Loss Statement, Balance Sheet to fulfill the legal requirements or financial reporting standard
What’s the central task for General Ledger Accounting?
Provide a comprehensive picture of external accounting and financial records, which serves as a complete record of all transactions
Example of External Accounting
G/L is managed at a company code level.
All accounting-relevant transactions made in other components, e.g. Logistics (LO) or Human Resources (HR), are able to post in real time to FI by means of automatic account determination.
Purpose of recording business transactions
create a balance sheet and profit and loss (P&L) statement
Important Task of FI
recording of monetary and value flows, and inventory evaluation
Purpose of Accounts Payable for (vendor)
all business transactions records relating to suppliers. It takes data from the procure-to-pay business process.
Purpose of Accounts Receivable for (Customers) (AR)
All business transactions records and manages accounting data of all customers. It takes much of its data from the order-to-cash business process.
Purpose of sub ledger in General ledger for Customer & Vendor
It generates a corresponding posting to the assigned Reconciliation G/L accounts. This ensures that the subledgers are always reconciled with the G/L.
Important Task for FI
Recording of monetary and value flow, inventory evaluation
Purpose of Bank Ledger (FI-BL) in Bank Accounting
supports the booking of cash flows.
Purpose of Asset Accounting (AA)
It deals with both current assets and non-current assets (fixed assets).
