DOCUMENT SPLITTING
• 1. Document Splitting — Overview
• 2. Document Splitting — Basic Steps
• 3. Document Splitting — Imp. Elements
• 4. Document Splitting — How It Works?
• 5. Document Splitting — Setting Up
• 6. Wrap-up
Document Splitting — Overview
• New General Ledger (or new G/L) in
the SAP ERP system offers a powerful feature known as document splitting
• With document splitting, accounting
line items are split according to specific characteristics
For example, Profit Center, Segment
• This way, you can create financial
statements for entities such as Segments and meet legal requirements
For example, International Accounting Standards
(IAS)requirements for segment reporting
IAS 14 relates to segment-level financial reporting. The
key objective
is to report financial information by lines of business
and/or by geographical areas.
• Sample Financial Transaction
Let me illustrate the concepts of document splitting using a simple financial transaction of Vendor Invoice
Vendor Invoice of $11,000.00 for two purchases and taxes
Two purchases belong to two different profit centers Account Description Amount Profit Center
Vendor A/C - 11,000
Purchases 1 8,000 PC-1
Purchases 2 2,000 PC-2
Input Tax 1,000
• This document is not balanced for a
characteristic Profit Center
You cannot analyze the financial transactions for individual
profit centers
You cannot identify the amount of, for example, Input Tax for
each profit center
Similarly, this document is not balanced for Vendor A/C
Account Description Amount
Profit Center
Vendor A/C - 11,000
Purchases 1
8,000 PC-1
Purchases 2
2,000 PC-2
Input Tax 1,000
• Let’s look at the purchases more
closely — the Profit Center ratios for purchases
The total purchases were in the ratio of 80%-20%
Vendor A/C $11,000
PC – 1 $8,800 80%
PC – 2 $2,200 20%
Input Tax $1,000
PC – 1 $800 80%
PC – 2 $200 20%
• Vendor Invoice Document — Alternative
If the original vendor invoice document was posted as shown
below using the ratios, you also receive the analysis for
the
profit centers
Account Description Amount Profit
Center
Vendor A/C - 8,800 PC-1
Purchases 1 8,000 PC-1
Input Tax 800 PC-1
Vendor A/C - 2,200 PC-2
Purchases 2 2,000 PC-2
Input Tax 200 PC-2
• Alternative ways to post Vendor Invoice
Comparison of Vendor Invoice Documents
Both documents are financially balanced — total net zero
Document #1 is not balanced for Profit Center
Document #2 is balanced for Profit Center
Document 2 – Balanced for Profit Center
Account Description Amount Profit
Center
Vendor A/C - 8,800 PC-1
Purchases 1 8,000 PC-1
Input Tax 800 PC-1
Vendor A/C - 2,200 PC-2
Purchases 2 2,000 PC-2
Input Tax 200 PC-2
Document 1 – Not Balanced for Profit Center
Account Description Amount Profit Center
Vendor A/C - 11,000
Purchases 1 8,000 PC-1
Purchases 2 2,000 PC-2
Input Tax 1,000
• Vendor Invoice Document — Balanced
for Profit Center
So that the document is balanced for the specific characteristic
(in this example, Profit Center)
The accounting lines for Vendor and Input Taxes are split
according to the pre-defined criteria
The splitting-criteria for Vendor accounts is Purchase expenses
This method of splitting accounting items is document
splitting
Account Description Amount
Profit Center
Vendor A/C - 8,800
PC-1
Purchases 1 8,000
PC-1
Input Tax 800 PC-1
Vendor A/C - 2,200
PC-2
Purchases 2 2,000
PC-2
Input Tax 200 PC-2
• Document splitting in the new G/L
New G/L offers AUTOMATIC document splitting
Instead of analysts manually splitting the accounting
items, system automatically splits the document
You can configure the rules for document splitting
Account Description Amount
ProfitCenter
Vendor A/C - 8,800
PC-1
Purchases 1 8,000
PC-1
Input Tax 800 PC-1
Vendor A/C - 2,200
PC-2
Purchases 2 2,000
PC-2
Input Tax 200 PC-2
Account Description Amount Profit Center
Vendor A/C - 11,000
Purchases 1 8,000 PC-1
Purchases 2 2,000 PC-2
Input Tax 1,000
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