Learning Journeys are visual guides, designed to help you complete the learning path for particular SAP solutions. The easiest way to find learning journeys is to search for SAP Learning Journeys in your browser. © Copyright. All rights reserved. 3 Periodic Closing Process Figure 2: Periodic Closing Process Preclosing Activities The preclosing activities that occur on the last day of previous month are as follows: ● Technical Open a new accounting period in Financial Accounting (FI), close the previous month in materials management (MM), close subledgers in FI, and perform a preliminary close of the general ledger (G/L) in FI. ● Financial Accounting (FI) As part of preclosing activities, process purchase order accruals, enter manual accruals and deferrals, process recurring entries, and process bad debt expenses in accounts receivable (AR). ● Materials Management (MM) Maintain the goods receipt and invoice receipt (GR/IR) clearing account, and post material revaluations. ● Human Resources (HR) Post payroll expenses. ● Sales and Distribution (SD) Post goods issues for deliveries to customers. Managerial Closing Activities The managerial closing activities are as follows: Unit 1: Financial Closing Overview 4 © Copyright. All rights reserved. ● Perform Controlling (CO) allocations and reposting. ● Lock the old accounting period. ● Reopen the G/L for adjustment postings. Closing Activities for External Reporting The closing activities for external reporting purposes are as follows: ● FI Perform valuations of open items in foreign currency. ● Technical Close the previous period. ● FI or CO Create document reports like tax reports, asset history sheets for external reporting, and managerial reports for internal purposes. Year-End Closing Process Figure 3: Year-End Closing Process For the final period of the fiscal year, in addition to the regular month-end closing activities, year-end closing activities are performed. Preclosing Activities The preclosing activities that begin in the old month are as follows: ● Technical Lesson: Explaining the Periodic Closing Process © Copyright. All rights reserved. 5 Open the first accounting period of the new fiscal year in FI, and perform the balance carryforward centrally in FI. ● MM Perform a physical inventory count, which may be performed on a monthly basis. ● Production Planning (PP) or CO Update product cost estimates, which may be performed more frequently. ● MM Perform lowest value determination, and perform Last In First Out (LIFO) or First In First Out (FIFO) valuation. ● AA Perform asset valuations and investment support. ● FI Conduct balance confirmations for customers or vendors. Note: All subledgers must always be closed before the general ledger in a fiscal year. If this basic principle is not considered, this can lead to inconsistencies with the general ledger balances (In particular, this applies in relation to the FI-AA subledger). For further information, see SAP Note 619969. Closing Activities for External Reporting The closing activities for external reporting purposes are as follows: ● FI Perform GR/IR clearing account analysis, reclassification of receivables and payables, reconciliation of prior year to new year, and other adjustment postings. ● Technical Conduct final closing of the old period for accounts receivable and accounts payable (AR/AP) and the G/L. ● FI or CO Create external and internal reports. LESSON SUMMARY You should now be able to: ● Explain the order in which closing activities are carried out Unit 1: Financial Closing Overview
The periodic closing process is an important part of financial accounting in SAP. It involves a series of activities performed at the end of a specific period (usually a month or year) to finalize financial transactions and prepare for the next period. There are three main categories of closing activities: preclosing activities, managerial closing activities, and closing activities for external reporting purposes.
Preclosing activities, which occur on the last day of the previous month, include various tasks performed in different SAP modules:
Technical: Opening a new accounting period in Financial Accounting (FI), closing the previous month in Materials Management (MM), closing subledgers in FI, and performing a preliminary close of the general ledger (G/L) in FI.
Financial Accounting (FI): Processing purchase order accruals, entering manual accruals and deferrals, processing recurring entries, and processing bad debt expenses in accounts receivable (AR).
. Materials Management (MM): Maintaining the goods receipt and invoice receipt (GR/IR) clearing, and posting material revaluations.
Human Resources (HR): Posting payroll expenses.
Sales and Distribution (SD): Posting goods issues for deliveries to customers.
Managerial closing activities involve performing controlling (CO) allocations and reposting, locking the old accounting period, and reopening the G/L for adjustment postings.
Closing activities for external reporting purposes focus on preparing reports for external stakeholders. These activities include1. FI: Performing valuations of open items in foreign currency.
Technical: Closing the previous period.
FI or CO: Creating document reports like tax reports, asset history sheets for external reporting, and managerial reports for internal purposes.
In the year-end closing process, additional activities are performed, in addition to the regular month-end closing activities:
Technical: Opening the first accounting period of the new fiscal year in FI and performing the balance carryforward centrally in FI.
MM: Performing a physical inventory count (which may be performed on a monthly basis).
Production Planning (PP) or CO: Updating product cost estimates (which may be performed more).
MM: Performing lowest value determination and performing Last In First Out (LIFO) or First In First Out (FIFO) valuation.
AA: Performing asset valuations investment support.
FI: Conducting balance confirmations for customers or vendors.
Closing activities for external reporting purposes in the year-end closing process include:
FI: Performing GR/IR clearing account analysis reclassification of receivables and payables, reconciliation of prior year to new year, and other adjustment postings.
Technical: Conducting final closing of the old for accounts receivable and accounts payable (AR/AP) and the G/L.
FI or CO: external and internal reports.
It is essential to follow a specific order of closing activities to ensure consistency and accuracy in financial reporting.
I hope this explanation clarifies the periodic closing process in SAP for you. If you have any further questions, feel free to ask!