Reconciliation Accounts and Special G/L Indicator
Most SAP people might be asking, what is a reconciliation account in SAP Financial Accounting? Well, my dear readers surely you will be enlightened by this article.
You must understand the definition of general ledger. General ledger is the main accounting record of a business which uses double-entry bookkeeping. In SAP, the central task of G/L accounting is to provide a comprehensive picture for external accounting and accounts. Transactions that have a financial impact are captured by the general ledger. The transactions could be originated from other modules. Example, posting of goods receipt (MIGO) performed by purchasing personnel (MM module) have already a financial impact. It increases the inventory balance and increases the GR/IR clearing account. The accounting journal entry the transactions MIGO create is debit (dr) Inventory account (G/L) and credit GR/IR clearing accounts (G/L).
The general ledgers summarize all financial transactions of a Company. It is the the basis of the preparation of the Company’s Financial Statements.
Now, let’s dig it further
Reconciliation Accounts are G/L accounts that receive postings from a subsidiary ledgers. Meaning, transactions data are not posted directly to recon accounts. Example of recon accounts are Accounts Receivable, Accounts Payable and Fixed Assets G/L. For accounts receivable G/L the subsidiary ledger is the customer account. All transactions with the customers are posted directly to the customer account and the recon account is automatically updated. How this thing happen? Well, when you create a customer account you specify under the Company Code data the reconciliation account.
All normal transactions to the customer e.g. sale of goods are posted to the recon account defined in the customer master data. Next question would be, what G/Laccount should be updated for postings of customer down payment (advance collection)? For proper accounting, downpayment should not be posted to Accounts Receivable – trade. It should be posted to different G/L account e.g. Advances from customer. Well, how would the said transaction be posted to Advances accounts.
This is one of the cases where the idea of special G/L indicator comes in. With the use of special G/L indicator you can specify in the set-up what G/L account advances transactions be posted. Standard posting key of customer transaction with special G/L indicator are 09 (dr) and 19 (cr). The system will always require you to indicate the special G/L indicator when you use the said posting keys.
well can you tell me why do we post customer advance to the advance account ,which is a separate a/c , rather than a/c recivables
thanks in advance
Above article is good to clear my doubts :-)
can u give the difference between reconciliation account and G/L account.
why use alternative reconciliation account
Hi, plees tell me what’s more importent part of 2nd book for certification
Please tell me what is RECONCILITION and parsol payment
Very Good article.
Hi can any one explain about GR/IR account and , how many GR/IR accounts is possible to create our company.
Really good article. Expecting more articles like this but little more elaborate. Thanks, Bhargav
Well, I hope that my advice could help.. So as to identify what particular GL account does the entry go.. Because deposits pertain to collections for a certain customer, which is found in a subsidiary ledger.. Subsidiary ledger is also called as Special ledger. That’s where the special GL indicator got it’s idea.
Hi ! Thank u,
I got better clarification regarding. Recon a/c.
but I have some doubt on what is the Diff between GL&Reconcilation.
this is a good article…hope to see some more details in deep…
As mentioned in your statement that a special G/L account needs to be opened for advances from customer.
well my understanding is that new customers creation will provide a a new customer no and all related transactions be done on that customer no e.g advances, credit notes, billing , delivery can all happen under that customer code and reflect the subsequent G/L accounts.
Good information………………… request some more datails
Reconciliation account decreases information dirty in the G/L account. All receivable, payments or fixed assets are recorded in their account and they are posted to the G/L when they are collected under same title. That is, all of the transaction for company is made in reconciliation accounts and posted them to the G/L account clearly.
If advance payments are posted in different gl, then how sales ledger would match witch AR gl?