Every company code needs to maintain different set of account books using different accounting principle. When a financial transaction happens, financial document is recorded in different books and this is referred as parallel accounting. Non leading ledger enables parallel accounting.
Let’s understand the concept of non leading ledger with example.
Nike headquarter at USA has subsidiaries in India (company code 1200) and Australia (company code 1100).
Both company code is required to produce financial reports using different accounting principle and in various currencies.
Below picture showing accounting books needed for Nike India .
Parallel accounting using ledgers
Nike India is required to prepare financials
- For group reporting using US GAAP in INR, USD — Fiscal year 1st OCT to 31st SEP
- For local authority using local GAAP in INR ——–Fiscal year 1ST APR to 31st MAR
- For global reporting in IFRS in INR, USD ———-Fiscal year 1ST APR to 31st MAR
Hence Nike India needs to maintain three different set of books.
Whenever a financial transaction happens, accounting document should be recorded appropriately in different books.
Scenario 1, 2 & 3: Documents are updating all ledgers 0L, N1 & N2.
Scenario 4: Documents are updating only ledger 0L & N1. (Ledger specific document posting)
Scenario 5: Documents are updating only N1 & N2 . (Ledger specific document posting)
Scenario 6: Document is updating only 0L. (Ledger specific document posting)
Normally when document is posted, data flows to all ledgers as shown in scenario 1, 2 &3.
But specific accounting principle may require adjustment hence ledger specific documents are posted as shown in scenario 4, 5 & 6. This helps in maintaining multiple set of books independently.
Now let’s understand difference between leading ledger and non-leading ledger.
Leading ledger
Leading ledger is the primary ledger or lead ledger. Leading ledger is always represented by 0L.
Leading ledger 0L is automatically created by sap and assigned to all the company codes. When a financial transaction happens, financial document always gets posted in leading ledger.
It’s a standard practice to keep accounting principle of leading ledger same as the group’s accounting principle (accounting principle in which consolidation has to happen).
Non leading ledger
Non leading ledger is used for maintaining books in accounting principle other than group’s accounting principle (accounting principle in which consolidation has to happen).
You may create as many non leading ledgers as you want but sap allows only one leading ledger. Standard practice is to keep ledger 0L as the leading ledger.
Non-leading ledgers require adjustments hence ledger specific documents are posted (as shown in scenario 4, 5 & 6).
What is ledger group? What is the use of ledger group?
A group of ledgers is called ledger group. Ledger group helps in posting ledger specific document
How to post a ledger specific document?
While posting a financial document, the field ‘Ledger Grp’ decides which ledgers will be updated by the document.
How ledger specific document can be posted.
If no input provided in the filed ‘Ledger Grp’ then document gets posted in each ledger.
If input is provided in the field ‘Ledger Grp’ then document gets posted in ledgers belonging to the ledger group.
Is it possible to post customer/ vendor account only in non leading ledger?
No, ledger specific documents cannot be posted for customer/ vendor account.
Customer/ vendor accounts will always be posted in all ledgers.
When posting customer/ vendor account, the field ‘Ledger Grp’ needs to be empty. No input should be provided in field ledger group.
Does a separate document number gets posted for each ledger.
Document number in non-leading ledger may be different from document number in leading ledger. Consider below two cases
Case 1: Fiscal year variant and posting period variant of non leading ledger is same as leading ledger
Outcome: Non leading ledger inherits the document number from leading ledger.
Case 2: Fiscal year variant and posting period variant of non leading ledger is different from leading ledger
Outcome: Document number in non leading ledger is different from document number in leading ledger.
Document number range needs to be assigned to document types in non leading ledger.
Summary: Leading ledger VS non leading ledger
Leading ledger
- It’s the base ledger which updates the consolidation.
- Only one leading ledger can be defined, sap provides leading ledger ‘0L’ which is assigned to all the company codes by default.
- Inherits properties (fiscal year variant, posting period variant and 1st currency) from company code
- Leading ledger is integrated with all non-leading ledgers.
- Only values from leading ledger flow from finance to controlling.
Non-leading ledger
- Non leading ledgers are activated by company code.
- Fiscal year variant, posting period variant can be different from leading ledger.
- Separate document number range can be assigned to document types in non leading ledger.
- Second local currency (LC2) and third local currency (LC3) can only be picked from currencies assigned to leading ledger.
- Non leading ledger enable parallel accounting by applying different accounting standards such as IFRS/ IAS or US GAAP etc.
GL ACCOUNTING
- What is SAP FICO ?What business requirement is fulfilled in this module?
- What is enterprise structure in sap fico?
- What is GL account? What is account group? What is operational chart of accounts?
- What is the need of country chart of account or alternate chart of account? How country chart of account helps fulfill a business requirement?
- What is the need for group chart of account? How group chart of account helps in consolidation of financial data?
- What is non leading ledger in sap fico?
- What is company code global settings? What global parameter is assigned to company code?
- What is fiscal year variant? Why fiscal year variant is assigned to company code?
- What is posting period variant? Why posting period variant is assigned to company code?
- What is field status variant? What is field status group?
- What is document type in sap? Explain the purpose of document type?
- Document date vs Posting date vs Entry date vs Translation date. Explain
- What is posting key? what is the use of posting key?
- Document header & line items capture information of business transaction.
- Everything about currency & exchange rate in sap.
- Foreign currency valuation in sap. Explain with example
- Retained earnings account helps in year end balance carry forward. Explain
- What is the significance of tolerance groups in sap?
- What parameters are maintained in GL master and how does it impact in document posting?
ACCOUNTS PAYABLE
- What is meant by accounts payable in sap?
- Understanding procure to pay (PTP) cycle and accounting document at each step.
- Understanding MM FI integration in very simple terms.
- Purchase order price determination in SAP. Explained in very simple words.
- House bank, Bank key, Account ID in SAP
- What configuration (FBZP) needed for executing F110 in sap ?
ACCOUNTS RECEIVABLE
- How sap overcomes challenges in accounts receivable process?
- What is customer reconciliation account?
- Understanding order to cash cycle in sap.
- Understanding SD FI integration in very simple terms.
- What is lock box? How lockbox helps in collection from customers?
TAX ACCOUNTING
- How sap helps in tax accounting?
- Tax configuration in sap: Tax procedure, Tax code & Tax jurisdiction code
- Concept of tax jurisdiction code & tax jurisdiction structure
- Significance of “Tax category & Posting without tax allowed” in GL master.
- Tax base amount and Discount base amount
- Assigning tax code V0 & A0 for non taxable transaction?
- Deductible input tax vs non deductible input tax
WITHHOLDING TAX
- Withholding tax in sap explained with example.
- How sap overcomes challenges in managing withholding tax?
- Withholding at the time of invoice or payment
- Withholding tax configuration in sap
- Business place & Section code in sap
- Withholding tax certificate numbering in sap
- Withholding tax report for filling tax returns
ASSET ACCOUNTING
- How sap helps in asset accounting?
- What is meant by asset accounting?
- What is the use of asset class?
- What is the use of depreciation key in asset accounting?
- Depreciation area and Chart of depreciation in sap.
- Derived depreciation area VS real depreciation area?
- Understanding asset accounting configuration needed in sap
- GL account determination for posting asset transaction
- Asset transaction and corresponding accounting document?
- How depreciation is posted in sap?
SAP CONTROLLING