Wednesday, November 30
Web Dynpro Generated Folders in the DTR perstective
I can see that in the DTR perspective, I have these many folders like gen_wdp, gen_mci etc. These folders as I know are generated by the web dynpro framework. There are other DCs in the DTR which do not have these folders. They have only src folder and .dcdef file.
These folders are not required on the DTR. These should be manually removed from the DTR as they were manually checked in to DTR at the time of Checkin. Removing web dynpro generated folders from the DTR is easy. Just go to the DTR perspective of your NWDS. Drill down to the _comp folder of your project. Right click on each of the web dynpro generated folder and choose delete->delete subtree. This will ask you to create and activity. Just create an activity. The deletion action will be catured in this Activity. Then checkin this activity, delete the project from you workspace and create it again from the inactive DCs in you DC perspective . Then go to DTR perspective again and drill down to the _comp folder of your project. You will see that web dynpro generated folders are gone.
For a project, on the DTR, only 1 folder called src and only 1 file called .dcdef is required. Everything else is generated by the web dynpro framework when you build a DC. These folders are not needed on the DTR . If they are there on the DTR perspective, your DC will appear broken to whoever creates it on his/her machine.
Tuesday, November 29
DC Builds fine on the WD View but Errors on the Navigator View
Sometimes when the Development Component is checked in to DTR manually, it may be checked in with some files in read-only mode. So these files get uploaded in DTR in read only mode. Then when the developer creates project from the Inactive DCs from the DC perspective of NWDS, the project gets created but with the below shown errors.
These errors are because the files in error are read-only. This is indicated on the problem view of NWDS IDE. So when you open the problem view of your NWDS IDE, you will be able to see these errors with their description.
All that you need to do is to go to the location on your local machine where these files are located and select them all and right click and go to properties and uncheck the readonly checkbox.
Once you do this then come back to NWDS and reload the project in the Web Dynpro perspective. If the errors are still there, go and check you Problem View. CHeck which all files are still in error. If there are any such files still, repeat the process for them and reload the project again. Do this unless all the errors are gone.
Once the project is free of all the errors, you need to checkin the project to DTR. This has to be done manually as you will notice that when you try to Edit any file in the project, the JDI does not ask you to create any activity even if you are logged in to DTR.
So go to DTR perspective of NWDS for manually checking in your changes.
These errors are because the files in error are read-only. This is indicated on the problem view of NWDS IDE. So when you open the problem view of your NWDS IDE, you will be able to see these errors with their description.
All that you need to do is to go to the location on your local machine where these files are located and select them all and right click and go to properties and uncheck the readonly checkbox.
Once you do this then come back to NWDS and reload the project in the Web Dynpro perspective. If the errors are still there, go and check you Problem View. CHeck which all files are still in error. If there are any such files still, repeat the process for them and reload the project again. Do this unless all the errors are gone.
Once the project is free of all the errors, you need to checkin the project to DTR. This has to be done manually as you will notice that when you try to Edit any file in the project, the JDI does not ask you to create any activity even if you are logged in to DTR.
So go to DTR perspective of NWDS for manually checking in your changes.
Saturday, November 19
package name not reserved. Reserve it on the System Landscape Directory
The above warning message comes when you create a DC whose name is not reserved in the System Landscape Directory. To resolve this you need to go to the System landscape Directory and reserve the namespace.
When you create a DC in a SC, the wizard asks you give a name to the DC. The name of a DC Consist of 2 parts, one if fixed which appears in a dropdown and one is a free entry which the developer has to give. The name that appears in the dropdown is a reserved name. This reservation is done in the system landscape directory.
Sunday, November 13
FIFO costing method and Effect of additional expenses on the stock value
At the conclusion of this topic you will be able to describe the standard costing method, describe the FIFO costing method, describe the effect of additional expenses on the stock value, update the costing methods, and use the material revaluation functionality.
The standard price costing method: SAP business one allows you to work with a standard price method for calculating your stock value. A standard or fixed price should be entered in each item, thus influencing every stock posting as described in the next few lines. A stock receipt entered with the different price than the standard price set for the item will debit the stock account according to the standard price. In addition the difference between the standard price and the actual receipt price will be recorded in a variance or a price difference account. For example when the receipt price is higher, than the standard price then the following journal entry will be created. As you will be able to see, the vendor or the allocation account is debited, the stock account is debited with the value according to the standard price and the variance account is debited with the difference between the actual price of the document and of the standard price defined for the item. Stock releases will be recorded according to the standard price only.
Setting standard prices: when you work with a single price in all your warehouses, you should set the standard price via the item master data window. Under the inventory tab there , in the field cost price, type the standard price of your item . when you click on the tab key, the system message- update price for all warehouses is displayed. Click yes to display this price to all your warehouses. It is possible to change the cost prices of each one of the items in the warehouses manually before inventory postings have been created. After these were created you can use the material revaluation window which will be explained later. You can see that in the field costing method, the option standard is selected. Lets see few examples of journal entries created when working with the continuous stock with the standard costing method. Lets first start with the goods receipts PO. Our preliminary assumptions are that the business partners are sales tax exempted and that the item has sufficient stock quantities and is managed by the standard costing methods. You should know that no journal entry would be created by a document containing items with no standard price. This means that if you add a document with an item which does not have the cost price here, no journal entry for the inventory value will be created. The following example will tell a case where the items price as recorded in the goods receipts PO, that is from the standard from as set in the item master data window. Lets type one hundred and fifty in the goods receipt PO. We conceive that the item master data , the cost price of the data in item number one is one hundred. Lets add the document. Lets browse back and take a look at the journal entry. You can see that the allocation account is credited by one hundred and fifty dollars which is the items price in the goods receipts PO. The stock account Is debited by one hundred dollars which is the items standard price. And the variance account is debited by fifty dollars which is the difference between the price in the documents and the standard price of the item in the warehouse. Remember that the allocation account functions as a temporary alternative for the vendors account which will be cleared only after you create a corresponding A/P invoice. Note again that whenever the variance account is recorded in the journal entry, you can conclude the items quantity in stock is positive. If the quantity in stock is zero or negative, the price difference G/L account will be reflected in the difference between the price in the document and the standard price recorded for the document. In this case the variance account will not appear here and instead the price difference account would be recorded. If a document changes the quantity of stock from positive to negative the price difference account will be recorded in the journal entry. If a document changes quantity in stock from negative to positive, then the variance account will be recorded in the journal entry. Lets base an A/P invoice on the goods receipts PO we have just added. When basing an invoice in the goods receipt PO, the allocation account is debited counter to the vendor account which is credited. Lets add the A/P invoice and see the journal entry. You can see that the vendor is credited by one hundred and fifty dollars and the allocation account is debited by one hundred and fifty dollars. Note again that the allocation account functions as a clearing account, it is debited by the amount with which it was credited in the goods received PO. Lets see some stock release documents. Lets open an A/R invoice an see the journal entry created by a standard price item. Again lets set the price here to one hundred and fifty dollars. Remember that the release document do not affect the stock valuation price. This A/R invoice is not based on any document. Let add the document, browse back and take a look at the linked journal entry. You can see that this journal entry includes the deliveries, the inventory transaction and the invoices of accounting transaction. You can see that the value of the inventory transactions is calculated by the item standard price and the amount in the accounting transactions is calculated by the price recorded in the A/R invoice. Lets see an example of an inventory document. Lets take for an example a goods receipt. Select the item again here and you can see that the price is one hundred and fifty. In this example we display a case where the items price here varies from the item standard price set. You can see that the items standard price is one hundred, and the price actually recorded is one hundred and fifty. Lets add this document. Browse back and you can see that the increase account is credited by one hundred and fifty dollars, the stock account is debited by one hundred dollars which is the standard price of the item and the variance account is debited by a difference, between the price in the document (one hundred and fifty ) and the standard price of the document which is hundred dollars. In general if the price in the stock receipt documents is lower than the standard price of the item then the variance account will be credited.
Working with negative stock in the standard method. In a situation where the item quantity in the stock is negative or will be negative after the transaction is created, in most cases the price difference account will be recorded in the journal entry instead of the variance account.
The FIFO costing method: this option calculates the stock value by the FIFO method( first in first out) . each inventory receipt transaction creates a layer of quantities, costs( purchase price) and dates. Each inventory release transaction uses quantities and their corresponding costs from the first open layer or layers. A layer closes when its entire quantity is released. When several inventory receipt transactions are recorded on the same date, SAP business one identifies the first layer, second layer and so on according to their entrance time. Note: no cost price will be displayed in the item master data.
Layers of quantities and prices: lets see how the FIFO costing method works in SAP business one. First and inventory receipt transaction is recorded. It might be a purchasing document or another stock receipt document in this example the inventory receipt transaction was recorded with a quantity of two at a price of one hundred and on the date January first 2004. This inventory receipt transaction created the first layer which is layer number one. On February second an additional inventory receipt transaction was recorded for this item. However, this time although the quantity was two, and the price was two hundred. This created the second layer number two. On march third, one of your customers purchased this item. An inventory release transaction was recorded. Three pieces of this item were purchased. As a result three units of this item were releases from the warehouse. As a result layer number one was closed since a quantity of two was released from this layer and layer number two remained open with a quantity of one at a price of two hundred since only one of the two pieces was released.
Lets see some example for journal entries created by the FIFO costing method. First you can see from the items master data that the selected costing method is FIFO. Notice that there is no cost price field here. This is because the FIFO prices are calculated dynamically according to the receipt and the stock postings. Lets start with the goods receipt PO. Again our prerequisites are that the business partner is tax exempted and that the item is managed by the FIFO costing method. Lets receive two items. Lets receive a quantity of two at a price of one hundred to warehouse number one. Lets add this document and browse back to see the journal entry. You could see that it’s a regular inventory valuation transaction. Now lets add another goods receipt PO. For this tome the quantity will be two and the price will be two hundred to warehouse number one. You can see that the journal entry is normal. Now lets go to the delivery which is the release document. Select the FIFO item and select a quantity of three. Lets add the document, browse back and take a look at the journal entry. You can see that the amount is four hundred. In the delivery there is a quantity of three and a price of one hundred. Remember that the prices in release document do not count for the calculation of the journal entries. So what they did for the calculation for the debited and credited amounts? If you remember, the first layer contains two items with a price of one hundred and the second layer contains two items with a price of two hundred. When the delivery document released a quantity of three, two items which were in the first layer were multiplied by one hundred and this layer was closed. The third item was calculated with a price of two hundred. This account two four hundred( 2 multiplied by one hundred plus one multiplied by two hundred. Lets demonstrate the FIFO transactions using a query we have defined earlier. This query uses a table which represents the WH journal. Here you can see the query sentence and you can see the items transactions. Under the column transaction type you can see the code of the documents. Number 20 represents the goods receipt PO and the number 15 represents a delivery document. In the first record you can see a transaction created by the goods received PO , with a receipt quantity of two at a price of one hundred. In the second record you can see a second transaction created by the goods receipt PO with a received quantity of two at a price of two hundred dollars each. Now lets see the release transactions. If you remember, earlier we had created one delivery document releasing a quantity of three. However you can see that in this query two separate transactions were created. The first transaction record an issued quantity of two at a price of one hundred. This transaction closes the layer created with the closed good receipt PO. The second record shows an issued quantity of one at a price of two hundred. Since the first layer was closed this quantity and price are now taken from the second goods receipt PO transaction and therefore the price changes accordingly.
Working with negative stock in FIFO method: when the stock is negative or zero after addition of a new FIFO layer , all FIFO layers of this item will be closed. The price of the released items will be taken from the last purchase price. When the stock becomes positive as a result of the addition of a new receipt transaction, two FIFO layers will be created for this item. The first layer will record the quantity required in order to bring the stock balance to zero. This layer will be closed. The second layer will record the remaining quantity of the receipt transaction and will function as the first open layer for future FIFO transactions.
Example: an items stock balance is (-4). A quantity of ten was recorded as a stock receipt transaction . results: the first layer for quantity of four, required to bring the stock balance to zero is closed. The second layer for the remaining quantity of six will function as the first open layer of this item.
Additional expenses: additional expenses maybe insurance, shipment or other fees which apply to your goods. If you are working with the continuous stock system, you can add the value of the additional expenses recorded in the row level of your purchasing documents to the inventory value of your goods. Additional expenses may also update the cost price of the items. Further information on additional expenses is provided later on. The influence of additional expenses on the inventory value will be explained further according to the moving average method.
If you are working on the additional expenses on a continuous stock system, you first need to verify that you have defined a certain G/L account under administration ,then definitions, then financials, then G/L accounts determination. Under the purchase tab page, at the bottom of this window, under the title expense account, you can see the variance account field. If you choose the affect the stock with additional expenses you need to specify a variance clearance account to clear journal entries created by the A/P journal memos based on A/P invoices or by the goods return based on the goods receipt POs withy which the additional expenses amount is changed. After you define this G/L account you can add sales and purchasing documents which include additional expenses. Lets see an example as to how the additional expenses affect the valuation when they are recorded in purchasing documents. Lets take for example a goods receipt PO. Lets select an item which is managed by a moving average costing method. The cost price of this item is one hundred in warehouse number one. Lets receive this item with a quantity of one. Select additional expenses. Lets say insurance in the amount of ten dollars. Under the column expenses one stock, you can choose either yes or no. if you choose yes, the additional expenses amount will influence the stock valuation. Lets add this document and browse back to see the journal entry. You can see that the allocation account is credited by one hundred dollars, which is the moving average price of the item. The additional expenses clearing account is credited by ten dollars which is the additional expenses amount and the stock account is debited by the total amount of these two G/L accounts. Note that the additional expenses amount recorded in the journal entry is the global amount for the additional expenses for the entire quantity. The expenses clearing Is the clearing account recorded for the stock account. Now lets place an A/P invoice in this goods receipts PO. You can see that the row that we have recorded in the goods receipt PO is now copied to the A/P invoice , including then additional expenses amount. Lets add the document, browse back and take a look at the journal entry. You can see that the vendor is credited by one hundred and ten dollars which is the total amount of document. The additional expenses clearing account is debited by ten dollars. This is to clear the amount credited in the goods receipt PO. The allocation account is credited by one hundred dollars which is the moving average price for the item. This is to clear the amount debited in the goods receipt PO. Now lets see an example of an independent A/P invoice. Lets select the vendor again, the item and type the date. Now again lets select an additional expense and type an amount. Select yes to affect the stock valuation with the amount of additional expenses lets select add. Browse back and take a look at the journal entry. Note that the expenses clearing account is not recorded in this journal entry since the stock account reflects the item price including additional expenses. As mentioned earlier, the expenses clearing is a clearing account and this journal entry records the final values affecting the inventory valuation. Therefore no intermediate accounts are recorded here. Only the vendor account and the stock account are seen.
Update costing method: starting in version 2004, it is possible to change the costing method of an item, however in case it is not linked to any open documents and its on hand stock is zero. Use the update stock valuation method report to update the costing method of your items.
Lets take a look at the update stock method window. Go to inventory. Click on item management and select update stock method. Approve the selection for the window that opens and open the update stock valuation report. Use this window to update the costing method of your items. Note that only items with a zero on hand stock and have no open documents are displayed ion this window. We can take a look at any item and see that it has no on hand stock. There is no quantity in this field. You can also see that the costing method is set to standard. In the current method column you can see the costing method of the items. In the new method column you can select the relevant costing method which you would like to use from now on for this item. In the approved column, check the boxes of all the items you would like to update. Lets select one of the items with a costing method of moving average method. When you click on update the window closes and you can see that the current method is changed from standard to moving average method.
Material revaluation: starting in 2004, It is possible to change the costing price for your items manually. This window allows you to revaluate material values by changing the moving average or the standard price of an item and calculating the total value of all the stock. There are two options for revaluating the stock: 1.the item price changes when the whole stock is affected.
2. the inventory value( credit or debit) changes with the reference to a certain quantity of the item.
Lets take a look at the material revaluation functionality. Go to inventory, then inventory transaction, then click on material revaluation. In this window you have two methods of revaluation- price change and inventory debit / credit. First lets see the price change revaluation type. In the table, select the items. Let this items current price be one hundred and two point five dollars. Lets say this resulted from the stick and that you would like the price to be one hundred dollars. Simply type new price in this column. Note that the increase and decrease G/L accounts are those defined in the selected warehouse. Click on add to select and perform the action. Go back to browse the linked journal entry. You can see that the corresponding journal entry created for stock valuation involves the stock account of warehouse number one and the decrease account specified in the corresponding field in the material evaluation window. The decrease G/L account is recorded on the journal entry due to the fact that we reduce the price from one hundred and two point five to one hundred. Lets take a look at the item .you can see now that the item whose price was changed from one hundred and two point five to one hundred. Lets take a look at the second method. Inventory debit / credit. This method allows you to record a change in the inventory value which relates to a certain quantity of the item. For example if you know that a price mistake was made in a certain receipt document, yet the inventory value of the entire quantity will be updated regardless of the quantity specified in here. Again lets select this item and now type the quantity. Note that the quantity is informative only . type a positive amount to debit the stock account and a negative amount to credit it. Note that the negative and positive amounts are dependant on the definitions made in the field displayed credit balance with a negative sign. Click on add. Lets browse back to see the journal entry. You can see that one hundred and ten dollars are recorded in the journal entry. Lets take a look at the item and you can see that the cost price was updated accordingly.
You will now be able to describe the standard costing method, describe the FIFO costing method, describe the effect of additional expenses on the stock value, update the costing methods, and use the material revaluation functionality.
The standard price costing method: SAP business one allows you to work with a standard price method for calculating your stock value. A standard or fixed price should be entered in each item, thus influencing every stock posting as described in the next few lines. A stock receipt entered with the different price than the standard price set for the item will debit the stock account according to the standard price. In addition the difference between the standard price and the actual receipt price will be recorded in a variance or a price difference account. For example when the receipt price is higher, than the standard price then the following journal entry will be created. As you will be able to see, the vendor or the allocation account is debited, the stock account is debited with the value according to the standard price and the variance account is debited with the difference between the actual price of the document and of the standard price defined for the item. Stock releases will be recorded according to the standard price only.
Setting standard prices: when you work with a single price in all your warehouses, you should set the standard price via the item master data window. Under the inventory tab there , in the field cost price, type the standard price of your item . when you click on the tab key, the system message- update price for all warehouses is displayed. Click yes to display this price to all your warehouses. It is possible to change the cost prices of each one of the items in the warehouses manually before inventory postings have been created. After these were created you can use the material revaluation window which will be explained later. You can see that in the field costing method, the option standard is selected. Lets see few examples of journal entries created when working with the continuous stock with the standard costing method. Lets first start with the goods receipts PO. Our preliminary assumptions are that the business partners are sales tax exempted and that the item has sufficient stock quantities and is managed by the standard costing methods. You should know that no journal entry would be created by a document containing items with no standard price. This means that if you add a document with an item which does not have the cost price here, no journal entry for the inventory value will be created. The following example will tell a case where the items price as recorded in the goods receipts PO, that is from the standard from as set in the item master data window. Lets type one hundred and fifty in the goods receipt PO. We conceive that the item master data , the cost price of the data in item number one is one hundred. Lets add the document. Lets browse back and take a look at the journal entry. You can see that the allocation account is credited by one hundred and fifty dollars which is the items price in the goods receipts PO. The stock account Is debited by one hundred dollars which is the items standard price. And the variance account is debited by fifty dollars which is the difference between the price in the documents and the standard price of the item in the warehouse. Remember that the allocation account functions as a temporary alternative for the vendors account which will be cleared only after you create a corresponding A/P invoice. Note again that whenever the variance account is recorded in the journal entry, you can conclude the items quantity in stock is positive. If the quantity in stock is zero or negative, the price difference G/L account will be reflected in the difference between the price in the document and the standard price recorded for the document. In this case the variance account will not appear here and instead the price difference account would be recorded. If a document changes the quantity of stock from positive to negative the price difference account will be recorded in the journal entry. If a document changes quantity in stock from negative to positive, then the variance account will be recorded in the journal entry. Lets base an A/P invoice on the goods receipts PO we have just added. When basing an invoice in the goods receipt PO, the allocation account is debited counter to the vendor account which is credited. Lets add the A/P invoice and see the journal entry. You can see that the vendor is credited by one hundred and fifty dollars and the allocation account is debited by one hundred and fifty dollars. Note again that the allocation account functions as a clearing account, it is debited by the amount with which it was credited in the goods received PO. Lets see some stock release documents. Lets open an A/R invoice an see the journal entry created by a standard price item. Again lets set the price here to one hundred and fifty dollars. Remember that the release document do not affect the stock valuation price. This A/R invoice is not based on any document. Let add the document, browse back and take a look at the linked journal entry. You can see that this journal entry includes the deliveries, the inventory transaction and the invoices of accounting transaction. You can see that the value of the inventory transactions is calculated by the item standard price and the amount in the accounting transactions is calculated by the price recorded in the A/R invoice. Lets see an example of an inventory document. Lets take for an example a goods receipt. Select the item again here and you can see that the price is one hundred and fifty. In this example we display a case where the items price here varies from the item standard price set. You can see that the items standard price is one hundred, and the price actually recorded is one hundred and fifty. Lets add this document. Browse back and you can see that the increase account is credited by one hundred and fifty dollars, the stock account is debited by one hundred dollars which is the standard price of the item and the variance account is debited by a difference, between the price in the document (one hundred and fifty ) and the standard price of the document which is hundred dollars. In general if the price in the stock receipt documents is lower than the standard price of the item then the variance account will be credited.
Working with negative stock in the standard method. In a situation where the item quantity in the stock is negative or will be negative after the transaction is created, in most cases the price difference account will be recorded in the journal entry instead of the variance account.
The FIFO costing method: this option calculates the stock value by the FIFO method( first in first out) . each inventory receipt transaction creates a layer of quantities, costs( purchase price) and dates. Each inventory release transaction uses quantities and their corresponding costs from the first open layer or layers. A layer closes when its entire quantity is released. When several inventory receipt transactions are recorded on the same date, SAP business one identifies the first layer, second layer and so on according to their entrance time. Note: no cost price will be displayed in the item master data.
Layers of quantities and prices: lets see how the FIFO costing method works in SAP business one. First and inventory receipt transaction is recorded. It might be a purchasing document or another stock receipt document in this example the inventory receipt transaction was recorded with a quantity of two at a price of one hundred and on the date January first 2004. This inventory receipt transaction created the first layer which is layer number one. On February second an additional inventory receipt transaction was recorded for this item. However, this time although the quantity was two, and the price was two hundred. This created the second layer number two. On march third, one of your customers purchased this item. An inventory release transaction was recorded. Three pieces of this item were purchased. As a result three units of this item were releases from the warehouse. As a result layer number one was closed since a quantity of two was released from this layer and layer number two remained open with a quantity of one at a price of two hundred since only one of the two pieces was released.
Lets see some example for journal entries created by the FIFO costing method. First you can see from the items master data that the selected costing method is FIFO. Notice that there is no cost price field here. This is because the FIFO prices are calculated dynamically according to the receipt and the stock postings. Lets start with the goods receipt PO. Again our prerequisites are that the business partner is tax exempted and that the item is managed by the FIFO costing method. Lets receive two items. Lets receive a quantity of two at a price of one hundred to warehouse number one. Lets add this document and browse back to see the journal entry. You could see that it’s a regular inventory valuation transaction. Now lets add another goods receipt PO. For this tome the quantity will be two and the price will be two hundred to warehouse number one. You can see that the journal entry is normal. Now lets go to the delivery which is the release document. Select the FIFO item and select a quantity of three. Lets add the document, browse back and take a look at the journal entry. You can see that the amount is four hundred. In the delivery there is a quantity of three and a price of one hundred. Remember that the prices in release document do not count for the calculation of the journal entries. So what they did for the calculation for the debited and credited amounts? If you remember, the first layer contains two items with a price of one hundred and the second layer contains two items with a price of two hundred. When the delivery document released a quantity of three, two items which were in the first layer were multiplied by one hundred and this layer was closed. The third item was calculated with a price of two hundred. This account two four hundred( 2 multiplied by one hundred plus one multiplied by two hundred. Lets demonstrate the FIFO transactions using a query we have defined earlier. This query uses a table which represents the WH journal. Here you can see the query sentence and you can see the items transactions. Under the column transaction type you can see the code of the documents. Number 20 represents the goods receipt PO and the number 15 represents a delivery document. In the first record you can see a transaction created by the goods received PO , with a receipt quantity of two at a price of one hundred. In the second record you can see a second transaction created by the goods receipt PO with a received quantity of two at a price of two hundred dollars each. Now lets see the release transactions. If you remember, earlier we had created one delivery document releasing a quantity of three. However you can see that in this query two separate transactions were created. The first transaction record an issued quantity of two at a price of one hundred. This transaction closes the layer created with the closed good receipt PO. The second record shows an issued quantity of one at a price of two hundred. Since the first layer was closed this quantity and price are now taken from the second goods receipt PO transaction and therefore the price changes accordingly.
Working with negative stock in FIFO method: when the stock is negative or zero after addition of a new FIFO layer , all FIFO layers of this item will be closed. The price of the released items will be taken from the last purchase price. When the stock becomes positive as a result of the addition of a new receipt transaction, two FIFO layers will be created for this item. The first layer will record the quantity required in order to bring the stock balance to zero. This layer will be closed. The second layer will record the remaining quantity of the receipt transaction and will function as the first open layer for future FIFO transactions.
Example: an items stock balance is (-4). A quantity of ten was recorded as a stock receipt transaction . results: the first layer for quantity of four, required to bring the stock balance to zero is closed. The second layer for the remaining quantity of six will function as the first open layer of this item.
Additional expenses: additional expenses maybe insurance, shipment or other fees which apply to your goods. If you are working with the continuous stock system, you can add the value of the additional expenses recorded in the row level of your purchasing documents to the inventory value of your goods. Additional expenses may also update the cost price of the items. Further information on additional expenses is provided later on. The influence of additional expenses on the inventory value will be explained further according to the moving average method.
If you are working on the additional expenses on a continuous stock system, you first need to verify that you have defined a certain G/L account under administration ,then definitions, then financials, then G/L accounts determination. Under the purchase tab page, at the bottom of this window, under the title expense account, you can see the variance account field. If you choose the affect the stock with additional expenses you need to specify a variance clearance account to clear journal entries created by the A/P journal memos based on A/P invoices or by the goods return based on the goods receipt POs withy which the additional expenses amount is changed. After you define this G/L account you can add sales and purchasing documents which include additional expenses. Lets see an example as to how the additional expenses affect the valuation when they are recorded in purchasing documents. Lets take for example a goods receipt PO. Lets select an item which is managed by a moving average costing method. The cost price of this item is one hundred in warehouse number one. Lets receive this item with a quantity of one. Select additional expenses. Lets say insurance in the amount of ten dollars. Under the column expenses one stock, you can choose either yes or no. if you choose yes, the additional expenses amount will influence the stock valuation. Lets add this document and browse back to see the journal entry. You can see that the allocation account is credited by one hundred dollars, which is the moving average price of the item. The additional expenses clearing account is credited by ten dollars which is the additional expenses amount and the stock account is debited by the total amount of these two G/L accounts. Note that the additional expenses amount recorded in the journal entry is the global amount for the additional expenses for the entire quantity. The expenses clearing Is the clearing account recorded for the stock account. Now lets place an A/P invoice in this goods receipts PO. You can see that the row that we have recorded in the goods receipt PO is now copied to the A/P invoice , including then additional expenses amount. Lets add the document, browse back and take a look at the journal entry. You can see that the vendor is credited by one hundred and ten dollars which is the total amount of document. The additional expenses clearing account is debited by ten dollars. This is to clear the amount credited in the goods receipt PO. The allocation account is credited by one hundred dollars which is the moving average price for the item. This is to clear the amount debited in the goods receipt PO. Now lets see an example of an independent A/P invoice. Lets select the vendor again, the item and type the date. Now again lets select an additional expense and type an amount. Select yes to affect the stock valuation with the amount of additional expenses lets select add. Browse back and take a look at the journal entry. Note that the expenses clearing account is not recorded in this journal entry since the stock account reflects the item price including additional expenses. As mentioned earlier, the expenses clearing is a clearing account and this journal entry records the final values affecting the inventory valuation. Therefore no intermediate accounts are recorded here. Only the vendor account and the stock account are seen.
Update costing method: starting in version 2004, it is possible to change the costing method of an item, however in case it is not linked to any open documents and its on hand stock is zero. Use the update stock valuation method report to update the costing method of your items.
Lets take a look at the update stock method window. Go to inventory. Click on item management and select update stock method. Approve the selection for the window that opens and open the update stock valuation report. Use this window to update the costing method of your items. Note that only items with a zero on hand stock and have no open documents are displayed ion this window. We can take a look at any item and see that it has no on hand stock. There is no quantity in this field. You can also see that the costing method is set to standard. In the current method column you can see the costing method of the items. In the new method column you can select the relevant costing method which you would like to use from now on for this item. In the approved column, check the boxes of all the items you would like to update. Lets select one of the items with a costing method of moving average method. When you click on update the window closes and you can see that the current method is changed from standard to moving average method.
Material revaluation: starting in 2004, It is possible to change the costing price for your items manually. This window allows you to revaluate material values by changing the moving average or the standard price of an item and calculating the total value of all the stock. There are two options for revaluating the stock: 1.the item price changes when the whole stock is affected.
2. the inventory value( credit or debit) changes with the reference to a certain quantity of the item.
Lets take a look at the material revaluation functionality. Go to inventory, then inventory transaction, then click on material revaluation. In this window you have two methods of revaluation- price change and inventory debit / credit. First lets see the price change revaluation type. In the table, select the items. Let this items current price be one hundred and two point five dollars. Lets say this resulted from the stick and that you would like the price to be one hundred dollars. Simply type new price in this column. Note that the increase and decrease G/L accounts are those defined in the selected warehouse. Click on add to select and perform the action. Go back to browse the linked journal entry. You can see that the corresponding journal entry created for stock valuation involves the stock account of warehouse number one and the decrease account specified in the corresponding field in the material evaluation window. The decrease G/L account is recorded on the journal entry due to the fact that we reduce the price from one hundred and two point five to one hundred. Lets take a look at the item .you can see now that the item whose price was changed from one hundred and two point five to one hundred. Lets take a look at the second method. Inventory debit / credit. This method allows you to record a change in the inventory value which relates to a certain quantity of the item. For example if you know that a price mistake was made in a certain receipt document, yet the inventory value of the entire quantity will be updated regardless of the quantity specified in here. Again lets select this item and now type the quantity. Note that the quantity is informative only . type a positive amount to debit the stock account and a negative amount to credit it. Note that the negative and positive amounts are dependant on the definitions made in the field displayed credit balance with a negative sign. Click on add. Lets browse back to see the journal entry. You can see that one hundred and ten dollars are recorded in the journal entry. Lets take a look at the item and you can see that the cost price was updated accordingly.
You will now be able to describe the standard costing method, describe the FIFO costing method, describe the effect of additional expenses on the stock value, update the costing methods, and use the material revaluation functionality.
Continuous Stock System in SAP business one
This topic describes the continuous stock system in SAP business one. At the conclusion of the topic you will be able to describe the continuous stock system, describe the three possible costing methods, initialize the continuous stock system in your company, and describe the moving average costing method.
A continuous stock system reflects the value of stock postings by means of monetary transactions in terms of the accounting system. These monetary transactions are carried out only when the items defined as WH items are received or released from the stock. A continuous stock system should be determined during basic initialization before any transactions have been posted. The stock account reflects the stock final value and recorded in most of the stock transactions in SAP business one.
A warehouse item is linked to a stock account. As you purchase this item by the purchasing documents, the balance of the stock account increases. When you sell this item using sales document, the balance of the stock account decreases.
There are three possible costing methods used for calculating the inventory. First one is moving average. This option calculates the inventory value by the item’s cost price. Next is the standard. This option calculates the inventory value by a fixed price. The items standard price should be fixed before starting to work your the company. The last one is FIFO. This option calculates the inventory value by the FIFO method( first in first out). Each inventory receipt transaction creates a layer or quantity related to costs; each inventory release transactions will use quantities and their corresponding costs from the first open layer or layers.
Check the box ‘inventory valuation by’ to initialize the stock system. Define primary G/L accounts to be selected as default in new warehouses, item groups and item master data. Set G/L accounts in the item master data window.
Initializing the continuous stock system: under administration, system initialization, then company details with the basic initialization tab page. First check the box ‘inventory valuation by’, in order to initialize a continuous stock system. As a result the following fields will be displayed. In the inventory valuation by, chose from the drop down menu one of the three options- moving average, standard or FIFO. Starting from version 2004 it is possible to change this method in any time. The default costing method for the new items is taken from the linked item groups, and the costing method of new item groups is then selected in this field. A new company is created with the moving average inventory valuation method as a default. The next is ‘handle price system from the warehouse’ check this box to manage separately the cost of each of the items in the warehouse. Use purchase account posting system. This box is available in only certain localizations. Check this box if you want to document your inventory transactions on the expenses side, and as well as conducting a continuous stock system. Each journal entry would have additional rows reflecting the companies expenses. Additional documentation is provided. Next area is ‘ allow stock release without cost price’ . check this box to allow stock release transaction with zero value. Thus the inventory valuation will not be affected. Note that the box ‘inventory valuation by’ cannot be checked after stock costing have been recorded. Moreover you cannot clear this box after the creation of an automatic stock posting. For example, delivery, goods received,etc.
Detailed information about the stock G/L account is attached later. The stock account reflects the stock final value, and is recorded in most of the stock transactions in SAP business one. Cost of goods sold is used in good delivery, invoices and to the returning account used in the AR returns and AR credit memos. Next is the allocation account. This account is used as an offsetting account in the goods, CPOs and AP credit memos. The balance of this G/L account reflects the total amount of open goods receive PL and good returns. Then comes the variance account. This account is used only in the standard price inventory system. In certain scenario, in case there are differences between the standard price and the actual price in the purchasing document, these differences would be recorded in the variance account. Examples are provided later. Then its sales returns. This is an offsetting account to the cost of goods sold account used in the AR returns and AR credit memos. Goods clearing account is an offsetting account to the allocation costs used when enclosing goods received POs or goods returns. In this case, no inventory entry is registered, however a journal entry is created including this G/ L account. Next is the expenses clearing account. If you choose to additional start with expenses you need to specify an offsetting G/L account to the stock account for clearing the journal entries created by AP invoices and goods received POs. note that this G/L account is involved with the journal entries whenever the allocation account is also involved. The stock account balance plus the sales returns account balance reflect the the total stock value.
Setting of G/L accounts in the item master data: select administration. Under it system initialization, then general settings, and finally the inventory tab page. Under the default warehouse, choose from the dropdown menu the default warehouse that is being used by your company. Set G/L account by. Use the dropdown menu to select the required method by which you would like to set the G/L accounts connected to your items. First is WH. Initially you need to find the warehouse window. Locate it under administration, definitions, inventory , warehouses an finally accounting tab page. Next is item group. In G/L account in order to find it you need to find the item groups window. Locate it under administration, definitions, inventory , item group. Define an accounting tab page. Next is the item level. So in this method in order to define G/L accounts for each item manually, via inventory, item master data, inventory tab page. Auto – add all the new items to the warehouse. Check this box that you wish SAP business one to add all the existing warehouses to every new item and every new added warehouse to all the existing items.
General remarks: it is generally recommended to define a separate warehouse for fixed asset items. In all three costing methods, the price calculated for the items is in the local currency. Starting in version 2004, it is possible to whether the row level additional expenses will affect the inventory valuation in purchasing documents.
When managing a continuous stock system by moving average, a stock receipt will debit the stock account of each warehouse, according to the price entered in the document. You can see that the vendor or the allocation account is credited and the stock account is debited according to the value of the cost price. This price will also update the item’s cost price according to a calculation formula relevant to the moving average system.
The moving average costing method: a stock release posting will credit the stock or sales returns account according to the items cost price. Stock release documents do not affect the cost price of your items. Note that the item prices recorded in the A/R credit memes and returns do not influence the cost price and are not considered to the calculation of the journal entries reflecting the inventory value , which these documents create.
The following demonstration shows the influence of release and receipt documents on the stock accounts and on the items cost pricing. This will not include all the possible journal entries created by release and receipt documents.
First take a look at the items managed by the moving average costing method. Under the inventory data tab page in the field costing method, you can see that the selected costing method is moving average. It is also possible to change the costing method into standard or FIFO. These will be discussed later. The default costing method for an item is taken from the linked item group. the costing method selected in group is the method selected in covering detail in basic initialization tab page, in the field inventory valuation by. Starting in version 2004, it is possible to change the costing method of an item. However, only if it is not linked to any open documents and its on hand stock is zero. If the box handle price system through warehouses is checked under system initialization in basic initialization tab page., the cost price will be ,managed and calculated separately, for each item in each warehouse and will be displayed in the warehouse row in the table. Here you can see that each of the displayed items are displayed along with the corresponding cost price. The moving average price which is the cost price will be displayed here after the inventory transactions will be carried out in SAP business one. You can see that every warehouse in the table is linked to G/L accounts according to the field set G/L accounts by. You can see the stock G/L account which is the main account, in which the inventory valuation is recorded. Lets see examples of journal entries created in working of a continuous stock system by the moving average costing method. Lets start with the goods receipt PO. Lets select a business partner and an item. first some prerequisites. Make sure that the business partner is tax exempted and that the item is not tax liable and is defined with the moving average costing method. Note that the warehouse specified under the item number one is the warehouse number one. Lets add this document. Lets browse back and display its journal entry. The debit and credit amounts are calculated by multiplying the quantity of the item in the document by the prices specified in the goods received. You can see that one multiplied by one hundred equals one hundred and this is the amount displayed in the journal entry. Let take a look at the item master data under the inventory data tab page and you can see that the cost price is calculated as one hundred. Lets open the journal entry again. You can see that the stock account recorded in the journal entry is stock one which is linked to warehouse number one as specified in the item master data. You can see that the stock account is debited. Therefore the items inventory valuation increases. You can see the allocation account here. Remember that a this allocation account functions as a temporary alternative to the vendors account which will be cleared only after you create a corresponding A/P invoice or goods return document. Lets copy this goods received PO to an A/P invoice. Lets select the vendor. Click on goods receipt PO and select the goods receipt PO and just create it. Lets add the document. Browse back to create it again and click this link arrow to display its related journal entry. When you base an A/P invoice in a goods received PO, the allocation account is debited. Counter to it is the vendors account which is credited. Note that the allocation account serves as a clearing account here. It is debited in the account in which it was credited in the goods received PO created earlier. Lets take a look at the item. You can see that the cost price is still one hundred since we did not change its receipt price. Now lets add an independent A/P invoice. This is an invoice that is not based on any other document. Select a vendor and now type a price of one hundred and twenty US dollars. Lets add the document. Browse back and display the journal entry. You can see that the debit and credit amounts are now one hundred and twenty and not one hundred. This is since the price form the document is taken and multiplied by the quantity. Note that now the stock account is recorded in the journal entry and not the allocation account. Lets take a look at the item master data. You can see that the cost price of the item is changed to one hundred and ten. This is because the first item received in the stock was received for one hundred dollars and the second item received was for one hundred and twenty dollars. The moving average of the two items with these two prices results in one hundred and ten. Now let us take a look at some release documents. Lets begin with delivery. Select a business partner and assign them. Lets deliver this item with a quantity of one and a price of one hundred. Lets take a look at the items cost price and consider that it is one hundred and ten. Lets add the document and browse back to display its related journal entry. You can see that although the price in the delivery document was one hundred dollars, the journal entry created here reports one hundred and ten both in the debit and credit sides. These are the amounts calculated by multiplying the quantity by each one of the items in the delivery document by their cost price. The cost of goods sold account functions as on offsetting account to the stock account and the stock account is credited. Thus the item inventory valuation is decreased. Now lets base an A/R invoice on this delivery. Again you can see here that the price is one hundred. Lets add the document and browse back to display the journal entry. When you base an A/R invoice on a delivery, no stock posting is created. Thus only a regular journal entry is created in the accounting system. You can see that there are no stock accounts here. Only the customer and the revenues account. Now lets add an independent A/R invoice. Again lets select a customer and an item. Lets add the document and browse back and look at its linked journal entry. This journal entry includes both the deliveries and inventory transaction represented by these two rows and the invoices accounting transaction represented by these two rows. Now lets see an inventory document. Lets ho to inventory and select inventory transaction and then select stock transfer. Lets transfer one unit of this item from warehouse number one to warehouse number two. Lets add the document and get back to see its linked journal entry. If you specify different stock accounts for your different warehouses, the stock transferred transaction will credit the stock transaction to the release warehouse. In this case the warehouse number one. And debit the stock account of the received warehouse. In this case the warehouse number two. The release and the receipt prices are set by the moving average price of the item in the release warehouse. You could see that one hundred and ten is displayed for warehouse number one.
Moving average in the production process: in a production order for a bill of materials item the parent item price will be calculated according to the moving average prices of its child items. You cannot change its price. There are two methods for issuing items in production orders. Additional information is provided in a separate lesson. One method is manual. In this method, you document the parent items receipt and the child items release in two separate steps. Second is the backflush. In this method, the parent items receipt and the child item release are recorded simultaneously. If your company is upgraded from a version before 2004, the old production method also will be available.
Lets take a look at the influence of the production process on the continuous stock system. First take a look at the define of bill materials window. Here you can see the parent product which is going to be received in warehouse number two. The parent product is comprised of this child item with a quantity of two which is going to be released from warehouse number one. Both the parent and child items are defined with moving average as their costing method. The child items cost price is one hundred in warehouse number one. Lets open a production order. Select the parent item .in the production order, the parent items price will be calculated according to the moving average prices of its child items. It is not possible to change this price. There are two methods for issuing items in production order which are manual and the backflush. Additional information is provided in a separate document. Manual: In this method, you document the parent items receipt and the child items release in two separate steps. First lets add this production order in a planned status. Browse back and change the status to release. Update the window, right click the mouse and select the issue components. This action will release the child items from the warehouse number one. Lets add the document. Browse back and take a look at the journal entry. You can see that the stock account at the child release in warehouse is credited and the work in progress account is debited. The credit and debit account amounts are calculated according to the moving average prices of the child item. You can see that the child items moving average price is one hundred in warehouse number one, multiplied by two gives you two hundred. Now lets receive the parent account into the warehouse number two. Select report completion and click on add. Browse back and take a look at the journal entry. You can see that the work in process account is credited and the stock account of warehouse number two is debited. Lets go back to the production order window. If we had selected the issue method as backflush when the production order was completed, the stock account of the parent item warehouse will be debited and the stock account of the child item warehouses would be credited. Again the release and the receipt prices are set by the moving average prices of the child items. However in the backflush method there is no issue for production but the two journal entries shown to you are just created simultaneously . when the issue method is set to manual, there might be a situation where the cost price of the item changes during the production process. For example this items cost price used to be one hundred dollars. An issue component took place , but then before the report completion was added the moving average price of the item was changed to one hundred and ten dollars instead of one hundred dollars. In this case under the summary tab page you can see the following data. The actual components value is two hundred ,however the actual products value is two hundred and twenty. Therefore there is a variance of twenty dollars. This variance would be reported as you close the production order. You can see that the work in process materials and the work in process variance are debited and credited respectively.
Working with negative stock: in a situation in the item quantity when the stock is zero or negative, the creation of the stock receipt document changes the cost price of the item to be entered in that receipt document.
You are now able to describe the continuous stock system, describe the three possible costing methods, initialize the continuous stock system in your computer and also be able to describe the moving average costing method.
A continuous stock system reflects the value of stock postings by means of monetary transactions in terms of the accounting system. These monetary transactions are carried out only when the items defined as WH items are received or released from the stock. A continuous stock system should be determined during basic initialization before any transactions have been posted. The stock account reflects the stock final value and recorded in most of the stock transactions in SAP business one.
A warehouse item is linked to a stock account. As you purchase this item by the purchasing documents, the balance of the stock account increases. When you sell this item using sales document, the balance of the stock account decreases.
There are three possible costing methods used for calculating the inventory. First one is moving average. This option calculates the inventory value by the item’s cost price. Next is the standard. This option calculates the inventory value by a fixed price. The items standard price should be fixed before starting to work your the company. The last one is FIFO. This option calculates the inventory value by the FIFO method( first in first out). Each inventory receipt transaction creates a layer or quantity related to costs; each inventory release transactions will use quantities and their corresponding costs from the first open layer or layers.
Check the box ‘inventory valuation by’ to initialize the stock system. Define primary G/L accounts to be selected as default in new warehouses, item groups and item master data. Set G/L accounts in the item master data window.
Initializing the continuous stock system: under administration, system initialization, then company details with the basic initialization tab page. First check the box ‘inventory valuation by’, in order to initialize a continuous stock system. As a result the following fields will be displayed. In the inventory valuation by, chose from the drop down menu one of the three options- moving average, standard or FIFO. Starting from version 2004 it is possible to change this method in any time. The default costing method for the new items is taken from the linked item groups, and the costing method of new item groups is then selected in this field. A new company is created with the moving average inventory valuation method as a default. The next is ‘handle price system from the warehouse’ check this box to manage separately the cost of each of the items in the warehouse. Use purchase account posting system. This box is available in only certain localizations. Check this box if you want to document your inventory transactions on the expenses side, and as well as conducting a continuous stock system. Each journal entry would have additional rows reflecting the companies expenses. Additional documentation is provided. Next area is ‘ allow stock release without cost price’ . check this box to allow stock release transaction with zero value. Thus the inventory valuation will not be affected. Note that the box ‘inventory valuation by’ cannot be checked after stock costing have been recorded. Moreover you cannot clear this box after the creation of an automatic stock posting. For example, delivery, goods received,etc.
Detailed information about the stock G/L account is attached later. The stock account reflects the stock final value, and is recorded in most of the stock transactions in SAP business one. Cost of goods sold is used in good delivery, invoices and to the returning account used in the AR returns and AR credit memos. Next is the allocation account. This account is used as an offsetting account in the goods, CPOs and AP credit memos. The balance of this G/L account reflects the total amount of open goods receive PL and good returns. Then comes the variance account. This account is used only in the standard price inventory system. In certain scenario, in case there are differences between the standard price and the actual price in the purchasing document, these differences would be recorded in the variance account. Examples are provided later. Then its sales returns. This is an offsetting account to the cost of goods sold account used in the AR returns and AR credit memos. Goods clearing account is an offsetting account to the allocation costs used when enclosing goods received POs or goods returns. In this case, no inventory entry is registered, however a journal entry is created including this G/ L account. Next is the expenses clearing account. If you choose to additional start with expenses you need to specify an offsetting G/L account to the stock account for clearing the journal entries created by AP invoices and goods received POs. note that this G/L account is involved with the journal entries whenever the allocation account is also involved. The stock account balance plus the sales returns account balance reflect the the total stock value.
Setting of G/L accounts in the item master data: select administration. Under it system initialization, then general settings, and finally the inventory tab page. Under the default warehouse, choose from the dropdown menu the default warehouse that is being used by your company. Set G/L account by. Use the dropdown menu to select the required method by which you would like to set the G/L accounts connected to your items. First is WH. Initially you need to find the warehouse window. Locate it under administration, definitions, inventory , warehouses an finally accounting tab page. Next is item group. In G/L account in order to find it you need to find the item groups window. Locate it under administration, definitions, inventory , item group. Define an accounting tab page. Next is the item level. So in this method in order to define G/L accounts for each item manually, via inventory, item master data, inventory tab page. Auto – add all the new items to the warehouse. Check this box that you wish SAP business one to add all the existing warehouses to every new item and every new added warehouse to all the existing items.
General remarks: it is generally recommended to define a separate warehouse for fixed asset items. In all three costing methods, the price calculated for the items is in the local currency. Starting in version 2004, it is possible to whether the row level additional expenses will affect the inventory valuation in purchasing documents.
When managing a continuous stock system by moving average, a stock receipt will debit the stock account of each warehouse, according to the price entered in the document. You can see that the vendor or the allocation account is credited and the stock account is debited according to the value of the cost price. This price will also update the item’s cost price according to a calculation formula relevant to the moving average system.
The moving average costing method: a stock release posting will credit the stock or sales returns account according to the items cost price. Stock release documents do not affect the cost price of your items. Note that the item prices recorded in the A/R credit memes and returns do not influence the cost price and are not considered to the calculation of the journal entries reflecting the inventory value , which these documents create.
The following demonstration shows the influence of release and receipt documents on the stock accounts and on the items cost pricing. This will not include all the possible journal entries created by release and receipt documents.
First take a look at the items managed by the moving average costing method. Under the inventory data tab page in the field costing method, you can see that the selected costing method is moving average. It is also possible to change the costing method into standard or FIFO. These will be discussed later. The default costing method for an item is taken from the linked item group. the costing method selected in group is the method selected in covering detail in basic initialization tab page, in the field inventory valuation by. Starting in version 2004, it is possible to change the costing method of an item. However, only if it is not linked to any open documents and its on hand stock is zero. If the box handle price system through warehouses is checked under system initialization in basic initialization tab page., the cost price will be ,managed and calculated separately, for each item in each warehouse and will be displayed in the warehouse row in the table. Here you can see that each of the displayed items are displayed along with the corresponding cost price. The moving average price which is the cost price will be displayed here after the inventory transactions will be carried out in SAP business one. You can see that every warehouse in the table is linked to G/L accounts according to the field set G/L accounts by. You can see the stock G/L account which is the main account, in which the inventory valuation is recorded. Lets see examples of journal entries created in working of a continuous stock system by the moving average costing method. Lets start with the goods receipt PO. Lets select a business partner and an item. first some prerequisites. Make sure that the business partner is tax exempted and that the item is not tax liable and is defined with the moving average costing method. Note that the warehouse specified under the item number one is the warehouse number one. Lets add this document. Lets browse back and display its journal entry. The debit and credit amounts are calculated by multiplying the quantity of the item in the document by the prices specified in the goods received. You can see that one multiplied by one hundred equals one hundred and this is the amount displayed in the journal entry. Let take a look at the item master data under the inventory data tab page and you can see that the cost price is calculated as one hundred. Lets open the journal entry again. You can see that the stock account recorded in the journal entry is stock one which is linked to warehouse number one as specified in the item master data. You can see that the stock account is debited. Therefore the items inventory valuation increases. You can see the allocation account here. Remember that a this allocation account functions as a temporary alternative to the vendors account which will be cleared only after you create a corresponding A/P invoice or goods return document. Lets copy this goods received PO to an A/P invoice. Lets select the vendor. Click on goods receipt PO and select the goods receipt PO and just create it. Lets add the document. Browse back to create it again and click this link arrow to display its related journal entry. When you base an A/P invoice in a goods received PO, the allocation account is debited. Counter to it is the vendors account which is credited. Note that the allocation account serves as a clearing account here. It is debited in the account in which it was credited in the goods received PO created earlier. Lets take a look at the item. You can see that the cost price is still one hundred since we did not change its receipt price. Now lets add an independent A/P invoice. This is an invoice that is not based on any other document. Select a vendor and now type a price of one hundred and twenty US dollars. Lets add the document. Browse back and display the journal entry. You can see that the debit and credit amounts are now one hundred and twenty and not one hundred. This is since the price form the document is taken and multiplied by the quantity. Note that now the stock account is recorded in the journal entry and not the allocation account. Lets take a look at the item master data. You can see that the cost price of the item is changed to one hundred and ten. This is because the first item received in the stock was received for one hundred dollars and the second item received was for one hundred and twenty dollars. The moving average of the two items with these two prices results in one hundred and ten. Now let us take a look at some release documents. Lets begin with delivery. Select a business partner and assign them. Lets deliver this item with a quantity of one and a price of one hundred. Lets take a look at the items cost price and consider that it is one hundred and ten. Lets add the document and browse back to display its related journal entry. You can see that although the price in the delivery document was one hundred dollars, the journal entry created here reports one hundred and ten both in the debit and credit sides. These are the amounts calculated by multiplying the quantity by each one of the items in the delivery document by their cost price. The cost of goods sold account functions as on offsetting account to the stock account and the stock account is credited. Thus the item inventory valuation is decreased. Now lets base an A/R invoice on this delivery. Again you can see here that the price is one hundred. Lets add the document and browse back to display the journal entry. When you base an A/R invoice on a delivery, no stock posting is created. Thus only a regular journal entry is created in the accounting system. You can see that there are no stock accounts here. Only the customer and the revenues account. Now lets add an independent A/R invoice. Again lets select a customer and an item. Lets add the document and browse back and look at its linked journal entry. This journal entry includes both the deliveries and inventory transaction represented by these two rows and the invoices accounting transaction represented by these two rows. Now lets see an inventory document. Lets ho to inventory and select inventory transaction and then select stock transfer. Lets transfer one unit of this item from warehouse number one to warehouse number two. Lets add the document and get back to see its linked journal entry. If you specify different stock accounts for your different warehouses, the stock transferred transaction will credit the stock transaction to the release warehouse. In this case the warehouse number one. And debit the stock account of the received warehouse. In this case the warehouse number two. The release and the receipt prices are set by the moving average price of the item in the release warehouse. You could see that one hundred and ten is displayed for warehouse number one.
Moving average in the production process: in a production order for a bill of materials item the parent item price will be calculated according to the moving average prices of its child items. You cannot change its price. There are two methods for issuing items in production orders. Additional information is provided in a separate lesson. One method is manual. In this method, you document the parent items receipt and the child items release in two separate steps. Second is the backflush. In this method, the parent items receipt and the child item release are recorded simultaneously. If your company is upgraded from a version before 2004, the old production method also will be available.
Lets take a look at the influence of the production process on the continuous stock system. First take a look at the define of bill materials window. Here you can see the parent product which is going to be received in warehouse number two. The parent product is comprised of this child item with a quantity of two which is going to be released from warehouse number one. Both the parent and child items are defined with moving average as their costing method. The child items cost price is one hundred in warehouse number one. Lets open a production order. Select the parent item .in the production order, the parent items price will be calculated according to the moving average prices of its child items. It is not possible to change this price. There are two methods for issuing items in production order which are manual and the backflush. Additional information is provided in a separate document. Manual: In this method, you document the parent items receipt and the child items release in two separate steps. First lets add this production order in a planned status. Browse back and change the status to release. Update the window, right click the mouse and select the issue components. This action will release the child items from the warehouse number one. Lets add the document. Browse back and take a look at the journal entry. You can see that the stock account at the child release in warehouse is credited and the work in progress account is debited. The credit and debit account amounts are calculated according to the moving average prices of the child item. You can see that the child items moving average price is one hundred in warehouse number one, multiplied by two gives you two hundred. Now lets receive the parent account into the warehouse number two. Select report completion and click on add. Browse back and take a look at the journal entry. You can see that the work in process account is credited and the stock account of warehouse number two is debited. Lets go back to the production order window. If we had selected the issue method as backflush when the production order was completed, the stock account of the parent item warehouse will be debited and the stock account of the child item warehouses would be credited. Again the release and the receipt prices are set by the moving average prices of the child items. However in the backflush method there is no issue for production but the two journal entries shown to you are just created simultaneously . when the issue method is set to manual, there might be a situation where the cost price of the item changes during the production process. For example this items cost price used to be one hundred dollars. An issue component took place , but then before the report completion was added the moving average price of the item was changed to one hundred and ten dollars instead of one hundred dollars. In this case under the summary tab page you can see the following data. The actual components value is two hundred ,however the actual products value is two hundred and twenty. Therefore there is a variance of twenty dollars. This variance would be reported as you close the production order. You can see that the work in process materials and the work in process variance are debited and credited respectively.
Working with negative stock: in a situation in the item quantity when the stock is zero or negative, the creation of the stock receipt document changes the cost price of the item to be entered in that receipt document.
You are now able to describe the continuous stock system, describe the three possible costing methods, initialize the continuous stock system in your computer and also be able to describe the moving average costing method.
Friday, November 11
Business Partners in SAP Business One
After Reading this post, you will be able to outline the three types of business partners that exist in SAP business one. You will also be able to describe how the business partners records are structured, including how to activate and deactivate a partner record.
There are three types of business partners in SAP business one. These are vendors , customers and leads. They are used in the following cases. A vendor master record is used to handle all the purchasing transactions. When the balances are integrated with the general ledger or accounting system, through one or more accounts. A customer master record id used to handle all sales transactions. Customer balances are also integrated to the general ledger through one or more control accounts. A lead can be used to handle sales opportunities, orders and quotations. However they cannot affect the accounting side of the system. If you want to post an invoice against the lead you must first convey them to a customer. It is also important to note that the business partner code must be unique for customers, vendors and leads , as well as general ledger account codes. If you want a customer to also be a vendor, you must create a separate business partner record.
The business partner master record contains of large amount of useful data, ranging from the addresses of the business partner , the currency that they trade in, their account balances, the contacts for the business partner, the sales employee assigned to the partner, and a group against which you can report about the business partner. We will discuss these throughout the topic.
The business partner master record contains the various balances for a customer. These balances are displayed depending upon the currency of the business partner. The balances shown are the account balance, the delivery balance , the order balance and the opportunities. The account balance is a combination of open invoices that have not been paid. Open deliveries list those deliveries that have not yet been invoiced. The order balance list the open orders that have not been delivered. And the opportunities aree opportunities that are not yet been closed or turned into an order. In SAP business one it is possible to create a report from these balances showing the data. This is often a useful overview of the business partners activity. It is also possible to view this report in a graph format.
Lets see a demo of the possible type of business partners as well as checking the balance of the business partners account balance and seeing a breakdown of a balance within a report. In the screen showing the general layout of the master record, there are three different types of business partners in the dropdown list. If we open a business partner, we can see that the field is populated . here we choose a customer from the system. And we see that the business partner type is set to customer. We also notice the currency of the business partner which is set to british pounds. And this system is said to be on the national or local currency . on the right hand side of the screen we can notice the balances that we discussed earlier with graph icons next to the balances.
In SAP business one it is possible to create relationships between business partners of the same type. For example one customer might be the parent of another customer. The parent customer may pay for the invoices raised against its subsidiaries or it might accept invoices raised against the leverage to the subsidiaries. These two types of relationships are possible with SAP business one.
In SAP business one it is also possible to categorize the business partners into groups. These groups can range from the size of the partner, for example the big partner groups, the small partner groups or the very important partners. Or it could be related to the products they sell or purchase such as sports equipment or clothing. Groups can be further broken down by the type of business partner. You can have a customer group and a vendor group. They are an extremely useful way of breaking down of the business partners for reporting and analysis. Let us see how to create a new group in the next demonstration.
In SAP business one there are 64 different properties that you can assign to any individual business partner. These properties can be used in numerous ways. The most common use of the property is to indicate the location of the business partner. The default setting in the business one for the top eight properties is to set a location. However all of these locations can be edited by the user. The locations might range from north to south or from continent to continent. Business partners can be grouped by property for further analysis.
In this demonstration we will learn how to add a new property and a group to a business partner. And then view a source analysis report using the group and property name. we first have to open a business partner data record.
In SAP business one it is possible to assign multiple contact persons for each business partner. A tab is available for this information in the business partner master data. The tab includes general details such as contact numbers and name, as well as remark fields. It is also possible in business one to select a contact as a default contact and have this person as the first port of call on any source or a document.
In SAP business one, there is a possibility of having both the billing for shipping and the delivery addresses . this is important as the company does not always want to ship to the same location as warehouse or store every time. A company may also have multiple offices and depending on the amount of the amount of invoice they may want to bill a different location. Now we shall she how to enter a ship- to address.
In this demonstration we are going to create a new default contact person for a business partner. We will also create a shipping or a delivery address for goods to be sent to. For creating a new contact, we click on the contacts tab. We then select define new and begin to fill the data fields on the right hand side of the screen. We are going to create a source contact and we are going to update the email address, the telephone number. You can see the other settings there. Also important is the remarks field where we can store information and about a particular contact, their interests, their likes and dislikes. We should just finish completing that. Once we have entered all the information we should just click update to update the customers record. To make the contact the default, you will see a button at the bottom of the screen which we can use to set the contact person as the default. When they are the default their name appears in board. To add a ship- to address click on the addresses tab ,and click on the arrow next to ship-to. This then opens up and gives us the option of defining it. You click on this and then begin filling the data on the right hand side of the screen. Let us set us an address in London for example. Then we click update. We once again make this the default address by selecting it and then setting it as default.
There are many situations where a customer may want to block transactions to a particular supplier or customer or business partner. In SAP business one it is possible to set a customer or supplier as active or inactive. Business one gives you the option of placing a partner on hold so that no transactions can be made until it has been unfrozen. It also gives you the option to making it inactive for a set period of time. This could be used for some promotions.
In SAP business one, it is sometimes necessary to deactivate a business partner record. They may be for example having a number of invoices and you do not want to take any more orders until these invoices have been paid. We do this by making the customer inactive or on hold. Here we open the transport master record and we tick the on hold button and update the business partner master record. This shows top transactions being made against trandsports. To check this we open the sales order. Now we select trandsports as our business partner. As we select this on the board, we receive a warning that the customer is frozen. We can overwrite this by selecting yes. We now add an item to the order, the delivery dates and click add. When we confirm the act, we receive the error telling that the customer is frozen. Hence we are unable to make any transactions against this customer because it is on hold. To activate this partner again we untick the on- hold box. In the business partner master record.
You have now completed the topic in business partners in SAP business one. After this session, now you will be able to outline the three types of business partners available, and the transactions that are possible against each of the type. You will also be able to describe how the business partner records are structured ,including the process of making a business partner active.
There are three types of business partners in SAP business one. These are vendors , customers and leads. They are used in the following cases. A vendor master record is used to handle all the purchasing transactions. When the balances are integrated with the general ledger or accounting system, through one or more accounts. A customer master record id used to handle all sales transactions. Customer balances are also integrated to the general ledger through one or more control accounts. A lead can be used to handle sales opportunities, orders and quotations. However they cannot affect the accounting side of the system. If you want to post an invoice against the lead you must first convey them to a customer. It is also important to note that the business partner code must be unique for customers, vendors and leads , as well as general ledger account codes. If you want a customer to also be a vendor, you must create a separate business partner record.
The business partner master record contains of large amount of useful data, ranging from the addresses of the business partner , the currency that they trade in, their account balances, the contacts for the business partner, the sales employee assigned to the partner, and a group against which you can report about the business partner. We will discuss these throughout the topic.
The business partner master record contains the various balances for a customer. These balances are displayed depending upon the currency of the business partner. The balances shown are the account balance, the delivery balance , the order balance and the opportunities. The account balance is a combination of open invoices that have not been paid. Open deliveries list those deliveries that have not yet been invoiced. The order balance list the open orders that have not been delivered. And the opportunities aree opportunities that are not yet been closed or turned into an order. In SAP business one it is possible to create a report from these balances showing the data. This is often a useful overview of the business partners activity. It is also possible to view this report in a graph format.
Lets see a demo of the possible type of business partners as well as checking the balance of the business partners account balance and seeing a breakdown of a balance within a report. In the screen showing the general layout of the master record, there are three different types of business partners in the dropdown list. If we open a business partner, we can see that the field is populated . here we choose a customer from the system. And we see that the business partner type is set to customer. We also notice the currency of the business partner which is set to british pounds. And this system is said to be on the national or local currency . on the right hand side of the screen we can notice the balances that we discussed earlier with graph icons next to the balances.
In SAP business one it is possible to create relationships between business partners of the same type. For example one customer might be the parent of another customer. The parent customer may pay for the invoices raised against its subsidiaries or it might accept invoices raised against the leverage to the subsidiaries. These two types of relationships are possible with SAP business one.
In SAP business one it is also possible to categorize the business partners into groups. These groups can range from the size of the partner, for example the big partner groups, the small partner groups or the very important partners. Or it could be related to the products they sell or purchase such as sports equipment or clothing. Groups can be further broken down by the type of business partner. You can have a customer group and a vendor group. They are an extremely useful way of breaking down of the business partners for reporting and analysis. Let us see how to create a new group in the next demonstration.
In SAP business one there are 64 different properties that you can assign to any individual business partner. These properties can be used in numerous ways. The most common use of the property is to indicate the location of the business partner. The default setting in the business one for the top eight properties is to set a location. However all of these locations can be edited by the user. The locations might range from north to south or from continent to continent. Business partners can be grouped by property for further analysis.
In this demonstration we will learn how to add a new property and a group to a business partner. And then view a source analysis report using the group and property name. we first have to open a business partner data record.
In SAP business one it is possible to assign multiple contact persons for each business partner. A tab is available for this information in the business partner master data. The tab includes general details such as contact numbers and name, as well as remark fields. It is also possible in business one to select a contact as a default contact and have this person as the first port of call on any source or a document.
In SAP business one, there is a possibility of having both the billing for shipping and the delivery addresses . this is important as the company does not always want to ship to the same location as warehouse or store every time. A company may also have multiple offices and depending on the amount of the amount of invoice they may want to bill a different location. Now we shall she how to enter a ship- to address.
In this demonstration we are going to create a new default contact person for a business partner. We will also create a shipping or a delivery address for goods to be sent to. For creating a new contact, we click on the contacts tab. We then select define new and begin to fill the data fields on the right hand side of the screen. We are going to create a source contact and we are going to update the email address, the telephone number. You can see the other settings there. Also important is the remarks field where we can store information and about a particular contact, their interests, their likes and dislikes. We should just finish completing that. Once we have entered all the information we should just click update to update the customers record. To make the contact the default, you will see a button at the bottom of the screen which we can use to set the contact person as the default. When they are the default their name appears in board. To add a ship- to address click on the addresses tab ,and click on the arrow next to ship-to. This then opens up and gives us the option of defining it. You click on this and then begin filling the data on the right hand side of the screen. Let us set us an address in London for example. Then we click update. We once again make this the default address by selecting it and then setting it as default.
There are many situations where a customer may want to block transactions to a particular supplier or customer or business partner. In SAP business one it is possible to set a customer or supplier as active or inactive. Business one gives you the option of placing a partner on hold so that no transactions can be made until it has been unfrozen. It also gives you the option to making it inactive for a set period of time. This could be used for some promotions.
In SAP business one, it is sometimes necessary to deactivate a business partner record. They may be for example having a number of invoices and you do not want to take any more orders until these invoices have been paid. We do this by making the customer inactive or on hold. Here we open the transport master record and we tick the on hold button and update the business partner master record. This shows top transactions being made against trandsports. To check this we open the sales order. Now we select trandsports as our business partner. As we select this on the board, we receive a warning that the customer is frozen. We can overwrite this by selecting yes. We now add an item to the order, the delivery dates and click add. When we confirm the act, we receive the error telling that the customer is frozen. Hence we are unable to make any transactions against this customer because it is on hold. To activate this partner again we untick the on- hold box. In the business partner master record.
You have now completed the topic in business partners in SAP business one. After this session, now you will be able to outline the three types of business partners available, and the transactions that are possible against each of the type. You will also be able to describe how the business partner records are structured ,including the process of making a business partner active.
SAP Business Intelligence
This post is an introduction to SAP business intelligence. Lets talk about the issues the business intelligence looks to solve, the origins of these problems, and the need to use business intelligence and the reasons why it is used and an overview as to how SAP has implemented this as an architecture.
Lets start now. For years companies have been gathering data using many software products. They have been using different data processing systems, ERP which stands for Enterprise Resource Planning and also CRM systems. So anything that has to do with data entry will have data capture. Several Bytes of data has been gathered. Companies have been archiving that data where it has not been retrieved anymore.
Another issue that is faced by the companies is that information is globally distributed. Companies have data which has been collected globally. All types of data is on different types of systems, databases, operating systems, and platforms. This will represent another challenge for companies.
Also when you look at the amount of data that has been amassed over the years, this will only continue to grow. This can be seen as a positive or a negative aspect. But to the business analyst, historical data will always seem to be very useful and is seen as a positive factor. Another factor in this stage is that the companies need to stay ahead in competition and to do so they need to be able to make strategic decisions.
So today we see a lot of asking questions companies ask like- what kind of products are maing us the most profits? , how are our sales doing compared to last year? , how can I predict turnover for the coming year? You can see that these questions are specific to the sales part. But if you made an analogy, for example human resources, then the questions asked can be like which companies have led as compared to last year, how many new things do we have?
What are the various possible solutions? First of all it tries to aggregate data into a place from where it can be accessed. This increases the performance of the data for which the report we have made. It also tries to take up all the business processes into consideration, from human resources to sales, marketing, development. It combines it all into an accessible to create reports and help to chart the companies to make quick decisions., the information that is needed to create these reports. Which in turn helps the components to make decisions.
So how does SAP Business intelligence do this. First of all it provides with data warehouse, where you can retrieve data from. It retrieves data from different source systems and aggregates all into one congregation. The second step is the business intelligence platform, which cleanses the data and then duplicates and transforms so that it can be used later.
And on top of that we have the analysis tools that will be used to speed up reports for the data in the business intelligence platform. This will raise a question- whose job is this? You of course. You will be responsible for implementing these solutions as a business intelligence consultant. You will help the organization be more competitive, help to increase revenue. In this way you will provide value to the company. In turn the company sees you as an asset.
The SAP business intelligence components would be the data warehouse, business intelligence platform, and the business explorer.
First of all the data warehouse extracts data from multiple sources and provides a single source of access to the data. We can extract data from all of the databases and web services and files like excel files. And hence we can access data from one single source.
Next is the business intelligence platform. This is the analytical engine, the brain behind the scene. The main aggregation takes place, slicing and dicing of the data takes place here and it provides data for the reports to be made.
The last part of the system is the business explorer. This is different form others. This is the part that everyone sees. It displays reports charts and graphs. It shows the statistics. It shows a couple of tools available in the SAP like the Bex analyzer, Bex web analyzer, Bex query designer, etc.
SAP is the provider for solutions like other companies like COGNOS and MICROSOFT. SAP business objects was recently acquired by the SAP to help directly compete with all the other providers. This shows that SAP regards business intelligence as of core importance, and it would be a good field to start a career in.
Lets start now. For years companies have been gathering data using many software products. They have been using different data processing systems, ERP which stands for Enterprise Resource Planning and also CRM systems. So anything that has to do with data entry will have data capture. Several Bytes of data has been gathered. Companies have been archiving that data where it has not been retrieved anymore.
Another issue that is faced by the companies is that information is globally distributed. Companies have data which has been collected globally. All types of data is on different types of systems, databases, operating systems, and platforms. This will represent another challenge for companies.
Also when you look at the amount of data that has been amassed over the years, this will only continue to grow. This can be seen as a positive or a negative aspect. But to the business analyst, historical data will always seem to be very useful and is seen as a positive factor. Another factor in this stage is that the companies need to stay ahead in competition and to do so they need to be able to make strategic decisions.
So today we see a lot of asking questions companies ask like- what kind of products are maing us the most profits? , how are our sales doing compared to last year? , how can I predict turnover for the coming year? You can see that these questions are specific to the sales part. But if you made an analogy, for example human resources, then the questions asked can be like which companies have led as compared to last year, how many new things do we have?
What are the various possible solutions? First of all it tries to aggregate data into a place from where it can be accessed. This increases the performance of the data for which the report we have made. It also tries to take up all the business processes into consideration, from human resources to sales, marketing, development. It combines it all into an accessible to create reports and help to chart the companies to make quick decisions., the information that is needed to create these reports. Which in turn helps the components to make decisions.
So how does SAP Business intelligence do this. First of all it provides with data warehouse, where you can retrieve data from. It retrieves data from different source systems and aggregates all into one congregation. The second step is the business intelligence platform, which cleanses the data and then duplicates and transforms so that it can be used later.
And on top of that we have the analysis tools that will be used to speed up reports for the data in the business intelligence platform. This will raise a question- whose job is this? You of course. You will be responsible for implementing these solutions as a business intelligence consultant. You will help the organization be more competitive, help to increase revenue. In this way you will provide value to the company. In turn the company sees you as an asset.
The SAP business intelligence components would be the data warehouse, business intelligence platform, and the business explorer.
First of all the data warehouse extracts data from multiple sources and provides a single source of access to the data. We can extract data from all of the databases and web services and files like excel files. And hence we can access data from one single source.
Next is the business intelligence platform. This is the analytical engine, the brain behind the scene. The main aggregation takes place, slicing and dicing of the data takes place here and it provides data for the reports to be made.
The last part of the system is the business explorer. This is different form others. This is the part that everyone sees. It displays reports charts and graphs. It shows the statistics. It shows a couple of tools available in the SAP like the Bex analyzer, Bex web analyzer, Bex query designer, etc.
SAP is the provider for solutions like other companies like COGNOS and MICROSOFT. SAP business objects was recently acquired by the SAP to help directly compete with all the other providers. This shows that SAP regards business intelligence as of core importance, and it would be a good field to start a career in.
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