Accounts payable-notes

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ACCOUNTS PAYABLE NOTES
What are Golden Rules of Account?
In Personal Account Debit the Receiver
Credit the Giver
In Real Account Debit what comes in
Credit What goes out
In Nominal Account Debit the Expenses /Losses
Credit the income/gain
What is Account Payable?
Accounts payable is a file or account sub-ledger that records amounts that a person or company owes
to suppliers, but has not paid yet (a form of debt), sometimes referred as TRADE payables. When
an invoice is received, it is added to the file, and then removed when it is paid. Thus, the A/P is a
form of credit that suppliers offer to their customers by allowing them to pay for a product or service
after it has already been received.
Example: Company Purchase some materials on credit basis, the Credit period is span of one month.
So until made payment to Vendor, it is treated as dues in Accounts Payable in balance sheet.
What are the teams in Accounts Payable?
Indexing/ sorting – Sorting team will sort the invoice according MM vendor invoice, finance vendor
invoice, Service vendor invoice, and Employee vendor invoice, date of invoice, vendor Name.
Invoice posting team – invoice posting team Posting the vendor invoices, if they found any wrong
(quantity mismatch, amount mismatch, or both , any require field is missing or not visible proper like
invoice no., vendor name etc then they post the invoice as park DOCUMENT .
Query handling Team – Query handling team release the Parking invoice by solving the query &
post that Invoice.
Payment Team – This team is responsible for all types Vendor payment – Normal Payment,
Advance payment, payment request.
Vendor Reconciliation team: The team is responsible for confirmation the vendor dues by reconcile
vendor payment history in system& Vendor Statement. If they found any dues still to be paid, they
raised supplementary payment or if they found any overpayment or duplicate payment against
duplicate invoice posting by user they raised credit memo to recovery of over payment or they
adjusted the over payment in next payment once confirmed for superior/manager.
& another responsible to handle the TDS transactions from top to bottom like Submitting the tds
amount in the bank on line, Bank challan receipt number update & TDS raised to vendor
What is Purchase Order?
Purchase order is a commercial document which is issued by the purchaser to the seller for ordering
goods or serves. Purchase order creates legal agreement between purchaser and the seller.
It contains
Name of the supplier
Description * specification of material
Quantity ordered
Date & place of delivery
What are Types of Purchase Order?
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Page 1 of 8SAP AREA: ACCOUNTS PAYABLE NOTES
17-Sep-2015http://saparea.blogspot.in/p/accounts-payable-notes.html

Standard Purchase order: This PO is created for one-time purchase of material.
Blanket Purchase Order: In this PO delivery schedule are not known clearly.
Contract Purchase Order: In this PO material required are not specified.
Planned Purchase Order: It is a long term agreement purchase Order. In this PO it specifies
materials, estimated costs, and tentative delivery schedules
What do you mean by four way matching, three Way Matching, and two way matching?
2-ways- we will compare 2 documents - match Purchase order with Invoice
Whatever you have ordered for the PO we will make the payment for the suppliers in 2-way (we will
compare two documents PO and Invoice).
Example: Suppose we had given PO for 100 items, for that we will receive invoice for 100 items. So
that we will make payment for that 100 items.
3-Way matching - we will compare 3 documents - Purchase Order + Goods receipt +Invoice
Example: Suppose we have ordered 100 items in Purchase Order. But we had received only 80 items,
but we had received invoice for 100 items. So, we will make payment for only 80 items
4-Way we will compare 4 documents – Purchase Order + Inspection + Goods Receipt +
Invoice+
Example: Suppose we have 100 items in Purchase Order .Suppers send us 80 items we will do
inspection on those items whatever we have received, IF 10 items got damaged. Finally, we are
going to make payment to the 70 items only.
What is Down payment Process flow?
This Fundamental is used to give advance payment to vendor to receive the goods. If it is declared
that material receives against advance payment in purchase order, in this situation purchase
department Notified that give down payment to vendor by create down payment request. The finance
Department is converted down payment request to down payment made on respective due date.
Sap process like :
Down payment Request f-47 (it many times created by purchase department & infirm to finance
department to pay the down payment on that due date)
Down payment Made – f-48 (if down payment request is exit first release that or if not make down
payment directly)
Down Payment Cleared – f-54 (Cleared the Down payment Against Invoice number, once vendor
invoice posted in the system)
What kind of error can be occurred during Document Posting?
Error of commission – this is happened when in invoice quoted amount is 560 and user entered 650
so it is an error of commission.
Error of omission – you totally omitted that invoice in system.
Duplicate invoice posting – if double time invoice posted in the system by give different
invoice/reference number.
To avoid this kind of an error you have to create doubt, if you posted same vendor’s invoice recently.
Who is indenter?
Indenter is a person who raised the Requirement to procure material.
Example: A manager in finance department needs 2 Printers to purchase. He will infirm to Purchase
Department regarding printer. In this case indenter is manager.
What is Procurement to pay or accounts payable or purchase Process flow with Journal entry?
Material Requisition Planning T.CODE

Material Requisition ME51N
Purchaser raised Shortlisted vendors ME21N
Goods Receipts - Raw Material A/c Dr. 500 MIGO
To GR/IR Clearing A/c Cr. 500
Invoice Receipt - GR/IR Clearing A/c Dr. 500 MIRO
To Vendor A/c Cr. 500
Vendor Payment - Vendor A/c Dr. 500 F-53/F-58/F110
To Outgoing Bank Clearing A/c Cr. 500
What are the Sub parts in Accounts Payable in sap?
Vendor invoice Posting
Release Park invoice
Vendor Payment
Reporting
Vendor Reconciliation
What is sap?
Sap is an ERP (Enterprise Recourse Planning). The acronym of SAP is System Application &
Product in Data Process.
What is ERP?
Enterprise Resource Planning system is a fully integrated business management system covering
functional areas of an enterprise like Logistics, Production, Finance, Accounting, Sales and Human
resources etc. It organizes and integrates Operation processes and information flows to make
optimum use of resources such as men, material, money and machine. ERP is a global, tightly
integrated closed loop business solution package and is multifaceted ERP promises one database, one
application and one user interface for the entire enterprise. ERP system enhances a manufacturer
ability to accurately schedule production, fully utilize capacity, reduce inventory, and meet promised
shipping dates.
What is Company?
Company represents a group. Means it is used for consolidating individual Company codes.
Example: Reliance Group is company
Reliance Auto mobile, Reliance Perotrolium , Reliance Telecom, Reliance Insurance, Reliance
Multimedia are individual Company codes.
What is Company code?
It represents by four digits alpha numeric keys. It is separate legal entity for which all financial
Statements are drawn like Balance Sheet, Profit & loss Accounts, cash flow statements , Funds flow
statements etc.
What is Business area?
Four digits code (Business area) represents a segment/Responsibility of the Organization for Which
Separate financial Statements are Prepared. It can be divided by Location wise, Product line wise,
segment wise.
Example: For company code 1000 (Reliance Auto) has five location Pune, Mumbai, Kolkata, bang
lore, Delhi branches are different business areas.
What is Fiscal year Variant?
Fiscal/financial year is a combination of 12 months periods. Which stats from April to March of
every year. In sap system there are two types of period one is regular posting periods of 12 months &
special periods of 4 months for the purpose of accounts adjustment at year end.
What is Document type?
Document types are used to differentiate the business transactions and to manage how document are
stored. Accounts Payable Document types are:
KA = Vendor Document
KG = Vendor Credit Memo
KR = Vendor Invoice

PK Transaction vendor Debit PK Transaction vendor Credit
21 Credit memo 31 Invoice
22 Reverse invoice 32 Reverse credit memo
24 Other receivables 34 Other payables
25 Outgoing payment 35 Incoming payment
26 Payment difference 36 Payment difference
27 Clearing 37 Other clearing
28 Payment clearing 38 Other clearing
29 Special G/L credit 39 Special G/L credit
RE = MM Vendor Invoice
KZ = Vendor payment
SA = GL A/C Document
What is Account type?
Accounts Types are used to identification of relevant category like A- Asset, K-vendor, D-Debtor,
M-Material, S- General ledger
What is posting keys?
The posting key controls how the line item is entered and processed
Which side of an account can be posted to whether Dr. Side or Cr. Side?
Which type of account can be posted to A- Asset, K-vendor, D-Debtor, M-Material, and S- General
Ledger?
40 G/L account debit posting
50 G/L account credit posting
01 Customer invoice
11 Customer credit memo
21 Vendor credit memo
25 Vendor payment
31 Vendor Invoice
W h a t
i s
Recon
ciliatio
n
Accou
nt?
Reconciliation Account is ledger account, which is updated through Sub-ledger account. We could
not post directly into reconciliation. All individual Vendors are Sub-ledger accounts.
Example: Vendor Reconciliation account is a Ledger & Ram, Hari, Gopals, Sudam accounts are sub
ledger accounts. When post the Ram’s invoice. Ram sub-ledger is updated as open item dues as well
as Vendor Reconciliation account is update through RAM. If post all vendors’ invoice then reflection
will be as below
Vendor Recon. Acct =Ram dues+ Hari’s dues + Gopals Dues + Sudam’s dues
1000 = 100+200+500+200
What are the Special Gl indicators used in sap?
Special GL indicators are used to identify the special transaction. This reflects in vendor line item
report under Special GL indicator column.
F- Down Payment Request
J- Simple Payment Request
A-Down payment made
w- Bill of exchange Payment
G- Bank Guarantee.
L – Letter of Credit Payment.
What is noted Item?
When you note down something to be paid in future that is Called as Noted item. Noted item has no
effect in books of accounts. Transactions like Down payment request, payment request, and bill of
exchange payment until release, letter of credit until release.
It is displayed in vendor line item report under Special GL indicator column.
What are Special Gl transactions?
Apart from normal transaction like invoice posting& simple vendor payment are called special gl
transactions. Example Down payment made.
What is line item?

Line item that provides a detailed information about the document like amounts, posting date, due
date, dues, not dues, over dues, open item or cleared item etc.
What is open item?
Items are identified by Red colour which represents as dues/not dues not paid yet to vendor
What is cleared item?
Items are indentified by Green Corlour Square button which represents payment has been made to
vendor.
Difference between partial & Residual payment?
Partial Payment Residual payment
In partial payment, partial amount can be paid
& this document will reflect in open item in
vendor line item report until full settlement the
dues.
Example : Vendor dues 1000
Partial amount paid 400
System response dues is 600 but 400 & 1000
will appear you in red colour open item.
When you paid remain 600 then total it will be
displayed in cleared item.
Here you also make partial payment to vendor
but one thing is that Residual item amount is
generated a new open item with new document
number.
Example : Vendor dues 1000
Partial payment = 400 is paid
Remain Residual item amount = 600 will be
created as open item automatically by system
So 400 will be cleared & displayed in cleared
item. 600 will be displayed in open item.
Difference between Hold Document& Parked Document?
Holding Document Parking Document
Holding Document is hold by temporary
number whatever given by user.
Parking document is created with internal
number range
Holding document is only viewed/changed by
user
Parking document can viewed & changed by
anyone
Hold Document in SAP means It is for short
term and is being used when SAP transaction
Debit or Credit is uncertain and generally its is
used for external purpose for example Advance
from unknown customer etc.
SAP Park Document means for longer period
and is generally used for internal purpose. Till
approval take place etc. after this SAP parked
document posted in SAP.
Difference between vendor invoice posting by transaction code screen FB60 & F-43?
FB60 SCREEN F-43 SCREEN
Single screen data entry Multiple screen date entry
Automatic document type, posting
key updated by the system.
Manually enter Document type, Posting key in
the system.
Difference between vendor Payment posting by transaction code F-53 VS F-58 VS APP
F-53 F-58 F110 APP
Multiple payment posting Manually Multiple payment posting manually
with Form print
Multiple payment Automatically
with form printing by set parameter
in APP.
What do you mean by posting date, Document date, Value date, clearing date & Base line
Date?
Posting date Doc. Date Value date Clearing Date Base line date
O n w h i c h d a t e
document is posted
into system
invoice quoted date
is document Date to
b e f i l l e d i n
document Date field
Use full for Bank Clearing date is auto
u p d a t e d o n c e
payment made or
c l e a r e d t h e
document.
To calculate all Due
dates with reference
to payment terms.
What is APP?
APP is nothing but Automatic Payment Program is used to make huge payment to huge number of
Vendors at a time, where system clears the vendor accounts & prints the Check, Payment advice &
payment summery automatically. The transaction code to run the APP is F110.
How payment is executed through APP?
Set the Parameter >>> Give proposal Edit proposal if any need to edit >>> payment run
>>>print the forms.

You launch transaction F110 and specify parameters for the selection of items to be paid. Then you
run Proposal Run which creates Payments Proposal. This proposal is analyzed by Treasury /
Accountants / somebody else and then it is approved immediately or with some corrections. After
that you run Productive Run. At this moment postings are done (or not done – see separately). When
Productive Run is finished, you can create payment file or paper payment documents for the bank
and/or payment recipients.
Terminology in APP
set the Parameter – set the payment parameter to executed the app where run date, identification
code, company code, Payment method, next run date & vendor code are compulsory to filled up.
Give proposal to run – you give Proposal to system to consider invoices for payment as per your set
parameter. If any invoice with red color those need to be release by edit proposal.
Edit Proposal: here you release the invoice for payment by avoid the payment block, assign
payment method, House bank by reallocation functionality.
Run payment: at last once clarified proposal you make payment by press payment run button.
Free selection tab: it is help full if management wants payment to be made by document type wise,
posting date wise, profit center wise or any other aspect wise. You can specify by assign respective
value in these fields.
Additional Log: You can define criteria for an additional log. If you call up the log later on, the
system displays the processing logic of the payment program in appropriate detail. Before doing
anything, you should read the note under Checking the Log in "Creating the Payment Proposal".
The following processing steps can be logged.
Due date check
Payment method selection in all cases
Payment method selection if not successful
Payment document items
Procedure
For the additional log, choose the Additional log tab on the Automatic Payment Transactions screen.
Click next to the corresponding option and enter the account numbers of the vendors or customers.
Next payment run date: This date is needed in order to check the due date of payables. If an item
is already overdue on the date of the next payment run, or would lose cash discount, the system pays
the item in this payment run. In real time most of companies are run app in every fortnightly. Run
schedule is in-between 1st
and 15th.
You run app on 1st
date of the month and two items has due date
on 3rd
and 5th
of the month, it will be overdue on next payment run (15th date
) or some item are falls
under cash discount due date 31th , then if you keep 31st
date in NEXT RUN DATE field, system
pays these item in this payment run and you get cash discount benefits.
Invoice under Exceptions:
When executing the Â automatic payment program (F110 transaction), a proposal run must always
be carried out in SAP system Â first. The proposal list will sometimes include exceptions or it is
displayed with red color error button.
Common exceptions are:
SAP Invoice contains payment block. To pay this invoice, remove the payment block when editing
the proposal list (unless the payment block is one which cannot be edited during payment proposal)
or remove payment block via FB02 for each SAP invoice.
Payment method in vendor master/invoice is different from the one specified in the payment program
parameter. To pay this invoice, allocate the payment method in the parameter of the payment run to
this invoice while editing the proposal list.
Vendor master does not contain information specified as mandatory in the payment method in the
parameter of the SAPÂ payment program. For example, depending on the payment method
configuration for the country, certain fields such as city or PO Box must be populated in the vendor
master. In this case, delete the proposal run, make the necessary changes in the vendor master and
execute the proposal run again.
Typically, Â payment program pays due invoices in full. To cater for partial payment via automatic
payment program, payment request will be used (optional). Down payments to staff and vendor can
also be made via the automatic payment program if down payment request was posted.
If Â foreign currency invoice is paid via Â automatic payment run, the relevant exchange rate type
should be selected in the payment run parameter. Exchange rate gain/loss on making the payment

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will be automatically posted to the relevant profit and loss account based on the reconciliation
account of the vendor.
The Â payment method specified in the parameter of the payment program determines the bank
account and the GL account used to make the payment. Also, depending on the payment method,
cheques, other forms and payment files will be generated.
What is Vendor Reconciliation?
It is Month end activities once Full accounts payment process is completed by payment to vendor.
The vendor reconciliation team reconciles payment by matching Vendor statement with system
payment history. They confirm whether any dues to be paid if any, they raise supplementary or any
amount to be collect from vendor by raise credit memo.
Country India version (CIN): Indian taxation & withholding tax (TDS)
What is TDS/withholding tax & its process Flow?
TDS (Tax Deducted at Source) is deducted at source of vendor’s income. We can Charge TDS when
we receive Govt. specified services from vendor & that person should eligible as per Govt. slab
incomes.TDS can be deducted at the time of payment to vendor or vendor invoice processing which
is ever is earlier.
What are the Section codes, percentage rates & Slab rates in TDS?
Follow the link: http://finotax.com/itax/tds0910.htm
All forms related TDS:
Follow the below link: http://taxworry.com/new-form-16-form-16a-form-24g-form-27d-notified-
download-now/
What are due dates for TDS payment
Due Date Table for TDS and TCS quarterly returns: Quarter
Form 24Q Form 26Q Form 27Q Form 27EQ
First July 15th
July 15th
July 14th July 15th
Second October 15th October 15th October 14th October 15th
Third January 15th January 15th January 14th January 15th
Fourth May 15th May 15th May 15th May 15th
Tax deducted by company
Time to deposit TDS (due date to deposit tds) Rule 30
1 tax deductible in March 30th April of
next year
2 other months & tax on perquisites opted to
be deposited by employer 7th of next month
Note: Assessing officer, with prior approval of Joint commission, may permit quarterly payment of TDS under
following sections
Section Description quarter of Financial year
ended on
date of payment
192 salary 30th June
(1st
qtr)
7th July
194A TDS on interest other than
securities
3th September
(2n qtr)
7th October
194D T D S o n i n s u r a n c e
commission
31st December
(3rd
qtr)
7th January
194H TDS on commission 31st March
(4th
qtr)
30th April
Note:TDS is to be deposited online mode only through Debit card or Interenet banking Mode, except in case of Book
adjustment by Govt Offices

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