Overhead expenses include non-direct costs like accounting fees, advertising, insurance, interest, legal fees, labour burden, rent, repairs, supplies, taxes, telephone bills, travel expenditures, and utilities. You define the valuation level to specify where material stocks are valued, which can be at the plant or company code level, and this affects account determination and maintenance of material master records. Plant parameters and tolerance limits need to be set for inventory management processes like goods receipts.

3. Overheadexpensesare all costs on the income statement exceptfor direct labour, direct materials, and direct expenses.
Overheadexpensesinclude accounting fees,advertising, insurance, interest, legal fees,labour burden, rent, repairs,
supplies, taxes, telephone bills, travel expenditures,and utilities.
Define valuation level
You define the valuation level by specifying the level at which material stocks are valuated
You can valuated material stocks at the following levels:-
1. Plant level
Valuation must be at this level in the following cases:
If you want to use the application component Production Planning (PP) or Costing
2. Company code level
The decisionyou make is valid forthe whole client. You are recommended setting material valuation at plant level.
Important

4. Your choice of valuation level affects the following:-
 Maintenanceof materialmaster records
Depending on the valuation level chosen, accounting data (in particular the valuation price) is maintained for each plant or for each company
code in the material master record.
 G/L accountsin which materialstocks are managed
 If material stocks are valuated at company code level, all plant stocks of a material are managed in a joint stock account for each company
code.
 If material stocks are valuated at plant level, the material stocks for each plant can be managed in different accounts. You can define a
separate account determination for each plant.
If several plants are to use account determination, you can group them together in Customizing for Valuation and Account Assignment in the
section Account Determination .
G/L accounts to which transactions are posted in Materials Management
(See under G/L accounts in which material stocks are managed.)
Account Determination:-
In this section, you make the configurations relevant to transactions in Inventory Management (for example, ) and in Invoice
Verification (for example, invoice receiptfor automatic postings to G/L accounts in Financial Accounting and Cost
Accounting).
You can do this with or without the wizard or you can use a combination of both.
The wizard always reads the existing Customizing settings first. These are displayed as default values and form the basis for
further adjustments.

5. Define copy, delete, and check plant:-
The plant is an operating area or branch within a company.
The plant is embeddedin the organizational structure as follows:
 The plant is assigned to a single company code. A company code can have several plants.
Several storage locations in which material stocks are managed can belong to a plant.
 A single business area is assigned to a plant and to a division .
A plant can be assigned to several combinations of sales organization and distribution channel.
 A plant can have several shipping points. A shipping point can be assigned to several plants
.
 A plant can be defined as a planning plant.
A plant has the following attributes:
 A plant has an address.
 A plant has a language.
 A plant belongs to a country.
 A plant has its own material master data. You can maintain data at plant level for the following views on a material master
record in particular: MRP, Purchasing, Storage, Workscheduling, Productionresources/tools,Forecasting,Quality
management, Sales, Costing.
The plant plays an important role in the following areas:-

6.  materialvaluation
If the valuation level is the plant, the material stocks are valuated at plant level. If the valuation level is the plant, you can
define the material prices for each plant. Each plant can have its own account determination.
 inventorymanagement
The material stocks are managed within a plant.
 MRP
Material requirements are planned for each plant. Each plant has its own MRP data. Analyses for materials planning can be
made across plants.
Define copy, delete, check division:-
The division is one of the organizational units in Sales & Distribution and is also required for business area account assignment for
logistics transactions in Financial Accounting. The area for the material is determined via the plant and the division defined in the
material master record.
In order to adapt the functional scope of a division to the organization in your company, you should process the following check list:
 Allocate a division to one or more organizations.
 Allocate a division to one or more distribution channels.
 Allocate a business area to a division from a plant. This way, business area account assignment can be carried out for transactions in
Materials Management. As of Release 3.0, the business area is determined in Materials Management from the division and the valuation area.

 A material is always assigned to one division only. You specify the division on the first sales & distribution screen in the material master
record.

 You can define your own master data within a division for customers as well as your own conditions and pricing.

7. Maintain purchasing organization:-
From the Materials Management and Purchasing view, the purchasing organization is responsibleforall purchasing
activities (including the processing of requests for quotations and purchase orders,for example).
Define Attributes of Material Types:-
Wheneveryou create a material master record,you must assign it to a material type. This requires you to first define the
attributes of each material type. You do this in this IMG activity.
Material types are used in the following neigh boring areas, where they are also configured in Customizing:
 Profit Center Accounting
 ProductCostPlanning
Set Tolerance Limits for Price Variance:-
In this step, you define the tolerance limits for price variances.
When processing a purchase order, the system checks whether the effective price of a PO item shows variances compared with the valuation
price stored in the material master record. In addition, it checks whether the specified cash discount value is admissible.
Variances are allowed within the framework of tolerance limits. If a variance exceeds a tolerance limit, the system issues a warning or error
message.
In the SAP System, the types of variance are represented by the tolerance keys. For each tolerance key, you can define percentage and value-
dependent upper and lower limits per company code.
Standardsettings

8. The standard SAP System supplied contains the following tolerance keys:
 PE Price variance, Purchasing
 Tolerance limit for system message no. 207. This message appears if the specified effective price exceeds the predefined tolerances when
compared with the material price.
 SE Maximum cash discount deduction, Purchasing

 Tolerance limit for system message no. 231. This is a warning message, which appears when the specified cash discount percentage
exceeds the predefined tolerances.
Note
You can specify whether the system message appears as a warning or error message using the menu optionsEnvironment -> Define Attributes of
System Messages.
Activities
Maintain the tolerance limits for each tolerance key per company code.
Plant Parameters:-
Inventory Management All settings are also contained in the individual steps of the ImplementationGuide for
Inventory Management If you want to allow negative stocks in your plant, you have to set the XBKNG indicator in addition
to the settings in this step.
To maintain this indicator, choose the step Goods Issue/Transfer Postings -> Allow Negative Stocks in Customizing.
Set Tolerance Limits:-
In this step, you set the tolerance limits for goods receipts.
When processing a goods receipt, the system checks each item to determine whether the goods receipt varies from the purchase order or the
material master data.

9. The different types of variances are defined by tolerance keys. For each tolerance key, tolerance limits can be set per company code.
The following variances are checked in Inventory Management:
 Variance in the
 purchase order price quantity
(Explanation)
For this variance, two tolerance keys are provided:
 Tolerance key B1 (error message)
You use tolerance key B1 to define the maximum percentage variance. If the variance is greater than the maximum variance, the system creates
an error message. The user cannot post the goods receipt.
 Tolerance key B2 (warning message)
Tolerance key B2 defines the percentage variance from which a warning message is to be issued. It is possible to post the goods receipt.
 Variance for the moving average price of the material
(Explanation)
You use tolerance key VP to define the percentage variance from which a warning message is issued. This warning message indicates a price
change.
Default settings
In the standard system, the tolerance keys for goods receipts for purchase orders are defined with the following tolerance limits in company code
0001:

10.  B1 (order price quantity variance with error message): 50 %
 B2 (order price quantity variance with warning): 20 %
 VP (variance from moving average price) 25 %
Maintain Default Values for Tax Codes:-
In this step, you define for each company code which tax code(s)the R/3 System suggestswhen you enter incoming
invoices.
 Domestic invoices
You can define up to four tax codes forinvoices that you receive from within your own country.
 Foreigninvoices
You can define one tax code for invoices that you receive from abroad.
 Invoices containing unplanned delivery costs
You can define a tax code for invoices containing unplanned delivery costs,which is used when you make postings to a
separate account in Logistics Invoice Verification.
Activities
1. Choose the company code for which you want to enter the default tax codes.
2. Enter the default values.
3. Save the default values.
Set Tolerance Limits:-
In this step, you specifythe tolerance limits for each tolerance key for each companycode.
When processing an invoice, the R/3 System checks each item for variances between the invoice and the purchase orderor
goods receipt.The differenttypes of variances are defined in tolerance keys.

11. The system uses the following tolerancekeys to check for variances:
 AN: Amount for item without order reference
If you activate the item amount check, the system checks every line item in an invoice with no order reference against the absolute upper limit
defined.
 AP: Amount for item with order reference
If you activate the item amount check, the system checks specific line items in an invoice with order reference against the absolute upper limit
defined. Which invoice items are checked depends on how you configure the item amount check.
 BD: Form small differences automatically:-
The system checks the balance of the invoice against the absolute upper limit defined.If the upper limit is not exceeded,the
system automatically creates a posting line called Expense/Incomefrom Small Differences,making the balance zero and
allowing the system to postthe document.
 ST: Date variance (value x days):-
The system calculates for each item the product of amount * (scheduled delivery date - date invoice entered) and compares
this product with the absolute upper limit defined.This allows relatively high schedule variances for invoice items for small
amounts, but only small schedule variances for invoice items for large amounts.
 VP: Moving average price variance
When a stock posting line is created as a result of an invoice item, the system calculates the new moving average price that results from the
posting. It compares the percentage variance of the new moving average price to the old price using the percentage tolerance limits defined.
Variances are allowed within predefined tolerance limits. If a variance exceeds a tolerance limit, however, the system issues a message informing
the user. If an upper limit (except with BD and VP) is exceeded, the invoice is blocked for payment when you post it. You must then release the
invoice in a separate step. If the tolerance limit for BD is breached, the system cannot post the invoice.
Define Automatic Status Change:-
In this step, you define for every company code whether an invoice posted in the background is assigned the status Verified
as corrector Completed.

12. Group Together Valuation Areas:-
In this step, you assign valuation areas to a valuation grouping code.
The valuation grouping code makes it easier to set automatic account determination. Within the chart of accounts, you assign the same valuation
grouping code to the valuation areas you want to assign to the same account.
Valuation grouping codes either reflect a fine distinction within a chart of accounts or they correspond to a chart of accounts.
Within a chart of accounts, you can use the valuation grouping code
 to define individual account determination for certain valuation areas (company codes or plants)
Example
 to define common account determination for several valuation areas (company codes or plants)
Example
Define Valuation Classes:-
In this step, you define which valuation classes are allowed for a material type.
If a user creates a material, he must enter the material's valuation class in the accounting data. The R/3 System uses your
default settings to check whether the valuation class is allowed for the material type.
The valuation class is a group of materials with the same account determination. If a transaction is to be posted to different
accounts depending on the valuation class, create an account determination for each valuation class in the step Create
automatic postings.
The valuation classes allowed depend on the material type. Several valuation classes are generally allowed for one material
type. A valuation class can also be allowed for several material types.
The link between the valuation classes and the materialtypes is set up via the accountcategory reference.

13. The account category reference is a combination of valuation classes.Preciselyone account category reference is assigned
to a material type.
Example
Requirements
 You must have defined your material types.
 You must have defined the chart of accounts.
 You must have agreed with Financial Accounting which materials are assigned to which accounts.

Defaultsettings
In the standard SAP R/3 System,an account category reference is created for each material type. The account category
reference is, in turn, assigned to preciselyone valuation class. This means that each material type has its own valuation
class.
Recommendation:-
We recommend that you create the account groups of your chart of accounts as an account categoryreference.
Example GKR:
 3000 for raw materials
 3030 for accessorymaterials
 7900 for finished products
 and so on
Activities:-
1. Create accountcategory references under accountcategory reference
1. Under valuation class, define the valuation classes for each accountcategoryreference.
2. Under Materialtype/account categoryreference,assign an account category reference to each material type

14. Account Determination:-
In this section, you make the configurations relevant to transactions in Inventory Management (for example, ) and in Invoice Verification (for
example, invoice receipt for automatic postings to G/L accounts in Financial Accounting and Cost Accounting).
You can do this with or without the wizard or you can use a combination of both.
The wizard always reads the existing Customizing settings first. These are displayed as default values and form the basis for further adjustments.
Caution
Use of the wizard is subject to certain restrictions, which are documented under what is account determination? And Technical notes on the first
screen of the wizard.
Note
You must make these configurations only in conjunction with your Financial Accounting department.
GR/IR Clearing Account Maintenance:-
Use
Quantity differencesbetweengoods receiptand invoice receiptfor a purchase orderresult in a balance on the GR/IR
clearing account.
 If the quantity invoiced is larger than the quantity received,the system then expects further goods receipts forthis
purchase order to clear the balance.
 If the quantity received is larger than the quantity invoiced, the system then expects further invoices for this purchase
order to clear the balance.
If no more goods or invoices are to be received,you must clear the balance manually.

15. This can be done in differentways:
 You can return the extra goods to the vendor.
 You can cancel the invoice.
 You can clear the GR/IR clearing account manually.
Postings at Goods Receipt and Invoice Receipt:-
In the SAP System, goods receipts and invoice receipts are offset to a clearing account (the GR/IR clearing account).
A Simple Example of a Goods Receipt Posting and an Invoice Receipt Posting

16. When you receive goods,the system credits the value of the goods (goods receiptquantity x net order price) to the stock
account and posts the offsetting entry to the GR/IR clearing account. The GR/IR clearing account is cleared when the
invoice is posted to the vendor account.
The systemdisplays the material document.
 Positionyour cursor on the material line item, and then choose Accounting docs...
 In the dialog box, choose Accounting document.
The posting is as follows:
·
Debit: Account300000(Inventory:Raw materials)
·
Credit: Account191100 (GoodsRecvd/InvoiceRecvd)
This document is an open item that is only cleared once the invoice for the order has been received.
In this example, we do not enter an invoice. For this reason, you have to make an adjustment posting for the quantity received that has
not yet been billed.
GR/IR Clearing Account Maintenance:-
Use
If there is a quantity variance between the goods receipt and the invoice for a purchase order, this results in a balance on the GR/IR
clearing account. The system expects an additional goods receipt or an additional invoice to clear this balance. If this is not done, you
must clear the GR/IR clearing accountmanually.
Features
For a material subject to moving average price control, the offsetting entry for clearing the GR/IR clearing account is posted to the stock
account (provided that there is sufficient stockcoverage for the quantity difference):

17.  If there is a delivery surplus on the GR/IR clearing account, the material was debited with too high a value when the goods receipt
was posted. When the
 GR/IR clearing account is cleared, the material is credited accordingly.

 If there is an invoice surplus on the GR/IR clearing account, the material was debited with too low a value when the goods receipt
was posted. When the GR/IR clearing account is cleared, the material is debited accordingly.


18. If there is insufficient stockcoverage for this quantity, only the portion correspondingto the available stockis posted to the stock
account. The rest is posted to a price difference account.
For a material subject to standard price control, the offsetting entry to clear the GR/IR clearing accountis made to a price difference
account. Thus, there are no value changes in the material master record.
Raw material consumption = expenditure= overhead =expenses
Increase / decrease in material stock while downgrading:-
1. Material A has been receivedinitially with 100 MT,which has sufferedfrom a damageof 2 MT.Due to the damage
the 2 MT will be downgradedfrom materialA to material B.
- You can achieve this requirement by performing material to material transfer (mvt type 309).
2. But after completing the downgrade processthe quantityof material B should be 1.5 MT (decreasein quantity)
/ 2.5 MT (increase in quantity).
- As per the standard SAP functionality, no quantity variation takes place while transferring materials (be it normal stock
transfer / material conversion). Thus, we can capture the gain or loss of material stock only after the successfulcompletion
of transfer. Meaning, once you complete the downgrading processyou can capture the stock variance.
To capture the variance you are required follow physical inventory process.The process will provide you the flexibility to
capture both gain or loss of your received material stock.

19. Assignment of accounts for automatic posting:-
This topic has been discussedmany times in this forum but every time more emphasis was given to theoretical aspectand
not practical. So request you all to discuss this important topic here case to case basis or provide your queries so other can
provide the suitable solution, this way we all will able to understand this Integration in a better way.
So lets start with simple posting where PO is created for raw material and MIGO is done using mvt type 101.so lets discuss
how system will arrive at the G/L accounts.
Configure Automatic Postings
In this step, you enter the system settings for Inventory Management and Invoice Verification transactions for automatic postings to G/L accounts.
You can then check your settings using a simulation function.
Under Further information there is a list of transactions in Materials Management and their definitions.
What are automatic postings?
Postings are made to G/L accounts automatically in the case of Invoice Verification and Inventory Management transactions relevant to Financial
and Cost Accounting.
Example:
Posting lines are created in the following accounts in the case of a goods issue for a cost canter:
Stock account
Consumption account
How does the system find the relevant accounts?
When entering the goods movement, the user does not have to enter a G/L account, since the R/3 System automatically finds the accounts to
which postings are to be made using the following data:

20. Chart of accounts of the company code
If the user enters a company code or a plant when entering a transaction, the R/3 System determines the chart of accounts which is valid for the
company code.
You must define the automatic account determination individually for each chart of accounts.
Valuation grouping code of the valuation area
If the automatic account determination within a chart of accounts is to run differently for certain company codes or plants (valuation
areas), assign different valuation grouping codes to these valuation areas.
You must define the automatic account determination individually for every valuation grouping code within a chart of accounts. It applies to
all valuation areas which are assigned to this valuation grouping code.
If the user enters a company code or a plant when entering a transaction, the system determines the valuation area and the valuation grouping
code.
Transaction/event key (internal processing key)
Posting transactions are predefined for those inventory management and invoice verification transactions relevant to accounti ng. Posting records,
which are generalized in the value string, are assigned to each relevant movement type in inventory management and each transaction in invoice
verification. These contain keys for the relevant posting transaction (for example, inventory posting and consumption posting) instead of actual
G/L account numbers.
You do not have to define these transaction keys, they are determined automatically from the transaction (invoice verification) or the movement
type (inventory management). All you have to do is assign the relevant G/L account to each posting transaction.
Account grouping (only for offsetting entries, consignment liabilities, and price differences)
Since the posting transaction "Offsetting entry for inventory posting" is used for different transactions (for example, goods issue, scrapping,
physical inventory), which are assigned to different accounts (for example, consumption account, scrapping, expense/income from inventory
differences), it is necessary to divide the posting transaction according to a further key: account grouping code.
An account grouping is assigned to each movement type in inventory management which uses the posting transaction "Offsetting
entry for inventory posting".
Under the posting transaction "Offsetting entry for inventory posting", you must assign G/L accounts for every account grouping, that
is, assign G/L accounts.

21. If you wish to post price differences to different price difference accounts in the case of goods receipts for purchase orders, goods receipts for
orders, or other movements, you can define different account grouping codes for the transaction key.
Using the account grouping, you can also have different accounts for consignment liabilities and pipeline liabilities.
Valuation class of material or (in case of split valuation) the valuation type
The valuation class allows you to define automatic account determination that is dependent on the material. for example: you post a goods
receipt of a raw material to a different stock account than if the goods receipt were for trading goods, even though the user enters the same
transaction for both materials.
You can achieve this by assigning different valuation classes to the materials and by assigning different G/L accounts to the posting transaction
for every valuation class.
If you do not want to differentiate according to valuation classes you do not have to maintain a valuation class for a transaction.
Requirements
Before you maintain automatic postings, you must obtain the following information:-
1. Valuation level (plant or company code)
Establish whether the materials are valuated at plant or at company code level
When valuation is at plant level, the valuation area corresponds to a plant.
When valuation is at company code level, the valuation area corresponds to a company code.
Define valuation level
2. Chart of accounts and valuation grouping code per valuation area
Find out whether the valuation grouping code is active.

22. U want he GL acc comes into picture after migo?
For account determination:
1.Chart of accounts....Asssigned to CO code.
2.Valuation Grouping code---Assigned to plants(plant is valuation area.)
3.Valuation class assigned to material type thr account category group.
The valuation class is the bridge b/w MM-FI.
4.Account modifier..The account keys thr movement type
all these needs to be made in MM-Account Determination---without wizard.
here in automatic postings , fort eh valuation class you assign GL accounts.
From here the GL account is picked up for the mvt type.
Hope u r clear...

23. How the goods movements (101,201,561,122 etc)are taking the differentG/L codes from OBYC?
After GR (101 movement type), it takes 3 G/L code for financial postings.
one G/L is for stock posting & is taken from "BSX" .
2nd G/L is GR/IR account & it is taken from "GBB". Here, what is the transaction like "AKO" for 101 movement types & how
they decide?
& 3rd G/L is Price difference G/L account & it is taken from "PRD" (in OBYC).
Like above, can anybody explain all the detailed postings for all other movement type ( 201,561,122etc ) ?
what are the movementtypes( like 101)where there is financial postings ?
The conceptof goods movementand automatic account determination:
In SAP every movement of goods is followed by one movementtype, without movementtypes no goods movementpossible
and movement type trigged transaction event keys (OMWN). G/L account assignment and G/L account assigned to
transaction event key (OBYC).If all assignmentcorrect/perfect,the GR & IR or any transactions will updated by movement of
goods only
In Automatic account assignment:The vital components involved are movementtype, Value string , valuation class, chart of
account, Valuation area, business key (transaction key), and valuation grouping code,account grouping code & nature of
G/L account and Posting keys
Chart of account: Collection of all G/L account
Valuation class: Enable the assignment of account on specific based on material & material type.
Valuation Grouping Code ( is known as Valuation Modifier) is used for grouping of all Valuation Area( for example:
plant/plants)

24. Account Grouping Code (is known as AccountModifier & also known as General Modification)is three character code which
is use to break account determination down by movement type
Value string: Value String Indicates the posting rule that always contains the same account assignment for a certain
transaction or event (for example a goods movementor an invoice receipt).
Accounting documentfor with movementtypes are:
For movement type 561:
(BSX) Stock A/c - Dr
(GBB-BSV)Initial Stock Entry - Cr
For movement type 101(if no excise involved):
(BSX) Stock A/c - Dr
(WRX)GR/IR Clearing- material - Cr
For movement type 201:
(GBB-VBR)ConsumptionA/C:Dr
(BSX) Stock A/c - Cr
For movement type 122:

25. All stock and G/L account updates that occurred during the goods receipt posting (101 movementtype ) are reversed.The
open purchase order quantity is increased by the returned quantity
PRD key triggers as in the case of price control in material master S and if any price differs in the transaction WRT material
master price and in the case of price control in material master V, it also triggers, if no sufficientstockavailable during
posting.
Each movementtype has a posting string or a value string attached to it. This can be checked in OMJJ for a specific
movementtype under "AccountGrouping" subsectionor in table T156X for that movementtype.
Each value string has differenttransaction event keys assigned to them and this can be checked in table T156W.
In OBYC, you have to assign for each transaction event key and the combination reqd for that key to a G/L account. This
account is hit when the movement type is called with these combinations.
In your case above, the keys that were triggered are BSX (Inventory Posting), WRX (GR/IR)and PRD (Price Difference)and
GBB is an offsetting forinventory postings.
In the SAP system,the corresponding posting transactions for each accounting-relevant transaction in Materials
Management are predefined.Since the many individual companies using SAP employdifferentcharts of accounts,
generalized posting records are assigned to each transaction in a so-called value string
Instead of specific G/L account numbers, the value string contains the transaction/event key for the relevant posting
transaction. The first transaction/event key of a posting rule generally stands for the debit posting.
The posting transactions for accounting-relevant transactions in inventory management and invoice verification are
predefinedand cannot be changed.

26. Posting records generalized in a value string (posting rule) are assigned to each relevant movementtype in inventory
management and each transaction in invoice verification. Instead of specific G/L account numbers, this value string contains
keys for the relevant posting transactions (for example, BSX for a stock posting and PRD for a price differenceposting)
You do not have to define these transaction/event keys.
They are determined automatically in the SAP system from the specific transactionin invoice verification or from the
transaction and movementtype in inventory management.
You need only assign the G/L account to which postings are to be made to each posting transaction (taking into account the
other influencing factors).
The assignments of the value strings to the goods movements and the breakdowns of the value strings into
transaction/event keys can be found in Customizing for inventory management and physical inventory. However, you can
change neither the value strings nor their assignments in Customizing.
You assign the relevant G/L accounts to the corresponding posting transactions in Customizing for valuation and account
assignment.
The value string assigned to a specific transaction is determined automatically. It dependspartly on manually entered
parameters and partly on parameters derived internally by the system.
The value string contains the maximum possible posting transactions for a certain transaction. Which of these posting
transactions lead to G/L postings in individual cases is decidedby the program and cannot be defined in Customizing.
The goods receiptposting in the example shown in this figure represents a goods receiptagainst an NB purchase order into
the warehouse or stores. The relevant PO item has no account assignment and is of the categorystandard.
The value string WE01 has been assigned to this business transaction for materials subject to value-based (and quantity-
based)inventory management. The next figure contains the transaction/event keys assigned to this value string.

27. These include:
• BSX for (all) postings to stock accounts
• WRX forpostings to the GR/IR clearing account following goods and invoice receipts relating to NB purchase orders
• UMB for the offsetting entry in the case of a price change (accounts for loss or gain from revaluation)
The documentation for the Customizing activity Configure Automatic Postings contains more detailed information on all SAP
transaction/event keys.
In the standard system,the value string WE01 is assigned to goods receiptsfor standard purchase orders (and
corresponding reversals and return deliveries)with items that have no account assignmentand are of the categories
standard or subcontracting for valuated material into the warehouse/stores.
For a (valuated) goods receiptagainst a PO item without account assignment, a posting is always made to a stockaccount
with the transaction/event code BSX.The offsetting entry is made to the GR/IR clearing account with the transaction/event
key WRX.
A price difference posting (transaction/event key PRD) is only made if the valuated material is valuated at a standard price
and if the PO price (or the invoice price) varies from the standard price.
The transaction/event key KDM is needed in Materials Management for exchange rate differencesinvolving POs in foreign
currencies due to differences in exchange rates at the times of goods receiptand invoice receiptif the material cannot be
debited or credited due to standard price control or lack of stock.
The transaction/event keys EIN and EKG (as well as, perhaps, FRE - see account determination for delivery costs)are only
considered incompany codes in which purchase account management is active (as is legally required in France or Belgium,
for example).
The transaction/event keys BSV, FRL, and FRN are used only in connectionwith the item category subcontracting.
For an explanation of why the transaction/event key BSX is included twice, and the meaning of the key UMB, please referto
the following figure.

28. The value stringWA14 is provided forthe goods movementfree-of-chargedelivery (movementtype 511)for materials with
value-based inventory management.
The concept of goods movement and automatic account determination:-
In SAP every movement of goods is followed by one movement type, without movement types no goods movement possible and movement type
trigged transaction event keys (OMWN). G/L account assignment and G/L account assigned to transaction event key (OBYC).If all assignment
correct/perfact, the GR & IR or any transactions will updated by movement of goods only
In Automatic account assignment: The vital components involved are movement type, Value string , valuation class, chart of account, Valuation
area, business key (transaction key), and valuation grouping code, account grouping code & nature of G/L account and Posting keys
Chart of account::- Collection of all G/L account
Valuation class: Enable the assignment of account on specific based on material & material type.
Valuation Grouping Code :-( is known as Valuation Modifier) is used for grouping of all Valuation Area ( for example: plant/plants)
Account Grouping Code (is known as Account Modifier & also known as General Modification) is three character code which is use to break
account determination down by movement type
Value string: -Value String Indicates the posting rule that always contains the same account assignment for a certain transaction or event (for
example a goods movement or an invoice receipt).
Accounting document for with movement types are:
For movement type 561:
(BSX) Stock A/c - Dr
(GBB-BSV) Initial Stock Entry - Cr

29. For movement type 101(if no excise involved):
(BSX) Stock A/c - Dr
(WRX)GR/IR Clearing- material - Cr
For movement type 201:
(GBB-VBR) Consumption A/C:Dr
(BSX) Stock A/c - Cr
For movement type 122:
All stock and G/L account updates that occurred during the goods receipt posting(101 movement type ) are reversed. The open purchase order
quantity is increased by the returned quantity
PRD key triggers as in the case of price control in material master S and if any price differs in the transaction WRT material master price and in
the case of price control in material master V, it also triggers, if no sufficient stock available during posting.
OBYC is t-code which is relevantto automatic accountdetermination linking Chart of accounts, Valuation grouping
code,valuation class, transaction event key and the GL account.
For movement types, the transaction event keys are fixed exceptin the case of account grouping code which is further
divisions for the transaction event key.
For all movementtypes the transaction event keys can be easily understood.For example in the case of 101 movement
type, stockaccount (BSX), GR/IR account (WRX)and PRD (price differenceaccount-in the case where price difference
matters) are affected.
In the case of 201, BSX, GBB (consumption account) are generally affected
Like that for all movementtypes we can easily identify the Keys that is relevant.

30. AKO is the key used in inventory management that deals with the price difference involved when consignmentmaterial
is withdrawn.
Goods Receipt:-
Use
With the goods receipt (GR) you post the physical inward movement of goods from an external vendor or from production and then complete a
goods movement, which leads to an increase in the warehouse stock.
You have the option of planning goods receipts and in so doing of monitoring stock of ordered or in-house produced materials.
 As long as you create goods receipts with reference to purchase orders (MM) or production orders (PP), they already stage all the
information necessary for planning. In the stock overview and plant stock availability, purchase order quantities at SKU level are identified
as on-order stock, and quantities in production orders as total open order quantity.

 If you create goods receipts without reference to a purchase order or a production order, you can enter
Reservations to manually plan goods receipts. Reserved quantities are displayed as planned receipts in the stock overview and plant stock
availability.
Features
 Goods receipts for purchase orders
As long as you work with the MM component purchasing, deliveries of goods usually take place with reference to purchase orders, which have been arranged
by the purchasing department. The purchase order document used by purchasing to request goods from a vendor is not only an important planning and
monitoring tool for purchasing, but also for MRP, inventory management, and invoice verification. Refer to the documentation on Entering Goods Receipts for
more details.
 Goods receipt for production orders
As long as you use the PP component production orders, deliveries of goods usually take place from production with reference to production orders. The document production
order not only documents why a material is produced, but is also an important planning and monitoring tool for MRP and inventory management.

31. Goods Receipt for a Purchase Order:-
Use
Usually, a goods receipt for a purchase order is valuated. How the material is valuated depends on the value calculation used and the postings carried out.
Features
A distinction is made between two ways in which the value of the goods receipt can be calculated:
 Goods Receipt Before Invoice Receipt
Generally, you receive the invoice after the goods. Consequently, the value of the delivery is not known at the time of goods receipt. In this case, the value calculation
is based on the purchase order. The value of the goods receipt is calculated based on the quantity received and the net order price.
Value Calculation:GoodsReceipt before Invoice Receipt
Purchase order: 100 pieces of material A at $10/piece
Goods receipt: 70 pieces
The value of the goods receipt is calculated as follows: 70 pieces x $10/piece = $700
 Invoice Receipt Before Goods Receipt
If an invoice has been posted for a purchase order before the goods are received, the value of the delivery is known at the time of goods receipt. In this case, the
value calculation is based on the invoice. The value of the goods receipt is calculated based on the quantity received and the invoice price. If the invoice was for only
part of the quantity, only the actual quantity invoiced is valuated at the invoice price at goods receipt. The remaining quantity is valuated at the purchase order price.

32. Value Calculation:Invoice Receipt Before GoodsReceipt
Purchase order: 100 pieces of material A at $10
Invoice: 50 pieces at $12/piece = $600
Goods receipt: 70 pieces
The value of the goods receipt is calculated as follows: 50 pieces x $12/piece + 20 pieces x $10/piece
= $800
Postings: Goods Receipt for Purchase Order:-
The value of the goods receipt is posted to the GR/IR clearing account; the offsetting entry depends on the type of price control for the material.
Features
Standard Price
In the case of a material valuated at a standard price, only the value of the delivered quantity x standard price can be posted to the stock account. If the net order price (or, in
the case of invoice receipt before goods receipt, the invoice price) differs from the standard price, this results in a difference between this value and the value of goods
delivered. The system posts this difference to a price difference account. Since only the value of the delivered quantity x s tandard price is posted to the stock account, there is
no change of value in the material master record.
Moving Average Price
In the case of a material valuated at a moving average price, the delivered quantity x net order price (or invoice price) is posted to the stock account.
If the purchase order price (or the invoice price) is the same as the price in the material master record, there is no change in the value per piece.
If the purchase order price (or the invoice price) is not the same as the price in the material master record, there is a change in the value per piece.

33. Goods Receipt with Price Variance :-

34. Since the purchase order price is higher than the moving average price in the material master record,the ratio of total value
to total quantity increases when the goods receiptis posted:
$7280/1400 pieces= $5.20/piece > $5.00/piece
If the purchase order price is lower than the moving average price, the moving average price is reduced when the goods
receiptis posted.
Invoice Verification (MM-IV):-
A procedure in Invoice Verification allowing assignment of incoming deliveries and invoices to an item of a purchase order
If goods-receipt-based Invoice Verification has been defined for an order item, an invoice for the order item can be entered with reference to a
goods receipt document or a delivery note number entered at the time of goods receipt. In the process, a separate invoice item is created for
each goods receipt. Checking of price and formal accuracy of the invoice is performed at this item level.
Logistics Invoice Verification (MM-IV-LIV):-
Logistics Invoice Verificationis a part of Materials Management (MM). It is situated at the end of the logistics supply chain
that includes Purchasing, Inventory Management, and Invoice Verification. It is in LogisticsInvoice Verificationthat incoming
invoices are verified in terms of their content, prices and arithmetic. When the invoice is posted,the invoice data is saved in
the system. The system updates the data saved in the invoice documents in Materials Management and Financial
Accounting.

35. Integration
Logistics Invoice Verification is closely integrated with the components Financial Accounting (FI) andControlling (CO). It
passes on the relevant information about payments or invoice analyses to these components.
Logistics Invoice Verificationis also connected to Empties Management . If Empties Management has beenactivated, you
can track movements and stocks of reusable packaging.
Features
In Materials Management , Logistics Invoice Verification has the following features:
 It completes the material procurementprocess,which started with the purchase requisition and resulted in a goods

 receipt.
 It allows invoices that do not originate in materials procurement(such as services,expenses,course costs)to be

 processed.

It allows credit memos to be processed,either as invoice reversals or return deliveries.
An invoice can be processed in Logistics Invoice Verification in various ways:

 Invoice Verification Online
You receive an invoice and enter the information contained in it in the system, comparing the data (such as quantities and
values) suggested by the system with that in the invoice and making any necessarycorrections.You then postthe invoice.
In the SAP system, a distinction is made between the following types of invoices:
o
o Invoices with purchase order reference
All the items in a purchase order can be settled. With purchase-order-basedInvoice Verification,all the items of a
purchase order can be settled together, regardless of whether an item has beenreceived in several partial deliveries.
o
o Invoices with goods receiptreference
Each goods receiptis settled separately.

36. o Invoices without purchase order reference
Invoices can be posted directly to G/L accounts or material accounts.
Valuation modification:- it is used to group plants with the same accounts
Valuation Modification is otherwise called as valuation grouping code. It helps in account
postings of different plants to the same G/L accounts. By this we can reduce the number of
G/L
Valuation modification is nothing but valuation grouping code.
All the valuation areas (plants), with same valuation will be grouped together to a valuation
grouping code and the G/L assignment will be done against the grouping code/valuation
modification in OBYC
What is Valuation Modifier in Account Determination? Please explain with an example?
Valuation Modifier and Valuation Grouping code are same?
lets say you have two plants and you procure/handle a single material with both plant 1 and plant 2.
here you different options for valuation
1. you can valuate the material at different prices for both plants or you can have same price for both plants
2. you can have different GL accounts for plant 1 and 2 or you can group together plant 1 and 2 to have a single GL account. for this scenario,
you have to group together the valuation area(plant) with the help of valuation grouping code(valuation modifier). so you can have same GL
account in both the plants. You group together plants/vauation area in OMWD and assign the GL account for this grouping in OB YC.

37. Valuation modifier is also called as valuation grouping code:-
You can assign the G/L accounts for automatic account determination (indirectly) dependent on the valuation area. To minimize the necessary
effort involved, valuation areas with the same account number assignment can be grouped together. This is done through the valuation grouping
code. The valuation grouping code is then used to assign the G/L account numbers.
The valuation grouping code (dependent on the valuation area) helps you to configure automatic account determination with the minimum
possible effort.
Within a chart of accounts, valuation areas that are to be treated equally in terms of account assignment are assigned to the same valuation
grouping code.
Valuation grouping codes are either used for fine differentiation within a chart of accounts or correspond exactly to a chart of accounts.
In contrast to the chart of accounts itself, you can specify for your company that automatic account determination is to be set up independently of
the valuation grouping code, either generally or only for individual transactions. In the former case, you deactivate the valuation grouping code. In
the latter, you adjust the rules accordingly for individual transactions
General modifications:-
In standard SAP,only three transaction keys are having Account modifiers.The transaction keys are GBB, PRD, KON.
This account modifiers helps to postto differentG/L accounts for the same transaction event keys.
Account modifiers for GBB
AUA: for order settlement
AUF: for goods receiptsfororders (without account assignment)
and for order settlementif AUA is not maintained
AUI: Subsequentadjustment of actual price from costcenter directly
to material (with account assignment)
BSA: for initial entry of stock balances
INV: forexpenditure/income from inventory differences
VAX: for goods issues forsales orders without

38. Account assignmentobject(the account is not a costelement)
VAY: for goods issues forsales orders with
Account assignmentobject(account is a cost element)
VBO: for consumptionfrom stock of material provided to vendor
VBR: for internal goods issues (for example, for cost canter)
VKA: for sales orderaccount assignment
(for example, for individual purchase order)
VKP: for projectaccount assignment(for example, for individual PO)
VNG: for scrapping/destruction