Fi MM

Valuation area:
Stock of a material owned by a company is an asset to the company. Valuation area defines the
organization level at which materials are valuated.
SAP has provided two options for valuation.
1. Valuation at plant level: All materials are valuated at plant level.
2. Valuation at company code level: All materials in all plants of a company are valuated at
company code level.
Material type:
This defines the type of material.
EG: Raw material, Finished goods etc.
Material type is defined during material master data creation.
Movement type:
This defines the type of material movement from one place to other. Movement type enables the
system to find predefined posting rules determining how the stock and consumption accounts are to be
posted. All possible goods movements are already defined by standard SAP
EG: Movement type 101 refers goods receipt
Movement type is entered while posting stock movement related transactions. Most of the time,
standard SAP automatically derives the movement type based on transaction code.
EG: If we go to MIGO, default movement type 101 is displayed by system.
Valuation class:
Valuation class is defined for the combination of plant and material (In Accounting 1 view of material
master).
Valuation class allows posting of stock values of
1. Materials of same material type to different G/L account (Different valuation class is
assigned in different plants for the same material)
2. Materials of different material type to same G/L account (Same valuation class is assigned to
materials of different material type)
Note: G/L accounts can be defined at valuation class level along with other parameters.
Valuation grouping code:
Valuation grouping code combines the valuation areas having same business properties for the
account determination. This reduces number of entries to be created for automatic account
determination for the stock postings.
EG: Valuation area 1 and 2 are required to be posted to same G/L account, these are grouped to
valuation grouping code ABC and G/L is determined based on valuation grouping code and valuation
class.
Before using valuation grouping code, it needs to be activated in OMWM.
Valuation grouping code is assigned to valuation area in t-code OMWD.
In below example, five valuation areas are assigned to same valuation grouping code.
Account modification/General modification:
This key is used to determine different G/L account for the same kind of goods movement based on
origin and target.
EG: During Goods issue, offsetting G/L is determined from transaction key GBB. If business wants to
post to different G/Ls for goods issue for cost centers (Movement type 201) and good issues to orders
(Movement type 261) for the same material and plant, Account modifier can help here. To understand
this better, let us go to t-code OMWN where we define the transaction key and account modification
for the movement type.
Transaction key which we see in OBYC is determined based on the movement type. When material
document is posted with these movement types, offsetting account is determined from transaction key
GBB based on account modifier and valuation class.
Transaction keys are used to determine general ledger accounts used by the system. Transaction keys
are predefined in the SAP system and cannot be changed.
At the time of the purchase of raw material as a debit to inventory and credit GR/IR. The
configuration setup of transaction BSX (inventory posting) is responsible for the inventory posting
and WRX (GR/IR clearing account) is responsible for GR/IR posting.
By Default, Standard SAP defines account modification keys for below transaction keys. User defined
keys can also be defined and respective account determination settings can be maintained.
 GBB (offsetting entry for inventory posting)

 PRD (price differences)
 KON (consignment liabilities)
Modifiers for GBB
For the transaction/event GBB (offsetting entry for inventory posting), the following account
groupings have already been assigned to the relevant movement types:
 AUF: for goods receipts for production orders with account assignment
 BSA: for initial entries of stock balances
 INV: for expense/revenue from inventory differences
 VAX: for goods issues for sales orders without account assignment object
 VAY: for goods issues for sales orders with account assignment object
 VBO: for consumption from stock of material provided to vendor
 VBR: for internal goods issues (e.g., for cost center)
 VKA: for consumption for sales order without SD
 VNG: for scrapping/destruction
 VQP: for sampling
 ZOB: for goods receipts without purchase orders
 ZOF: for goods receipts without production orders
Modifiers for PRD
If you also activate account grouping for transaction/event PRD (price differences) when you make
the settings for automatic postings, the following account groupings are already assigned to the
relevant movement types in the standard:
 none for goods receipts and invoice receipts for purchase orders
 PRF: for goods receipts for production orders
 PRA: for goods issues and other goods movements
Modifiers for KON
If you also activate account grouping for transaction/event KON (consignment liabilities) when you
make the settings for automatic postings, the following account groupings are already assigned to the
relevant movement types in the standard:
 none for consignment liabilities

 PIP: for pipeline liabilities
Finance Entries while posting through Material Management
Goods Receipt FI entry:
Dr. Inventory Raw Material A/c
Cr. GR/IR Clearing A/c
Goods issue against order FI entry:

Dr. Raw Material Consumption A/c
Cr. Raw Material Stock A/c
Goods received from production to stock FI Entry:
Dr. Finished goods stock A/c
Cr. Cost of Goods Manufactured A/c
Goods Deliver to Customer FI Entry:
Dr. COGS (here, COGS entry comes because, delivery may include selling and other expenses)
Cr. Finished Goods Stock A/c
SAP FI-MM Integration Entries

The following are the important FI MM integration related accounting entries in
SAP.

Purchase order (PO)

Accounting entry will not generate

Goods received from vendor (GR) – MIGO

Example: 100 (Qty) X 20 (PO price) = 2,000

Inventory Account Dr 2,000 – BSX

To GR/IR Clearing Account 2,000 – WRX (Movement type 101)

Invoice received (IR) – MIRO

In case of full stock available

Example: Invoice price is Rs.25, and then the invoice value will be 100X25 =2500

Entry: GR/IR Clearing Account Dr 2,000- WRX

Stock Account Dr 500 – BSX

To Vendor Account 2,500

In case of partial stock available – 50 Qty

Entry: GR/IR Clearing Account Dr 2,000 – WRX

Stock Account Dr 250 – BSX

Price Difference Account Dr 250 – PRD


In case of No stock available

Entry: GR/IR Clearing Account Dr 2,000 – WRX

Price Difference Account Dr 500 – PRD


Payment to vendor

Vendor Account Dr 2,500

To Bank Clearing Account

Issued material to production order (Movement type 261)

Material Consumption Account Dr 1,000 – GBB VBR

To Stock Account 1,000 – BSX

Co Entry: Production Order Dr

Goods received from production to stock (Movement type 101)

Stock FG Account Dr – BSX

To COGM – GBB AUF

Co Entry: Cr Production Order

Delivery

COGS Account Dr – GBB VAX/VAY (VAX: without cost element & VAY: with cost
element)

To Stock FG Account – BSX
OBYC Settings for EM01 Company Code:
BSX :
Valuation Class G/L Account (Assets)
E001 Inventory – RM
E002 Inventory –SFG
E003 Inventory - FG
FR1:
Freight Clearing A/C (Liabilities)
PRD:
Price Differences (Expenses)
WRX:
GR/IR Clearing Account (Liabilities)
GBB
Valuation General Value Class Account Description

Modification Modification
E000 VBR EM01 Expenses GL RM Consumption
E000 VBR EM02 Expenses GL SFG Consumption
E000 VAY E003 Expenses GL COGS
E000 VAX E003 Expenses GL COGS
E000 AUF E003 Expenses GL Inc/Dec in Stock
E000 AUF E002 Expenses GL Inc/Dec in Stock
E000 ZOF E003 Expenses GL Inc/Dec in Stock
Movement
Description Type Accounting Effect
GR goods receipt 101 S
Reversal of GR 102 H
RE return to vendor 122 H
RE rtrn vendor rev. 123 S
GR returns 161 H
GR rtrns reversal 162 S
GI for cost center 201 H
RE for cost center 202 S
GI for project 221 H
RE for project 222 S
GI for Order 261 H
GI for Order rev. 262 S
TR Slc to Slc in one step 311 –
TR Slc to Slc in one step rev. 312 –
TF quality to unrest 321 –
TR quality to unrest reversal 322 –
TF blocked to unre. 343 –
TR blocked to unre. 344 –
TF blocked to qual. 349 –
TR blocked to qual. 350 –
TF own to own 411 –
TF own to own rev. 412 –
GR without reference to PO 501 S
GR without reference to PO rev. 502 H
Free of charge 511 S
Free of charge rev. 512 H
GI scrapping 551 H
RE scrapping 552 S
Initial Entry of Stock Balances 561 S
Initial Entry of Stock Balances rev. 562 H
GD goods issue: delvy 601 H
RE goods deliv. rev. 602 S
TF to stock in trans. 641 –
TR to stock in trans. 642 –
GD ret.del. returns 651 H
GD ret.del. retn rev 652 S
GR phys.inv.: whse 701 S
GI phys.inv.: whse 702 H
GR phys.inv: QI 703 S
GI phys.inv: QI 704 H
GR phys.inv.:blocked 707 S
GI phys.inv.:blocked 708 H

Fi MM

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Valuation area:

 GBB (offsetting entry for inventory posting)

Modifiers for GBB

Modifiers for PRD

Modifiers for KON

 none for consignment liabilities

Finance Entries while posting through Material Management

Goods Receipt FI entry:

Dr. Inventory Raw Material A/c

Cr. GR/IR Clearing A/c

Goods issue against order FI entry:

Cr. Raw Material Stock A/c

Goods received from production to stock FI Entry:

Dr. Finished goods stock A/c

Cr. Cost of Goods Manufactured A/c

Goods Deliver to Customer FI Entry:

Cr. Finished Goods Stock A/c

SAP FI-MM Integration Entries

OBYC Settings for EM01 Company Code:

Valuation Class G/L Account (Assets)

Freight Clearing A/C (Liabilities)

GR/IR Clearing Account (Liabilities)

Valuation General Value Class Account Description

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