1. What is SAP'?

SAP is an acronym for Systeme, Anwendungen, Produkte der Dataenverarbeitung, in German, meaning Systems,
Applications, and Products in Data Processing. Founded in 1972, SAPwith its headquarters in Walldorf, Germany
is the global market leader in collaborative, inter-enterprise business solutions (i.e., business software). SAP employs
close to 40,000 employees worldwide, with more than 100,000 installations in about 40,000 companies in 120 countries.
More than 12 million people use SAP on a daily basis. There are more than 20 industry-specific Industry Solutions,
known commonly as IS (IS-Oil, IS-Retail, IS-Bank, etc.).
2. Tell Me More About (The History Of) SAP.

SAP was founded by five former IBM employees, in 1972, to develop a standard business application software,
with the goal of processing business information in real-time. The company, SAP GmbH, was started in
Mannheim, Germany.

During 1973, the company released its first financial accounting software, R1 (the letter R stands for RealTime Processing).

In the late 1970s, SAP R/2 was released with IBMs database and a dialogue-oriented business application.

R/2 was further stabilized during the early 1980s and the company came out with a version capable of
processing business transactions in several languages and currencies to meet the needs of its international
clientele.

SAP GmbH became SAP AG in 1988. Later on, the company established subsidiaries in countries such as the
United States, Sweden, Denmark, and Italy.

The 1990s saw the introduction of SAP R/3, with client-server architecture and GUI, which ran on almost any
database, and on most operating systems. SAP R/3 heralded a new era in enterprise computing, moving from a
main frame to a 3-tier architecture (Database->Application->User interface), which became the new industry
standard.

By 1996, the company had more than 9,000 installations worldwide. By the end of the 1990s, SAP had
introduced the e-commerce enabled mySAP suite of products for leveraging ever-expanding web technology.

SAP began the twenty-first century with the Enterprise Portal and role-based access to business information.

SAP continues to evolve and innovate, bringing cutting-edge technologies to business-information

processing. SAP has already introduced SAP NetWeaver, which is based on Enterprise Services Architecture
(ESS) with application integration across diverse platforms for providing one-stop end-to-end business
processing. With NetWeaver, companies can now integrate people, information, and processes.

Explain how mySAP ERP Financial is Better/Different than R/3 Financial Accounting.
mySAP ERP Financials is built on the NetWeaver platform, which is the foundation for service-oriented business
solutions, for deploying financial processes at a faster pace. Irrespective of the business type, mySAP ERP Financials is

designed to support financial accounting requirements to provide a single complete platform to achieve excellence in
accounting, performance management, financial supply chain, and corporate governance. The features include:

Industry-Specific Financial Management

mySAP ERP Financials provides a comprehensive and robust analytical framework to consolidate and/or
dissect business information generated in industry solutions or core enterprise processes: all managers in all
operations have an improved visibility with a single integrated solution.

Performance Management
mySAP ERP Financials provides a single solution for the entire life cycle of Corporate Performance
Management by delivering real-time, personalized measurements and metrics to improve business insight and
productivity of non-technical users. Executives, managers, and business workers will now have access to
information such as business statistics and Key Performance Indicators (KPI) presented in the context of
business tasks for better insight and faster decision making. mySAP ERP Financials encompasses:

Consolidated financial and statutory reporting

Planning, budgeting, and forecasting

Strategy management and scorecards

Risk management

Financial analytics

Financial and Management Accounting

mySAP ERP Financials helps companies comply with global accounting standards (such as the United
States Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting
Standards (IFRS). With the New FI-GL functionality (Refer to Q.181 for more details) you will now have the
ability to generate financial statements of any dimension of the business (unit, profit center, geographical
location, etc.). This offers greater flexibility to extend a chart of accounts and allows an easier method of
reporting by individual management units and segments. This feature helps companies reduce the complexity
and costs associated with parallel accounting or managing a set of books by region, industry, or regulatory
reporting statute.

Corporate Governance
With a set of applications and tools, mySAP ERP Financials assists in meeting the specific requirements of
todays financial regulations such as the SarbanesOxley Act. You now have an intuitive mechanism to collect,
document, assess, remediate, and attest to internal control processes and safeguards to ensure transparent
business activity. By configuring controls and defining rules and tolerances for your business, you can easily
customize internal processes for security, reporting, and error prevention. In addition, you can now document all
your internal control processes and make them visible to corporate executives, auditors, and regulators.

Financial Supply Chain Management

Provides the tools to help you manage your financial supply chain and cash-flow cycle more effectively, through
end-to-end process support of:
o

Credit Management

Electronic Bill Presentment and Payment

Collections Management

Dispute Management

In-house Cash Management

Cash and Liquidity Management

Bank Relationship

Treasury and Risk Management Processes

Explain the SAP R/3 System Architecture.

SAP R/3 is based on a 3-tier Client-Server model, represented by the:

Database Layer

Application Layer

Presentation Layer

In a 3-tier Client server model, all the above three layers run on three different machines.
The Database Layer consists of an RDBMS (Relational Database Management System), which accepts the database
requests from the Application Layer, and sends the data back to the Application Layer, which in turn passes it on to the
Presentation Layer.
The Application Layer or the server interprets the ABAP/4 programs, receiving the inputs from them and providing the
processed output to them.
The Presentation Server or Presentation Layer is what is installed on the typical workstation of a user. This is nothing
but the SAPGUI, which when started provides the user with the interface of SAP R/3 menus. This interface accepts the
inputs from the user, passes them on to the Application Server, processes the inputs and sends back the output. If
database processing is required, the Application Server sends the details to the Database Layer, receives the data, and
then processes it at the Application Layer level and sends back the output to the Presentation Layer where the SAPGUI
may format the data before displaying it on the screen.

Figure 2: SAP R/3 System Architecture

Explain Financial Accounting (FI) in SAP.
The FI (Financial Accounting) module of SAP is the back-bone, which records, collects, and
processes financial transactions or information on a real-time basis to provide the necessary inputs for external
(statutory) reporting. The module is integrated with other modules (such as Material Management (MM), Sales &
Distribution (SD), Human Resources (HR), Production Planning (PP), Controlling (CO), etc.). The module FI has several
submodules that are tightly integrated.
76. What are the Submodules within FI?

FI-AA Asset Accounting

Integrated with FI-GL, FI-AR, FI-AP, CO, MM, PP and PM, this module manages the financial side
(depreciation, insurance, etc.) of the assets throughout their entire lifecycle starting with procurement of assets
and ending with scrapping or sales.

FI-AP Accounts Payable

Integrated with FI-GL, FI-AA, FI-TR and MM, this submodule manages vendor transactions by linking with
material management, asset accounting, travel management, etc. Notable is the payment program for making
payments to vendors.

FI-AR Accounts Receivable

Integrated with FI-GL, FI-AA, FI-TR, MM and SD, this submodule manages customers and receivables, and
integrates with SD. It is well-known for credit management functionalities and the dunning program.

FI-BL Bank Accounting

FI-FM Funds Management

FI-GL General Ledger Accounting

This submodule is integrated with all other submodules within FI and outside FI.

FI-SL Special Purpose Ledger

This submodule is used to provide the summary information from multiple applications at a level of detail that
the user defines.

FI-LC Legal Consolidations

This submodule helps in the central task of combining the financial operating results of the companies within a
group to provide overall results for the group.

FI-TM Travel Management

77. Name the Submodules Within FI, from Which FI-GL Gets Simultaneous Postings.

Accounts Receivable (FI-AR)

Accounts Payable (FI-AP)

Asset Accounting (FI-AA)

78. Name Three Distinct Characteristics of FI-GL.

Multi-currency capability

Flexible real-time reporting

Real-time transaction entries

What are the Submodules within FI?

FI-AA Asset Accounting

Integrated with FI-GL, FI-AR, FI-AP, CO, MM, PP and PM, this module manages the financial side
(depreciation, insurance, etc.) of the assets throughout their entire lifecycle starting with procurement of assets
and ending with scrapping or sales.

FI-AP Accounts Payable

Integrated with FI-GL, FI-AA, FI-TR and MM, this submodule manages vendor transactions by linking with
material management, asset accounting, travel management, etc. Notable is the payment program for making
payments to vendors.

FI-AR Accounts Receivable

Integrated with FI-GL, FI-AA, FI-TR, MM and SD, this submodule manages customers and receivables, and
integrates with SD. It is well-known for credit management functionalities and the dunning program.

FI-BL Bank Accounting

FI-FM Funds Management

FI-GL General Ledger Accounting

This submodule is integrated with all other submodules within FI and outside FI.

FI-SL Special Purpose Ledger

This submodule is used to provide the summary information from multiple applications at a level of detail that
the user defines.

FI-LC Legal Consolidations

This submodule helps in the central task of combining the financial operating results of the companies within a
group to provide overall results for the group.

FI-TM Travel Management

Name the Submodules Within FI, from Which FI-GL Gets Simultaneous Postings.

Accounts Receivable (FI-AR)

Accounts Payable (FI-AP)

Asset Accounting (FI-AA)

Name Three Distinct Characteristics of FI-GL.

Multi-currency capability

Flexible real-time reporting

Real-time transaction entries

SAP FICO is also mentioned as SAP FI/CO, where FI stands for Financial Accounting and CO stands for Controlling,
now referred to as Management Accounting. There are two target groups that use accounting information:
1. External users: These users typically require information that conforms to legal requirements. This data is
managed in the application component FI. Groups that would fall under this category are the federal
government, state governments, financial institutions, and insurance providers.
2. Internal users: These users come from all levels within the company. They need information for the internal
operations of the company. This information is contained in the application component CO.
The FI module is used to monitor and review the financial statements of a given entity. Financial reports used for
external reporting purposes (such as balance sheets, profit and loss calculations, and cash flows) are created in FI.
These external reporting requirements are based on the varying legal requirements set by the relevant financial
authorities, usually prescribed through general accounting standards such as Generally Accepted Accounting Principles
(GAAP) or International Accounting Standards (IAS). The FI module is called external accounting because it focuses on
external reporting.
The application component CO contains all the functions for effective controlling of cost and revenue of an entity. CO
covers all aspects of management. It is management oriented and management driven. It offers a broad spectrum of
tools that can be used to compile information for the company management, which greatly exceeds that required by law.
The FI module comes with the following submodules. You will learn more about sub-modules later in this book.
The General Ledger (FI-G/L) records all relevant accounting transactions from a business point of view in the G/L
accounts. In order to retain a clear overview, the G/L often contains collective postings. In such cases, the information
posted is displayed in more detail in the subsidiary ledgers, which provide their information to the G/L in summarized
form.
Accounts Payable (FI-AP) records all financial transactions with your vendor. This module often gets it data from
procurement or Materials Management (MM).
Accounts Receivable (FI-AR) records all financial transactions for dealings with customers. Much of its data is obtained
from Sales and Distribution.
Asset Accounting (FI-AA) records all accounting transactions relating to the management of assets starting from
acquisition of assets to the sale or scrap of an asset. This submodule interacts with FI-AP, FI-AR, and G/L of FI
modules, as well as MM modules.
Travel Management (FI-TM) manages, calculates, and supports travel costs, travel planning, and travel expenses. This
submodule is tightly integrated with SAP HR and FI-AP because employees in SAP are treated as vendors.
Bank Ledger (FI-BL) supports the posting of cash flow, cash payments, and cash receipts.
All transactions posted to G/L expenses and revenue account directly or indirectly flow to controlling. Similarly, when
cross object transactions happen between controlling objects, the system creates and FI posting. Figure 2.1 shows data
flows between various submodules of FI.
Like FI, CO covers following submodules. However, we will cover those in more detail later in the book.

Cost and Revenue Element Accounting [CO-OM-CEL] is part of Overhead Cost Controlling. It provides classification of
transaction items. These transactions are captured in various cost objects, such as a cost center or an internal order,
depending on their cost or revenue element.
Cost Center Accounting (CO-CCA) is used for cost collection and provides information about where costs are incurred
in your organization.
An Internal Order (CO-IO) is another kind of cost object used for a wide variety of purposes to capture costs and, in
some cases, revenues within a controlling area.
Product Costing (CO-PC) takes care of all aspects of a product, from planning to tracking of costs. This submodule
consists of following components:

Product Cost Planning (CO-PC-PCP)

Cost Object Controlling

Actual Costing

If you are looking for multidimensional reporting tool, then Profitability Analysis (CO-PA) is the best solution. Through
profitability analysis you can analyze market segments and profitability measures.

SAP Financial Accounting (FI)

Before getting into the questions, please look at the Financial Accounting (FI) organization structure in Figure 0.1. When
moving through the questions, it is helpful to refer to the layout if you have questions at any point of time. To be
successful as an FI or CO consultant, you must have a thorough grasp on this basic fundamental block in SAP FI/CO.

Figure 0.1: FI Organizational Structure

The questions are arranged into several areas within FI, including:

Organization Units and Basic Settings

General Ledger Accounting (FI-G/L)

Accounts Payable (FI-A/P) and Accounts Receivable (FI-A/R)

Bank Accounting (FI-BL)

Asset Accounting (FI-AA)

Lease Accounting (FI-LA)

Travel Management (FI-TV)

Chapter 1: Organizational Units and Basic Settings

OVERVIEW
The questions in this section relate to the basics in SAP Financial Accounting and will help you to understand how to
design and define the organizational units, relationships, assignments, and interdependencies among them, as well as
the various configuration units/settings like financialyear, posting period, chart of accounts, and so on as detailed below:

Company

Company codes

Fiscal year

Posting period

Currency

Exchange rate

Tax

1 WHAT IS AN ENTERPRISE STRUCTURE IN SAP?

The enterprise structure helps you to portray the specific organizational structure of your business in
the SAP system. SAP, in its standard version, comes with sample organizational units (for accounting, logistics, human
resources, etc.). Do not expect SAP to provide everything that is required for your business, but it is a good idea to try to
match the structure provided by SAP with your specific requirements and extend the SAP structures wherever you need
more or different units. It is very critical that you define the structure correctly because you will not be able to change

these after the business is activated. It is also necessary that you restrict the access to these structures through
appropriate authorization profiles. Remember to define only the required structuresnothing more, nothing less!

2 WHAT ARE ORGANIZATIONAL UNITS IN SAP?

The organizational units in SAP are the elements or structures representing the business functions, and they are used
in reportingfor example, Client (across the various modules), Company Code (FI), Controlling Area (CO), Plant
(Logistics), Sales Organization (SD), Purchasing Organization (MM), Employee Group (HR), and so on.

3 WHAT ORGANIZATIONAL UNITS MUST BE DEFINED IN SAP FI?

The various organizational units in SAP FI (Version SAP ERP/ECC6) are:

Company (not required)

Company Code (mandatory)

Business area (mandatory)

Consolidation Business Area (mandatory)

Functional Area (mandatory)

Credit Control Area (mandatory)

Functional Management (FM) Area (mandatory)

Profit Center (mandatory)

Segment (optional)

You will be defining these units under SAP Customizing Implementation Guide>Enterprise
Structure>Definition>Financial Accounting (Version SAP ERP/ECC6) (Figure 1.1).


Figure 1.1: FI Organizational Units

Transaction Code: SPRO

4 WHAT IS A COMPANY?
A company in SAP is represented by a 5-character alphanumeric code and usually represents the
organizational unit in accounting depicting the business enterprise as per the particular countrys commercial
law requirements. A company can include one or more company codes. InSAP, the creation/definition of a
company is optional, but the consolidation functions in SAP are based on the company. SAP provides you with
the sample company "G00000" with all the foreign key relationships. It is recommended that you keep the
preset company ID G00000 if you only require one company. This way, you can reduce the number of tables
you need to adjust (Figure 1.2).

Figure 1.2: Company and Company Code

Figure 1.3: Define a Company

Note that all the company codes for a company must work with the same operational chart of accounts and
fiscal year, though the currencies used in each of the company codes can be different (Figure 1.3).
(When you enter the transaction, do not be confused when the screen shows "Change View Internal Trading
Partners: Overview." This is where you define the company.)

Transaction Code: OX15

5 WHAT IS A COMPANY CODE AND HOW IS IT DIFFERENT FROM A COMPANY?

A company code in SAP is the smallest organizational unit for which you can draw
individual financial statements (balance sheets and profit and loss accounts) for your external statutory
reporting. It is denoted by a 4-character alphanumeric code. The creation of the company code is mandatory.
You need to have at least one company code per client defined in the system for implementing FI. You may,
however, define several company codes in a single client.
SAP comes delivered with company code 0001 in clients 000 and 001 for Germany (country code: DE). All
country-specific parameters (like payment methods, tax calculation procedures, chart of accounts, etc.) are
preset in this company code for this country. In case you want to create a company code for the United States
and its legal requirements, you must first run the country installation program in client 001. The country of
company code 0001 is then set to "US" (from "DE"), and all country-specific parameters related to it are set to
the United States.
You may define a company code by copying from an existing one (copy, delete, check company code option). In
fact, SAP recommends this approach (less time consuming than creating new), as this has the advantage that
you also copy the existing company code-specific parameters. You may then change certain data in the relevant
application.
You may also create the company code (the second option in Figure 1.4) from scratch.


Figure 1.4: Options to Define a Company Code
6 WHAT NEEDS TO BE DONE IF YOU DEFINE A COMPANY CODE BY A COPY FUNCTION?
When you copy an existing company code, all the company code-specific specifications of the source (From Company
Code) are copied to your new company code target (To Company Code) (Figure 1.5).

Figure 1.5: Define a Company Code (with the "Copy" Function)

Note that the target company code should not have been defined, as the same will be defined automatically during the
copying procedure.
So how do you do this?
Create the company code using the function "Copy Company Code."
Enter/modify special company code data (name, description, address, and currency) with the function "Edit
Company Code Data."
Use the Transaction Code OBY6 to modify any other global parameters that need to be different from
the source company code.

Transaction Code: EC01

7 HOW DO YOU CREATE A NEW COMPANY CODE FROM SCRATCH?
You can use the function "Edit Company Code Data" to create a company code from scratch (Figure 1.6). In this case,
the company code "global data" are not copied.

Figure 1.6: Define a Company Code (with the "Edit Company Code Data" Function)
Once you create the new company code using this option, then you need to maintain the global parameters using
the Transaction Code OBY6.
8 HOW DO YOU CHANGE THE COMPANY CODE KEY?
Use the "Replace" function in the Transaction Code EC01 to change the company code key. But this is only possible if
no postings have been made in the company code that are to be replaced with the new company code key.
9 WHAT ARE ALL THE IMPORTANT GLOBAL PARAMETERS FOR A COMPANY CODE?
The global parameters for a company code are divided into two sections:
Accounting Organization
The parameters under this section include the chart of accounts, the credit control area, the FM area, the
company, the fiscal year variant, and more (Figure 1.7). This is also the area where you will normally set the
company code as "productive" before activating the system.

Figure 1.7: Accounting Organization Parameters under Global Parameters

Processing Parameters
The processing parameters include settings like field status variant, fiscal period variant, whether you want the
system to propose the fiscal year during document entry, the company codecontrolling area assignment, the
calculation base for discounts/taxes, whether you will need financial statements per business area, the
maximum exchange rate deviation allowed, and more (Figure 1.8).

Figure 1.8: Processing Parameters under Global Parameters

Transaction Code: OBY6

10 CAN YOU ASSIGN MORE THAN ONE COMPANY CODE TO A COMPANY?
Yes, you can assign more than one company code to a company. But all such company codes should use the
same chart of accounts and the same financial year, even though they all can have different local currencies.
11 WHAT IS A BUSINESS AREA?
Business areas correspond to specific business segments of a company and may cut across different company codes
(for example, product lines) (Figure 1.9). They can also represent different responsibility areas (for example, branch
units). You can create financial statements for business areas that can be used for various internal reporting purposes.

Figure 1.9: Business Area

Transaction Code: OX03

12 HOW DO YOU ENABLE BUSINESS AREA FINANCIAL STATEMENTS (FS)?
There are two ways you can enable the financial statements for the business areas:
Enabling the business area financial statements in the global parameters of company codes (one by one for
each of the company codes) (Figure 1.10).

Figure 1.10: Enable Business Area Financial Statements

Transaction Code: OBY6

Enabling the business area financial statements for more than one company code at the same time (Figure
1.11).

Figure 1.11: Enable Business Area Financial Statements

Transaction Code: OB65

When you set this indicator, the business area field is always ready for input (when documents are posted), independent
of the field control of the posting keys and of the accounts.
13 WHAT PRECAUTIONS SHOULD YOU TAKE WHEN YOU ENABLE BUSINESS AREA FS?

You should only set the indicator for the business area field if you work with all the financial statements (this way, the
business area field is always ready for input irrespective of your settings if field control for posting keys/accounts). If you
only work with business areas in a few financialstatement areas (for example, P&L), then you should not set the
indicator. Instead, you should make the business area field ready for input for the business arearelevant accounts
using the field control of the accounts/posting keys.
14 CAN YOU DERIVE A BUSINESS AREA BY NOT ASSIGNING ONE IN A POSTING?
Yes. The business area can also be derived from other account assignmentsfor example, cost center. But to do this,
you need to define the business area in the master record of that particular cost center.
15 HOW DO YOU POST CROSS-COMPANY CODE BUSINESS AREA POSTINGS?
By using a cross-company code transaction, you can post to different business areas cutting across various company
codes. Any number of business areacompany code combinations are possible.
The content of the book is arranged into ten chapters:
1. General Controlling (CO)
2. Cost Element Accounting (CO-OEM-CEL)
3. Cost Center Accounting (CO-OM-CCA)
4. Internal Orders (CO-OM-OPA)
5. Activity Based Costing (CO-OM-ABC)
6. Product Cost Controlling (CO-PC)
7. Profitability Analysis (CO-PA)
8. At the Cross-Roads...
9. SAP Tables in Controlling
10. SAP Transaction Codes in Controlling
The chapter General Controlling (CO) has 64 questions covering the fundamentals of SAP Controlling. To help
understand the CO organizational elements together with their assignment, an organizational map is provided before we
even start the questions. Besides the organizational structure, the chapter also discusses the basics in CO like account
assignment, business transactions, currency, number ranges, settlement, distribution, etc.
The Cost Element Controlling (CO-OM-CEL) chapter discusses the cost elements, cost element categories, cost
element groups, accruals, overhead structure, etc. (in 17 questions), providing the necessary insight on all these.
The 3rd chapter focuses through 73 questions - on Cost Center Accounting (CO-OM-CCA): cost center, cost center
group, cost center category, standard hierarchy, activity types, statistical key figures , resources, planning profile,
versions, distribution, assessment, allocation, budgeting, variances, summarization, etc., are all discussed here.

The chapter on Internal Orders (CO-OM-OPA) discusses individual orders, standing orders, statistical order, real order,
order types, order categories, order manager, order management, archiving orders, etc., in a total of 20 questions.
The Activity Based Costing (CO-OM-ABC) is discussed in Chapter 5. There are 23 questions covering the definition,
usage, benefits, approaches (push and pull), allocation, etc. You will also see questions on parallel and integrated ABC,
planning aids, and ABC information system.
The Product Cost Controlling (CO-PC) is the largest chapter, with 184 questions, covering the four sub-components
namely, Product Cost Planning (CO-PC-PCP), Cost Object Controlling (CO-PC-OBJ), Actual Costing / Material Ledger
(CO-PC-ACT) and Product Costing ControllingInformation System (CO-PC-IS). Here, you will find questions on terms /
concepts, use / benefits of product costing, valuation variant, costing variant, reference variant, transfer / date / quantity
controls, costing, costing run, cost estimates, cost component structure, cost component split, cost roll-up, product cost
by order / period, standard / moving average price, price change, price control, valuation, variance, WIP, overhead,
overhead calculation, costing sheet, collective orders, sub-contracting, results analysis, joint production, template,
actual costing, revaluation, material ledger, mixed costing, prices and inventory values, value flow monitor, reports, etc.
The 7th chapter is devoted to Profitability Analysis (CO-PA). The questions (42) throw light on key terms, difference
between PA and PCA (Profit Center Accounting), operating concern, characteristics, values fields, segments, currency,
PA structure, master data, conversion, realignment, valuation, planning framework, planning methods, etc.
You will find the 8th chapter At the Cross-Roads... very interesting as it draws the most challenging real-life scenarios
and situations encompassing the entire scope of Controlling. The solution(s) suggested to each of the questions in this
chapter will certainly help you to resolve any similar situation in your work place. You will also get more help and
comprehension from the screen-shots displayed along with the answers.
The SAP Tables in Controlling chapter lists 75 of the most important tables in SAP CO application area.
A total of 1,335 Transaction Codes are listed in the three sections (Overhead Cost Controlling, Product
Cost Controlling and Profitability Analysis) in the chapter SAP Transaction Codes in Controlling. Unlike an alphabetical
listing of Transaction Codes / Tables which is the convention, here you will find something functional and useful: the
information is arranged the way you need, as most of the time you may not know the Transaction Code or Table to look
at, but you know the functionality or task for which you are trying to find the information.
So, how to use this book?
Read in any way you want.
Pick a chapter and read all the questions or simply pick a particular question, go to the relevant page and see the
answer. Use the book as a reference or a study-guide or a just as reading material, but make sure you understand a
particular question or concept before moving on to the next.

The SAP ERP Central Component (ECC 6.0) can be broadly sub-divided into three major application areas, namely:

Financials

Logistics

Human Resources

SAP Financials is made up of:

1.

Accounting General (AC)

Financial Accounting (FI)

Controlling (CO)

Financial Supply Chain Management (FSCM)

SAP Banking

Investment Management (IM)

Project Systems (PS)

Enterprise Controlling (EC)

Real Estate Management (RE)

Public Sector Management

Management of Internal Controls

Country Versions

EXPLAIN CONTROLLING (CO) IN SAP.

SAP calls managerial accounting Controlling and the module is commonly known as CO. The CO module is
thus primarily oriented towards planning, managing, and reporting cost/revenue and is mainly used in internal decision
making, focusing on determination variances. Facilitating coordination, monitoring, and optimization of all processes in
an organization, CO involves recording both the consumption of production factors and the services provided by an
organization. As in with any other application module in SAP, this also has (a) configuration setup and (b) application
functionality.
The Controlling module focuses on the internal users, and helps the management by providing reports on cost centers,
Profit Centers, contribution margins and profitability, etc.
The data flows regularly between Financial Accounting and Controlling: all the cost information flow automatically
from SAP FI to CO; the system assigns the costs and revenues to various CO objects (internal orders, cost centers,
projects, etc.); the required and relevant accounts of SAPFI are maintained as cost elements / revenue elements in CO,
for easy and effective reconciliation between FI and CO.

SAP Controlling is meant for providing the necessary information for management decision-making. Integrated with
other applications like Financial Accounting (FI), Materials Management (MM), Sales and Distribution (SD), Production
Planning (PP), etc., this facilitates coordination, monitoring and optimization of all processes in an organization, by
recording both the consumption of production factors and the services provided by an organization. This application
component contains the following modules:

General Controlling

Cost Element Accounting (CO-OM-CEL)

Cost Center Accounting (CO-OM-CCA)

Internal Orders (CO-OM-OPA)

Activity Based Costing (CO-OM-ABC)

Product Cost Controlling (CO-PC)

Profitability Analysis (CO-PA)

The relationship between various organizational units within and outside CO is depicted in Figure 0.1. It is essential that
you understand the structure to comprehend the functionality better.