Accrual of an expense is reporting an expense in the period in which they occur

irrespective of the payment made. Expenses are reported in the period in which they
occur, and that period is prior to the period in which the payment is made.

Deferral of expenses means that a payment is made in one period, but the expense
itself will be reported as an expense in a later period.

In Accrual/Deferral document method, provisions are made on a month’s end and the
same are reversed on the next month’s first working day.

Accounting of Accrual Deferral Posting

Accounting implication of accrual of expenses can be seen on the following example.
Suppose that we make a provision for rent on 23.11.2017 and reverse the same on
01.12.2017.

On 23.11.2017:

Provision for rent

Rent a/c dr 50000

to outstanding expenses a/c 50000

On 01.12.2017:

Reversal of provision

Outstanding expenses a/c dr 50000

to rent a/c 50000

Now, suppose the actual rent is paid on 05.12.2017.

On 05.12.2017:

Rent Payment
Rent a/c dr 50000

to bank a/c 50000

SAP Accrual Deferral Posting

In this tutorial, we are going to explain how these accounting postings are done in SAP
FI. Here are the steps involved in SAP accrual deferral posting:

1. Define reversal reason

2. Enter accrual/deferral document
3. Reverse accrual/deferral document

Step 1: Define Reversal Reason

Path: SPRO -> Financial Accounting -> G/L Accounts -> Business Transactions ->
Adjustment Posting/Reversal -> Define Reason for Reversal

Reasons for Reverse Posting – Initial Screen

Click New Entries button and define Reason 09 with the following parameters:

 Text: Accrual/deferral reversal for AZ10

 Negative posting: Check this indicator. When we reverse a transaction, it will be
shown at the same side instead of being shown on the other side. For example, if we
 reverse rent provision on 01.12.2017, it will be shown as the negative balance on the
debit side instead of credit side, so that the net effect is zero.
 Alternative posting date: Check this indicator. If we do not select this, the system
allows us to reverse document only on the original posting date. If this check is
selected, it allows reversal entry on any date.

New
Reason for Reverse Posting
Now save it.

Step 2: Enter Accrual/Deferral Document

Path: Accounting -> Financial Accounting -> General Ledger -> Periodic Posting ->
Closing -> Valuate -> Enter Accrual/Deferral Document

Transaction code: FBS1

We will post a normal provision for rent by using FBS1 transaction and we will give a
reversal reason and a reversal date. Document is posted on 23.11.2017 and is reversed
on 01.12.2017. It means that provision of rent is made on 23.11.2017 and the same is
reversed on 01.12.2017. This activity is a part of month end provisions in any company.

Enter Reversal Reason as 09.

Initial Screen Accrual/Deferral
In the next screen, enter the amount of provision to be made and text.
Next Screen Accrual/Deferral
Now, post the transaction. Below is the document posted. Rent account will be debited
and outstanding expenses account will be credited.
Accrual/Deferral Document Display
We will post one more transaction for provision of salaries on 30.11.2017.
Initial Screen Accrual/Deferral Document
Salaries account is debited and outstanding expenses account is credited.
Accrual/Deferral Document Display

Step 3: Reversal of Accrual/Deferral Document

Path: Accounting -> Financial Accounting -> General Ledger -> Periodic Posting ->
Closing -> Valuate -> Reverse Accrual/Deferral Document

Transaction code: F.81

Now, we will reverse the rent provision and salaries provision by entering
transaction F.81 in the command field. Then, we will enter company code, reverse
posting date, check test run and click on execute button.
Reverse Accrual/Deferral Document
Reverse Accrual/Deferral Document – Test Run Results
After this, we will click on button and the SAP system will show a
message that the document has been reversed like shown below.

Reverse Accrual/Deferral Document – Results

Document #2 (rent provision) is reversed with document #4, and document #3 (salaries
provision) is reversed with document #5.
We can also view the reversed document by using transaction FB03 (Display
Document).

Initial Screen of FB03 Transaction

Reversed Document for Rent

The rent account is credited and the outstanding expenses account is debited.
Revered Document for Salaries
Similarly, the salaries account is credited and the outstanding expenses account is
credited.

I hope this tutorial gives you a good understanding of the concept of SAP accrual
deferral posting.
We will post one more transaction for provision of salaries on 30.11.2017
Reversal of Accrual/Deferral Document F.81