SAP FICO Interview Questions and Answers - 9

Accounts Payables

207. Explain the ‘Account Payables’ Submodule.

‘Accounts Payables,’ a submodule under Financial Accounting (FI), takes care of vendor-related

transactions as the module is tightly integrated with the purchasing transactions arising from the

‘Procurement Cycle.’ The module helps in processing outgoing payments either manually or

automatically through the ‘Automatic Payment Program.’ It also helps in ‘Vendor Evaluations.’

208. What Documents Result from ‘Procurement Processes’?

In Materials Management (MM):

􀂃 PR: Purchase Requisition (manual or automatic using MRP)

􀂃 PO: Purchase Order

In Financial Accounting (FI):

􀂃 Invoice Verification

􀂃 Vendor Payment (manual or automatic)

Both MM and FI areas:

􀂃 Goods Receipt

You may also group these documents into (1) Order documents, (2) GR (Goods Receipt)

documents, and (3) IR (Invoice Receipt) documents. While GR/IR documents can be displayed

both in MM and FI views, the order documents can only be viewed in MM view.

209. Describe a ‘Purchase Cycle.’

A ‘Purchase Cycle or Procurement Cycle’ encompasses all activities including purchase

requisition, purchase order, goods movement, goods receipt, invoicing, invoice verification,

payment to vendors, and ends with the updating of vendor account balances.

Figure 53: Procurement Cycle

210. What is a ‘Purchase Requisition’ (PR)?

A ‘Purchase Requisition,’ PR, is the document that outlines a company’s purchasing needs of a

material/service from vendor(s). A PR, typically an internal document that can be created

automatically or manually, identifies the demand for a product and authorizes the purchasing

department to procure it. In the automatic creation of a PR, this is done as a result of MRP

(Material Requirements Planning). The PR, after identifying the vendor, is processed further to

result in a RFQ (Request for Quotation) or directly to a Purchase Order (PO).

211. What is a ‘Request for Quotation’ (RFQ)?

A ‘RFQ (Request for Quotation),’ which can be created directly or with reference to another

RFQ or a PR or an Outline Agreement, is actually an invitation to vendor(s) to submit a ‘quotation’

for supplying a material or service. The RFQ will contain the terms and conditions for supply. You

may send the RFQ to single or multiple vendors, and you can monitor it by sending reminders to

those who have not responded to the RFQ.

212. What is an ‘Outline Agreement’?

An ‘Outline Agreement,’ a declaration binding both the buyer and seller, is the buyer’s intention

to purchase a material/service with certain terms and conditions agreed to by both parties. The

essential difference between the ‘outline agreement’ and ‘quotation’ is that the outline agreement

does not contain details such as delivery schedule or quantities. Outline agreements can be

contracts or scheduling agreements.

213. What is a ‘Contract’?

A ‘Contract,’ also referred to as a ‘Blanket Order,’ is a long-term legal agreement between the

buyer and the seller for procurement of materials or services over a period of time. The contract,

created directly or with reference to a PR/RFQ or another contract, is valid for a certain period of

time with start and end dates clearly mentioned. There are two types of contracts: Quantity

Contracts and Value Contracts.

214. What is a ‘Release Order’?

A ‘Release Order’ is a ‘purchase order’ created against a Contract. The release orders usually

do not contain information on quantities or delivery dates and are also called ‘Blanket Releases,’

Contract Releases,’ or ‘Call-Offs.’

215. What is a ‘Scheduling Agreement’?

A ‘Scheduling Agreement’ is also a long-term agreement with the buyer and seller for

procurement of certain materials or services subject to certain terms and conditions. These

agreements can be created directly or with reference to other documents such as another

scheduling agreement, or an RFQ or PR. These agreements help in promoting Just-In-Time (JIT)

deliveries, less paperwork, they reduce supply lead times, and ensure low inventory for the buyer.

216. What is a ‘Quotation?

A ‘Quotation’ contains information relating to the price and other conditions for supply of a

material or a service by a vendor, and is the vendor’s willingness to supply the same based on

those conditions. You will be able to compare the data from quotations using a Price

Comparison List and will help in identifying the most reasonable vendor for supply of that item(s).

After you receive the quotations, you will typically enter the quotation data (pricing/delivery) in

RFQ. The SAP system can easily be configured to automatically print ‘Rejections’ for vendors

whose quotation are not selected.

217. What is a ‘Purchase Order’ (PO)?

A ‘Purchase Order’ (PO) is a legal contract between a vendor and a buyer concerning the

material/service to be purchased/procured on certain terms and conditions. The order mentions,

among other things, the quantity to be purchased, price per unit, delivery related conditions,

payment/pricing information, etc.

A PO can be created:

1. Directly or

2. With reference to a PR/RFQ/contract or another PO. Remember, all items on a PO

should relate to the same Company Code.

218. What is a ‘PO History’?

The ‘Purchase Order History’ (PO History) lists all the transactions for all the items in a PO

such as the GR/IR document numbers.

219. Will the FI Document be Created with the Purchase Order (PO)?

No. There will not be any document created on the FI side during creation of a PO. However,

there can be a document for posting a ‘commitment’ to a Cost Center in CO. (The offsetting entry

is posted at the time of GR.)

220. Explain FI-MM Integration.

FI-MM Integration is based on the following:

􀂃 Movement Types

􀂃 Valuation Class

􀂃 Transaction Keys

􀂃 Material Type

The Movement Type is the ‘classification key’ indicating the type of material movement (for

example, goods receipt, goods issue, physical stock transfer). The movement type enables the

system to find pre-defined posting rules determining how the accounts in FI (stock and

consumption accounts) are to be posted and how the stock fields in the material master record

are to be updated.

Figure 54: Movement Types

The Valuation Class refers to the assignment of a material to a group of GL accounts. Along with

other factors, the valuation class determines the GL accounts that are updated as a result of a

valuation-relevant transaction or event, such as a goods movement. The valuation class makes it

possible to:

􀂃 Post the stock values of materials of the same material type to different GL accounts.

􀂃 Post the stock values of materials of different material types to the same GL account.

The Transaction Key (also known as the ‘Event Key or Process Key’) allows users to

differentiate between various transactions and events (such as physical inventory transactions

and goods movements) that occur within the area of inventory management. The

transaction/event type controls the filing/storage of documents and the assignment of document

numbers.

The Material Type groups together materials with the same basic attributes, for example, raw

materials, semi-finished products, or finished products. When creating a material master record,

you must assign the material to a material type. The material type determines:

􀂃 Whether the material is intended for a specific purpose, for example, as a Configurable

Material or Process Material.

􀂃 Whether the material number can be assigned internally or externally.

􀂃 The Number Range from which the material number is drawn.

􀂃 Which screens appear and in what sequence.

􀂃 Which user department data you may enter.

􀂃 What Procurement Type the material has; that is, whether it is manufactured in-house or

procured externally, or both.

Together with the plant, the material type determines the material’s inventory management

requirement, that is:

􀂃 Whether changes in quantity are updated in the material master record.

􀂃 Whether changes in value are also updated in the stock accounts in financial accounting.