Topic overview

Financials has the task to numerically record, monitor and evaluate the value flow in the company. Similarly, besides tax evaluation, Financials offers important and relevant counting means for external and internal prospective customers. Financials provides important information for successful management of the operation to the expert. Financial accounting is a central part of Financials. It provides legally required information for internal and external company addressees. Financial accounting provides the actual data as basic information for the other areas of the business Financials. It is, therefore, the central base data.

External addressees (prospective customers) are:

• Authorities (fiscal office)
• Banks
• Attesters
• Capital investors

Definition of terms

 Balance sheet

The financial accounting is a time point and period calculation. In the profit commission statement the operating result is determined for a certain period and with the help of expenses and revenues. The balance sheet reflects the result with the help of asset values and liabilities at a certain time point.

Financial Accounting

Financial Accounting is part of the Financials framework. It is used to record and manage the non-operational value traffic of its own company from the business relations with customers (accounts receivable—A/R) and suppliers (accounts payable—A/P) and the resultant changes in the asset and capital conditions. Financial Accounting supplies the current state of pending items and the figures for preparing the balance sheet and profit and loss account.

Customer and supplier information is transferred to Financial Accounting for those customers and suppliers marked as A/R or A/P in their partner master data. Data of the customer and supplier invoices released for Financial Accounting are also transferred.

The transferred customer and supplier invoice data are posted to the A/R and A/P accounts. In pre-set time intervals, the A/R and A/P account balances are transferred from Financial Accounting. If, for instance, an A/R account has a debit exceeding the customer’s credit limit, a delivery or posting block can be set for the customer. Any blocks are transferred together with the balances.

Cost and activity accounting

Unit and resource accounting for a certain period in consideration of an activity unit (unit, group, etc.)

Sub-ledger account

Sub-ledger accounts are accounts of a subsidiary ledger and allow detailed expense and revenue postings. On the balance sheet, the sums of these subledger accounts are declared in the claims and liabilities.

Impersonal account

Impersonal accounts are accounts of the general ledger which are either assigned to the balance sheet or to the profit commission statement. The balance
sheet comprises asset accounts (assets) and liability accounts (liabilities and
debts). The profit commission statement comprises expense accounts and
revenue accounts

Control account

Impersonal accounts of the control account type, also called general accounts, are accounts of the claims and liabilities category. All the postings on sub-ledger accounts (accounts receivable, accounts payable) which represent assets or debts are collected automatically on the control account. These accounts can be tallied with the balance lists of the relevant sub-ledger account area. They cannot be posted to directly.

Tax account

Impersonal accounts of the pre-tax or value added tax category are accounts of the general ledger which gather the tax amounts from postings with sales tax. These accounts cannot be posted to directly, but are posted to automatically according to the tax codes and the assigned tax accounts. Tax reliefs are carried out automatically by the system, together with the filing of the VAT return.

Statutory regulations

In contrast to cost accounting or planning, financial accounting is highly regulated by numerous legal sources in great detail. Statutory regulations in fiscal and commercial law are

• Laws,
• Regulations,

Also included are the pertinent jurisdiction and customary laws. Customary laws are realized in unclear or even undefined basic principles, trade customers, or good faith.

The International Accounting Standards have also been added (since 2005) due to the globalization.

Due to the different points of view of trade and tax laws, companies are forced to make do with contradictory regulations in some areas.

Basic principles for proper accounting

These basic principles, varying according to the country, interpret the regulations and standards for financial accounting, annual accounts as well as the approaches and evaluations in annual accounts based on trade law. Generally, the basic principles of proper financial accounting are divided into two groups: Basic principles for documentation and Basic principles for account balancing.

• Correctness of the vouchers

Basic principles for account balancing, normally the reproduction of laws:

• Clarity
• Truth
• Continuity
• Prudence

Accounts receivable accounting area

Sales vouchers are posted in the Accounts receivable accounting area in Financials. The reposting takes place in the Accounts receivable accounting area under Customer invoices/Credit notes, using the saved

• tax assignments,
• account assignments, and
• in case of activated cost accounting, the values entered for

In doing so, the vouchers to the reposted from the goods management can be selected in advance by the user in the financial cockpit or optionally in the sales cockpit. The necessary person accounts of Accounts receivable category are automatically made available in the system to Financials.

The Accounts receivable accounting area has all analyses, posting documentations, automatic payment runs, bank collections and check payments as well as dunning. The Accounts receivable application reachable through the Financials client not only manages the master data of the concerned person account, but the user can also receive information on open and cleared posts, payments assignments and account withdrawals through the application up to the voucher and/or account level below.

Accounts payable accounting area

Purchase vouchers are posted in the Accounts payable accounting area in Financials. The reposting takes place in the Accounts payable accounting area under Supplier invoices/Credit notes, using the saved

• tax assignments,
• account assignments, and
• in case of activated cost accounting, the values entered for

In doing so, the vouchers to the reposted from the goods management can be selected in advance by the user in the financial cockpit or optionally in the purchasing cockpit. The necessary person accounts of Accounts payable category are automatically made available in the system to Financials.

In the Accounts payable accounting area, the user will find all analyses, posting documentations, automatic domestic and international payment runs. The Accounts payable application reachable through the Financials client not only manages the master data of the concerned person account, but the user can also receive information on open and cleared posts, payments assignments and account withdrawals through the application up to the voucher and/or account level below.

Bank/Cashier accounting area

In the Bank/Cashier accounting area the complete payment traffic is accepted in Financials, that is the cash receipts and payments including the settlement of open posts. The user is supported by automatic payment runs of the respective accounts payable and receivable areas and the possibility of electronic account withdrawals.

Nominal ledger postings accounting area

In the accounting area Nominal ledger postings, in Financials, only postings without person account assignment or bank/cash cover are carried out. Some examples would be postings of payroll accounting or corrections and transfers in revenue or expense accounts according to journalization. Final postings for creating balance sheets also come under this category.

Value added tax

The system determines all VAT relevant postings while creating or determining the value added tax messages according to the relevant directives of the country. While keying the VAT message to completed all tax accounts are credited and automatically transferred to a billing account.

Journalization

Journalization in financial accounting means the procedure of freezing a posting. This means that a correction cannot be carried out with the posting entered, but must be documented with another or other more (correction) postings.

The journalization method can be set by the user by financial accounting settings at the end of a period (month) or immediately after a posting session. The relevant national directives must be kept in mind in this case as well.