EDUCAÇÃO E TECNOLOGIA

Financial Statement Imbalances

Introduction:

When we post Journal entries in Group Reporting (GR) module, system will also calculate net income and generate additional entry to post the same. This is when we post journal entries between balance sheet and income statement accounts. i.e. when an entry between balance sheet and income statement accounts leads to an imbalance in the financial statements, SAP S/4HANA system will post a financial statement balancing adjustment entry automatically.

Business Scenario & Solution:

An adjustment to depreciation of machinery involves posting in both the income statement (for Depreciation posting) and the balance sheet (For depreciation Reserve). This causes an imbalance in both the balance sheet and the income statement. The system calculates this imbalance and automatically posts to the Income FS Item (P&L Account) and Retained earnings FS Item (Balance sheet Account). In Group Reporting it is called as balancing adjustments and it is an inbuilt facility provided by SAP so that we need not execute Net Income task as and when we post journals.

Below Financial statements illustrates the scenario:

We have taken the below Sample Trial Balance to explain the scenario:

Based on the above TB, below are the Income statement & Balance sheet

Now post the below journal entry in Group Reporting:

A/C >> 5061200000 – Depreciation Building          Dr Rs  20000

A/C >>2012210000 – ACC. DEP. BUILDINGS       Cr Rs  20000

Without balancing adjustment, the situation is as below for the income statement & Balance Sheet:

Income Statement:

Balance Sheet:

To make the balanced P&L Account and Balance sheet, system will post the below additional line items along with the original Journal entry:

GR70000010   Net Income (or Retained Earnings A/c) Dr 20000

GR70000020   Net income/loss (P&L A/C)                    Cr 20000

Below is the situation after balancing adjustment automatic postings by the system:

Income Statement:

Balance Sheet:

The system posts the balancing adjustment automatically. This ensures that the balance sheet and income statement are posted consistently. Once the adjustment is posted, the two statements balance again.

Point to Note: This automatic posting is nothing but execution of Calculation of Net Income task. So while executing Net Income task, system will not consider these journal entries as the calculation happens at the time of journal entries posting time itself.

Related FS Items Configuration for Automatic Postings:

To achieve this automatic posting, we need to assign the relevant FS Items in the system. To make it as a simple process assign the relevant role to the FS item so that in future you can change the FS Item by changing the Role, if required. In our case, we have considered SAP Delivered Role S-ANI-BS for Balance sheet FS Item and S-ANI-PL for Income-Statement FS Item.

For Balance Sheet FS Item:

SPRO>>SAP S/4HANA for Group Reporting>>Consolidation FS Items configuration>>Specify selected FS Items for automatic postings.

For Profit and Loss Account:

Note: The above solution works for all the Journal entries i.e applicable for the journal entries posted by way of flat file as well.

Conclusion: This solution avoids calculation of Net Income after every journal posting. I Hope this helps in understanding the Net Income calculation functionality during Journal postings and I look forward for your comments and queries.