SAP Accrual Deferral Posting

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SAP Accrual Deferral PostingThis tutorial which is the part of the free SAP FI course talks about SAP Accrual Deferral Posting.

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.

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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

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Rent a/c dr 50000

to outstanding expenses a/c 50000

On 01.12.2017:

Reversal of provision

Outstanding expenses a/c dr 50000

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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

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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
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
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
Initial Screen Accrual/Deferral

In the next screen, enter the amount of provision to be made and text.

Next Screen Accrual/Deferral
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
Accrual/Deferral Document Display

We will post one more transaction for provision of salaries on 30.11.2017.

Initial Screen Accrual/Deferral Document
Initial Screen Accrual/Deferral Document

Salaries account is debited and outstanding expenses account is credited.

Accrual/Deferral Document Display
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
Reverse Accrual/Deferral Document – Test Run Results
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
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
Initial Screen of FB03 Transaction
Reversed Document for Rent
Reversed Document for Rent

The rent account is credited and the outstanding expenses account is debited.

Revered Document for Salaries
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.

Did you like this tutorial? Have any questions or comments? We would love to hear your feedback in the comments section below. It’d be a big help for us, and hopefully it’s something we can address for you in improvement of our free SAP FI tutorials.

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