This 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.
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.
Provision for rent
Rent a/c dr 50000
to outstanding expenses a/c 50000
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.
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:
- Define reversal reason
- Enter accrual/deferral document
- 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
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.
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.
In the next screen, enter the amount of provision to be made and text.
Now, post the transaction. Below is the document posted. Rent account will be debited and outstanding expenses account will be credited.
We will post one more transaction for provision of salaries on 30.11.2017.
Salaries account is debited and outstanding expenses account is credited.
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.
After this, we will click on button and the SAP system will show a message that the document has been reversed like shown below.
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).
The rent account is credited and the outstanding expenses account is debited.
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.