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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6 thoughts on “SAP Accrual Deferral Posting”

    1. Closing Checklist:

      Hi
      please check this out for year-end closing activities check list

      Check List for FI Year End Closing
      1 Execute Report for InterCompany Activity & Journal Entries
      2 Open posting period for next yr
      3 Run Business Area’s Assignment report.
      4 Review list of recurring journal entries
      5 Execute Recurring Entries for A/R, A/P, G/L
      6 Process Parked A/R, A/P, G/L accounting documents
      7 Final Cutoff for the Maintenance of Fixed Asset- Add Transfer and Retire
      8 Run Depreciation in Test Run and post
      9 Verify Display Log for Depreciation Test Run
      10 Capitalize AUC Assets if needed
      11 Enter Payroll Data to SAP
      12 Verify Depreciation Balances with GL balances
      13 Post Depreciation
      14 Execute Asset History Report, and retire assets if needed
      15 Adjust specific depreciation areas if necessary
      16 Reconcile AM subledger with GL
      17 Check Bank Data
      18 Review AR Open Items
      19 Review AP Open Items
      20 Execute Pending Invoices
      21 Clear Open Item for GRIR, freight
      22 Reconciliation of Financial Documents and transactional figures
      23 Open new CO Posting Period
      24 Compare current (cost estimates) with last current price (Moving Avg)
      25 Update current cost price to material master price field.
      26 Process Freight charges, Match SD freight to actual
      27 Review Internal Order Postings
      28 Settle All Orders
      29 Verify All Post Goods Issue have been Invoiced (Billing Due List)
      30 Review SD Billng Doc from prior mth that have not yet been released to accounting
      31 Reconciliation of MM movements in Transit Intra-SAP to NonSAP
      32 Reconcile PI Inventory with SAP
      33 Perform Manual Adjustment if needed
      34 Verify balance of the GR/IR account
      35 Post Accruals and Deferrals
      36 Clearing of Cancelled Documents
      37 Check Profitability Segment Adjustment
      38 Aging Report-Reconcile GL balances with subledger balances AP
      39 Check the check run numbers
      40 Bank reconciliation Data
      41 Enter Tax Journal Entry
      42 Reconcile GL balances with subledger balances AR/MM/AP
      43 Display Balance Sheet Adjustments
      44 Post Balance Sheet Adjustments
      45 Post Foreign Currency Valuation (foreign exchange)
      46 Check generic cost centers for posting with wrong accounts
      47 Correct wrong postings on generic cost centers
      48 Check Validation dates for Cost Centers, Cost Elements, CO area
      49 Check COGI–for both month end and year end
      50 Doubtful receiviables
      51 Verify In-transist Inventory
      52 Reconcile PA to G/L
      53 Post Cost Centre Assessments and Distributions
      54 Run CO-FI Reconciliation to balance
      55 Run BW reports P&L and Balance Sheet
      56 Maintain CO yr variant
      57 Fiscal Yr Balance carryforward AP/AR/AM
      58 Fiscal Yr Balance carryforward CO
      59 Fiscal Yr balance carryforward FI
      60 Fiscal Yr balance carryforward PCA
      61 Set Document number ranges – FI – new year
      62 Set Document number ranges AP/AR – new year
      63 Generate Financial statement Reports
      64 Change Fiscal Year For Assets
      65 Year end Closing– Asset Accounting–final for year end
      66 Close CO Posting Period
      67 Close Prior A/R Posting Period
      68 Close Prior A/P Posting Period
      69 Close Prior MM Posting Period
      70 Reverse accruals and deferrals for the new month
      71 Reconciliation of Financial Documents from old fiscal year and new fiscal year
      72 Load Balances, Budget Data for Cost centers, sales
      73 Update Retained Earning Account , balance carry fwd

  1. 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
    Rent a/c dr 50000
    to outstanding expenses a/c 50000

    On 01.12.2017:
    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.
    On 05.12.2017:
    Rent Payment
    Rent a/c dr 50000
    to bank a/c 50000

    Don’t understand this example. in this example the rent expense is booked in financial statements in november as well as december..?? why.. According to me it should be:
    in Nov-
    Rent 50,0000 (Dr)
    To Outstanding Expense 50,000 (Cr)

    And in Dec.
    Outstanding Expense 50,000 (Dr)
    To Bank 50,000 (Cr).

    In this way we are not charging the rent in December.. Please correct me if i’m wrong.
    Thanks

    1. To make my above question simple. is it compulsory to make a reversal of accrual and deferral expenses in SAP or we can use the method that i mentioned in above Question?

    2. Hi there
      Accrual is accumulation of expense items until it becomes due for payment. Mere creation of provision will not help…as it comes under operating costs. Thus we need to reverse it and thereafter it is paid in the next month December.

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