534857304

Chapter 5
Creating a General Ledger (G/L)
In this chapter, you learn how to create G/L accounts, use line items, and open item management in G/L
accounts.
At the end of this chapter, you will be able to:
• Explain what a general ledger is
• Describe what a master record is
• Create G/L account master records
• Use a template to copy a G/L account
General Ledger
Business transactions are sorted and stored in G/L accounts that apply the double entry principle—dual
control (debit and credit). Transactions posted to G/L accounts are classified into assets, liabilities, income,
and expenditures, from which financial statements are drawn.
All financial transactions with business partners are posted to sub-ledgers in SAP ERP. Financial
transactions are treated in accounting as debit or credit transactions. Several sub-ledgers are created in SAP
R/3 to store financial accounting transactions in the system. The summary, or balance of sub-ledgers, is
automatically posted in real-time to the reconciliation (general ledger) accounts as debit balance or credit
balance by the system. For example, in Figure 5-1, the amounts of 1,500 and 2,000 were posted to Motor
Vehicle and the amount of 5,000 was posted to Furniture & Fittings in the sub-ledger accounts. The system
automatically posted the balances of both sub-ledgers to the G/L account in real-time.
Sub-ledgers are a subset of the general ledger used for recording individual items and transactions in
accounting. Sub-ledgers include individual accounts payable, accounts receivable, assets, and bank account
information. They hold accounts payable details such as the vendor’s name, number of transactions, dates,
discounts, and payment terms Transactions are posted in the system as they arise in the sub-ledger. The
summary or balance of sub-ledgers is posted to reconciliation accounts. In other words, balances in the
sub-ledger are posted to the reconciliation accounts. The reconciliation accounts hold the balances of subledgers
from which a financial statement is drawn. The advantage of a reconciliation account is that it gives
you a snapshot of the sub-ledger.
65