Reconciliation Accounts and Special G/L Indicator
Most SAP users should have some question..
What is the reconciliation account and special general ledger indicator in SAP Financial Accounting?
Let see more detail in this article.
Firstly, you need to understand the meaning of general ledger. The general ledger is a list of account balances for a specific company. It is used to support legal financial statements and other statutory reports (see more at General Ledger)
All accounting transactions to a company are recorded in general ledger. The transactions could be incurred from other modules. For example, posting of goods receipt (MIGO) performed by purchaing personnel (MM module) have already a financial impact. It increases the inventory balance and increases the GR/IR clearing account in General Ledger.
The general ledgers summarize all financial transactions of a Company. It is the the basis of the preparation of the Company’s Financial Statements.
Next, let’s continue about Reconciliation Accounts in SAP.
Reconciliation account is defined as roll-up account from either AR, AP, or asset sub ledgers and prevents it being posted to directly. You might have the question why the reconciliation is required in SAP. Let’s think if you have to create a account for each customer/vendor or asset. It does not make sense, right?
Then, we are talking about special g/l in SAP.
Normally, all transactions will be recorded to the vendor/customer or fixed asset account. For example, sale of goods are recorded to the vendor/customer or fixed asset through a reconciliation account defined in master record.
The next question is what G/L account should be updated for special postings of vendor/customer/asset as down payment, advance?
For proper accounting, down payment should not be recorded to vendor/customer/asset account. It should be posted to alternative G/L account e.g. Advances for customer. Well, how would the said transaction be posted to other accounts.
Here is one of the cases where the idea of Reconciliation Accounts and Special G/L Indicator. Hope this article will be useful for you guy.
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