100 Important SAP FICO Interview Questions and Answers [With PDF]

In this article, we will go over 100 important SAP FICO interview questions and answers with pdf. SAP FICO contains lots of terms and explanations. We chose the top 100 SAP FICO interview questions and answers from among them. It will help you overcome your SAP FICO interview challenges.

SAP FICO Interview Questions and Answers

The 100 important SAP interview questions and answers are as follows:

#1. What is SAP FICO?

Answer: SAP FICO is an acronym that stands for “Financial Accounting” and “Controlling.” SAP FI and SAP CO are important fundamental modules in SAP that work together to help business organizations maintain and create financial statements for better decision-making and reporting.

#2. What are the Sub-Modules of SAP FI?

Answer: the important sub-modules of SAP FI are as follows:

  • General Ledger Accounting
  • Accounts Payable
  • Accounts Receivable
  • Bank Accounting
  • Asset Accounting

#3. What Other Modules are Connected with ‘FICO’?

Answer: The other modules which are connected with FICO are as follows:

  • Material Management (MM)
  • Production Planning (PP)
  • Sales and Distribution (SD)
  • Logistic Execution (LE)
  • Human Resource (HR)

#4. What are the Organizational Elements in SAP FI?

Answer: The organizational elements in SAP FI are as follows:

  • Company Code
  • Business Area
  • Chart of Accounts
  • Functional Area

#5. What is a Client?

Answer: The SAP Client is the highest hierarchical organizational unit in an SAP system, containing master records and tables.

#6. What is Company Code?

Answer: The company code is the smallest external accounting organizational unit for which a completely self-contained set of accounts can be created. This is a legal entity in its own right.

#7. What is Controlling Area?

Answer: The controlling area is the central organizational unit of the Controlling (CO) component, which is responsible for cost accounting. One or more company codes can be assigned to a single controlling area.

#8. What is Operating Concern?

Answer: The Operating Concern is the organizational unit in which SAP Profitability Analysis is performed. Profitability analysis is used to generate granular profitability reports based on multiple dimensions such as customer, material, and so on.

#9. What is Business Area?

Answer: In SAP, a business area is an organizational unit within accounting that can be classified geographically or by-product based on the needs of the corporation. You prepare financial statements comprising balance sheet and profit & loss account for internal reporting under the business area.

#10. What is Credit Control Area?

Answer: A credit controlling Area is an organizational unit or area of responsibility established to manage customer credit limits. Only one credit control area can be assigned to a single company code in SAP. Many company codes, however, can be assigned to the same credit control area. Aside from that, the credit-control area can be derived from the sales area.

#11. What is Financial Management Area in SAP?

Answer: In SAP, a financial management area is an organizational unit that organizes the business in terms of cash management and funds management.

#12. What is the Default Exchange Rate Type used in all SAP Transactions?

Answer: The default exchange rate for all SAP transactions is M (Average Rate).

#13. What is Segment?

Answer: In accounting, a segment is an organizational unit that can be used for both internal and external reporting. At the segment level, both profit and loss and balance sheet reporting will be available.

#14. What is an Account Group?

Answer: An account group is a method of separating or grouping similar accounts into a single group. In SAP, each account group is associated with a chart of accounts, thus you can only utilize account group if the controlling areas have the same chart of accounts.

#15. What are Tolerance Groups for Employees?

Answer: Employee tolerance groups in SAP establish the maximum limits for postings based on Amount per document, Amount per open item account, Cash discount, and Payment discrepancies.

#16. What is a Risk Category?

Answer: You can categorize customers using risk categories, such as low-risk customers, medium-risk customers, high-risk customers, and so on.

#17. What is a Functional Area?

Answer: A functional area is used to categorize operating expenses by function, such as production, administration, sales, R&D, and so on. In the GL account master and the cost center master, functional areas can be assigned.

#18. What is Parallel Ledger Concept?

Answer: In New GL, SAP introduced the Parallel Ledger Concept. Parallel accounting can be conducted in General Ledger accounting by running many parallel ledgers (general ledgers) for distinct accounting principles. Data can be posted to all ledgers, a specific selection of ledgers (via ledger group), or a single ledger during posting (ledger group containing a single ledger). Depending on the requirements, there may be only one leading ledger but multiple non-leading ledgers. The non-leading ledgers are parallel ledgers that are alongside the leading ledger.

#19. What is a Fiscal Year Variant?

Answer: Fiscal Year Variant denotes the Accounting Period for which Financial Reporting is required by law to be disclosed. It is typically a twelve-month period during which a corporation generates financial statements and examines inventories on a regular basis.

#20. What is a Short End Fiscal Year in SAP?

Answer: A short-end fiscal year occurs when a standard fiscal year is converted to a non-calendar fiscal year or vice versa. This form of shift occurs when a business joins a new co-corporate group.

#21. What is Posting Period Variant?

Answer: In the Fiscal Year Variant, Posting Period Variants are defined for the opening and closure of periods. You have the ability to open and close these posting periods. As many posting periods as needed can be opened at the same time.

#22. What is a Field status Variant?

Answer: A Field Status Variant must be defined and assigned to the Company Code. Various field status groups are used in the field status variant to specify the field requirement (required, optional, or hidden) for each GL account at the time of posting. In the G/L account master record, the field status group is assigned to individual G/L accounts.

#23. What is Document Type?

Answer: The document type is used to record various types of transactions in the system. Document types are applicable to all clients. For each document type, we define a number range key.

For example, AA-Asset Posting, AF-Depreciation Posting, DZ-Customer Payment, KZ-Vendor Payment, SA-G/L Account Document, and so on.

#24. How many currencies can be configured for a Company Code?

Answer: A Company code can be configured to use one of three currencies: one local currency and two parallel currencies.

#25. What is Local Currency?

Answer: The currency entered during the company code creation process is referred to as local currency.

#26. What is Parallel Currency?

Answer: The currency entered during the company code creation process is referred to as local currency, while the other two additional currencies are referred to as parallel currencies.

#27. What is the use of Parallel Currency in SAP?

Answer: In foreign business transactions, parallel currencies might be used. Parallel currency can be used to conduct international transactions.

#28. What is Posting Key?

Answer: A posting key is a two-digit numerical value is used to determine the transaction type that is entered in the line item.

#29. What are SAP Validations and Substitutions?

Answer: Validation or substitution is defined at the document and line item level for each functional area in SAP, such as Assets, Controlling, and so on.

#30. What is a Chart of Accounts?

Answer: A chart of accounts is a list of all GL Accounts that can be used in an accounting system that adheres to a single Accounting Principle. Every Accounting Principle requires the creation of a new Chart of Accounts.

#31. What is the Financial Statement Version (FSV) in SAP?

Answer: The Financial Statement Version (FSV) is a hierarchical arrangement of general ledger (G/L) accounts. The accounts can be set up in accordance with the legal regulations that are used to generate your financial statements. Alternatively, you can arrange the accounts according to your needs.

#32. What are Sales Tax and purchase Tax in SAP?

Answer: Purchase Tax (Input Tax) is imposed on all types of purchases, while Sales Tax (Output Tax) is imposed on all types of sales. Every country has its own sales tax and purchases tax system.

#33. What are Recurring Entries?

Answer: Recurring Documents are used to process transactions that are routine and repetitive in nature.

#34. What is Accrual or Deferral Entries?

Answer: In the case of recording provisions, accrual or deferral entries are a useful feature. Provisions can be created at the end of the month and reversed the following month by running a program in SAP. This feature is useful for posting accruals, deferrals, and provisional entries at the end of the month.

#35. What is the Process of Accrual or Deferral Entries in the System?

Answer: There are two steps in the process:

1. T-Code FBS1 is used for the initial posting, in which the user posts the document while also mentioning the reversal date and reason.

2. T-Code F.81 is used to reverse all documents.

#36. What are the Year-end Activities in SAP?

Answer: The followings are the year-end activities in Sap:

  • Carry Forward AR/AP Balances
  • Carry Forward GL Balances
  • Asset Fiscal Year Change
  • Asset Year-End Closing
  • Create Number Range for the Fiscal Year

#37. What is Vendor Account Group?

Answer: A Vendor group is an object that was created to differentiate between different types of Vendors and to group Vendors of a similar nature transactionally.

#38. What is Vendor Reconciliation Account?

Answer: All vendors are assigned to a general ledger account known as the vendor reconciliation Account. Vendor balances are automatically reconciled with the vendor reconciliation account balance.

#39. What are Payment Terms?

Answer: A Payment Term specifies the conditions under which a payment must be made. It symbolizes the typical agreements you have with your vendors and customers. When a vendor or customer’s Master Record is created, a payment Term is assigned to them.

#40. What is Security Money Deduction from Bill?

Answer: The security money is deducted from the bill during the payment process. In this process, a certain amount is deducted from the final payment to the vendor as a security deposit and is returned after a certain period of time, depending on the business terms and conditions. This will be kept as a separate GL liability owed to the vendor.

#41. What is Customer Account Group?

Answer: A customer group is an object that was created to differentiate between different types of customers and to group customers of similar nature in terms of transactions.

#42. What is a Customer Reconciliation Account?

Answer: A customer reconciliation account is a general ledger account that is permanently reconciled in SAP with the customer balance. When a financial posting is made to a customer account, the same posting is automatically replicated in the customer’s reconciliation account in the general ledger. Customer reconciliation accounts can only be posted through the customer route and cannot be directly posted to in the general ledger.

#43. What is Special GL Indicator?

Answer: Special GL indicators are those that are used in transactions other than regular accounts receivable and payable transactions to identify a special GL transaction.

#44. What is Day Sales Outstanding (DSO)?

Answer: Days Sales Outstanding represents the average number of days it takes for a receivable to be paid by the customer or the average collection period for the company. The number of days’ sales outstanding (DSO) is used to assess the effectiveness of receivable management.

#45. What is Dunning in SAP?

Answer: Dunning’ is the process of sending payment chasing letters to consumers. We can determine which letter has been issued to the client by using the dunning level on the customer master.

#46. What is the Chart of Depreciation Accounts?

Answer: A depreciation chart is used to manage asset valuation for various legal requirements. Every Company Code that uses Assets Accounting must be assigned to a Chart of depreciation.

#47. What is the Depreciation Area?

Answer: The depreciation area aids in valuing asset balances and transactions for various purposes. It enters and depreciates values into the general ledger.

#48. What is Asset Class?

Answer: Fixed assets are classified into asset classes (e.g., vehicles, furniture, machines). Asset classes are used to categorize fixed assets based on business and legal requirements. The asset class is divided into two sections: master data and depreciation area.

#49. What is Depreciation Key?

Answer: The depreciation key (valuation key) controls the asset’s valuation in specific depreciation areas.

#50. What is Account Determination?

Answer: Account determinations are the keys in SAP that are used to link asset classes or master records to general ledger (G/L) accounts based on the nature of the transaction.

#51. What is Financial Lease Asset?

Answer: Financial lease asset terms operate in the same way as company-owned assets, with an acquisition cost and normal depreciation. Leased assets will be created as a separate asset class where lease-related data for the asset can be maintained.

#52. What is Operating Lease Asset?

Answer: Operating lease assets are not shown on the balance sheet. As a result, for reporting and tracking purposes, a zero value asset will be created in the appropriate asset class, and an evaluation group key will be entered in the Evaluation Group 1 field in the Allocations tab of the asset master.

#53. What is Cash Journal?

Answer: Bank Accounting includes the Cash Journal as a sub-module. It is used to manage the cash and petty cash transactions of a business. The system computes and displays the opening and closing balances, as well as the receipts and payments totals, automatically. For a single company code, many cash journals can be created.

#54. What is a Bank key?

Answer: Each bank branch must have its own bank key (account number). This includes the bank’s name, address, swift code, branch code, and tax identification number.

#55. What are the Different Procedures for Paying Vendor Invoices?

Answer: The different procedures for paying vendor invoices are as follows:

  • Manual Payment
  • Automatic payment (Cheques, Wire transfer, etc.)

#56. What is Automatic Payment in SAP?

Answer: Automatic payment is a system in which SAP can automate payments to vendors and customers based on a due date computed from payment terms and the baseline date.

#57. What Level does SAP Store Customer and Vendor Codes?

Answer: SAP saves the Vendor and Customer codes at the client level. That is, by expanding the company code view, any company code can use the customer and vendor codes.

#58. What is GRIR Clearing Account in SAP?

Answer: In SAP, the GR IR Clearing Account is a clearing account that acts as an intermediate for goods and invoices in transit. It stands for the accounts of Goods Receipt and Invoice Receipt. It is a balance sheet account.

#59. What is the Controlling Module of SAP?

Answer: SAP’s controlling module provides management with the information they need to make decisions. It enables the organization’s numerous processes to be coordinated, monitored, and optimized.

#60. What is the Relationship Between FI and CO?

Answer: In the SAP system, Controlling (CO) and Financial Accounting (FI) are separate components. The necessary FI accounts are controlled as cost/revenue items in CO. The user must designate a cost object, such as cost centers, projects or orders, COPA segment, etc., to the costs and revenues posted in FI. The item flows from FI to CO due to the combination of cost element and cost object. The data transfer between the two components occurs in real-time.

#61. What are the Components of Controlling?

Answer: Controlling has various sub-components, some of which are as follows:

  • Cost Element Accounting
  • Cost Center Accounting
  • Internal Orders
  • Product Cost Controlling
  • Profitability Analysis
  • Planning & Budgeting

#62. What is Profit Center?

Answer: A profit center is an accounting organizational unit that often reflects the organization’s management-oriented structure for the purposes of internal control. A profit center is where revenue and costs are recorded.

#63. What is Cost Center?

Answer: A cost center is an organizational unit in the Controlling Area that does not generate direct profit but collects the costs of running a business.

#64. What is an Internal Order?

Answer: Internal Order is a cost object in which we book our costs for a certain time period. An Internal Order is an incredibly versatile CO tool that may be used to track expenditures and, in some situations profits within a controlling area.

#65. What are the Types of Internal Order?

Answer: There are Two Types of Internal order, which are as follows:

  • Real Internal Order
  • Statistical Internal Order

#66. What is Real Internal Order?

Answer: Real internal orders are cost objects capable of collecting expenses that may then be settled to various objects such as cost centers, fixed assets, and so on.

#67. What is the Primary Purpose of Real Internal Order?

Answer: Real internal orders will mostly be used primarily for asset-related transactions.

#68. What is Statistical Internal Order?

Answer: Statistical internal orders are statistical objects that do not gather expenses. They are only used for reporting purposes.

#69. What is Cost Element Accounting?

Answer: Cost Elements in SAP are cost modes/carriers. Cost Element Accounting is used to manage cost elements, which are a Controlling master data object. It is the section of accounting in which costs incurred during a settlement period are entered and grouped. It is not an accounting system, but rather a detailed record of data that serves as the foundation for cost accounting.

#70. What is Product Cost Controlling?

Answer: Product Cost Controlling is a Controlling component that deals with product cost and related activities. It is a crucial component of standard costing, which entails estimating standard costs based on raw material prices, production activities, and overheads, and then recording and controlling the cost flows that occur during the manufacturing process.

#71. What is Controlling Profitability Analysis (CO-PA)?

Answer: Controlling Profitability Analysis (CO-PA) is a Controlling component that allows enterprises to evaluate and analyze the profitability of market segments divided by products, customers, orders, and business units (sales organizations) in relation to a company’s profit margin.

#72. What are the Two Types of COPA Analysis?

Answer: The two types of COPA analysis are as follows:

  • Costing Based COPA and
  • Account-Based COPA

#73. What is Costing-based Profitability Analysis?

Answer: Costing-based Profitability Analysis is a type of profitability analysis that allows for the breakdown of costs and revenues to a much finer level than the GL account level. This is not automatically reconciled to the general ledger.

#74. What is Account-based Profitability Analysis?

Answer: Account-based Profitability Analysis is a type of profitability analysis that is organized in accounts and uses an account-based valuation technique. The use of cost and revenue elements distinguishes this type. It enables profitability reports that are reconciled with financial accounting.

#75. What is the Value Field in COPA?

Answer: In the profitability analysis, value fields are numbers or value-related fields such as quantity, sales revenue, discount value, and so on.

#76. What are Primary Cost Elements?

Answer: Primary Cost Elements are those cost elements whose costs originate outside of the CO module and include accrual costs utilized for controlling. In Financial Accounting, each Primary Cost element will have a matching G/L account.

#77. What are Secondary Cost Elements?

Answer: Secondary cost elements are cost components used to apportion costs for internal activities. In Financial Accounting, secondary cost elements do not have a corresponding G/L account. They are exclusively used in controlling and, as a result, cannot be defined as a general ledger account in Financial Accounting.

#78. What Are Some Uses of Secondary Cost Elements?

Answer: Some uses of secondary cost elements are as follows:

  • Activity allocation in product costing
  • COPA allocation

#79. What is Cost Center Standard Hierarchy?

Answer: A Cost Center Standard Hierarchy is a hierarchical arrangement of all cost centers in the controlling area. A Cost Center Standard Hierarchy is an arrangement of many cost center groups, one below the other, and the groups that have been transferred to higher-level groups, all of which are part of the standard hierarchy.

#80. What is a Bill of Material (BOM)?

Answer: A bill of materials (BOM) is a formally structured list of the components used in the manufacture of a finished/semi-finished product. The list includes the material number of each component, as well as the quantity and unit of measurement.

#81. What is Routing?

Answer: Routings define the processes that are employed to create the final product. Routing includes the work centers and typical activities used in the material’s manufacture.

#82. What is Activity Type?

Answer: Activity type is a Controlling component that categorizes activities performed in a cost center. In other words, activity types can be described as the cost center’s output. Setup time, machine time, labor time, and so on are examples of activity types.

#83. What is a Maintenance Order?

Answer: A maintenance order, like an internal order, is a cost object with additional functionality needed for Plant Maintenance. It records plant maintenance expenses for further processing within the Controlling module.

#84. What is Production Order/Product Cost Collector?

Answer: A production order or product cost collector, is a cost object that, like an internal order, includes additional features that are important for Production Planning. It records production costs for further processing within the Controlling module.

#85. What is the Statistical key Figure?

Answer: Statistical key figures give information on non-monetary statistics for the profit centers such as the number of personnel, machines, capacity utilization, market information, and so on.

#86. What is Profitability Segment?

Answer: The profitability segment is a Profitability Analysis object to which costs and revenues are assigned.

#87. What are Characteristics?

Answer: Characteristics are the criteria in Profitability Analysis (CO-PA) that can be used to examine operating performance.

#88. What is Standard Cost Estimate?

Answer: Standard cost estimate is the process of calculating the predicted standard cost of an In-House manufactured product. It estimates the manufacturing cost of the finished product by taking into account the projected raw material costs and conversion expenses. It is a component of SAP’s Product Costing module.

#89. What is a Mixed Costing Estimate?

Answer: Mixed costing can be utilized when inventory value must incorporate the mixed procurement costs when there are different procurement possibilities for the same material, such as two production lines or two vendors.

#90. What is Actual Costing or Material Ledger?

Answer: Actual Costing, often known as Material Ledger, is an SAP feature that calculates the actual periodic cost of a product. Inventory can be revalued (based on real cost computation) and related accounting entries can be generated as an option.

#91. What is Costing Variant?

Answer: The costing variant describes how a cost estimate determines the standard price.

#92. What is Cost Component Structure?

Answer: Cost Component Structure is the method of depicting a product’s cost in a concise and meaningful manner, which is utilized for various decision-making objectives. The display of product cost estimates is determined by the Cost component views. Each cost component can be variable or fixed in nature.

#93. What is Standard Cost Estimate Release?

Answer: Cost estimate release is the action of determining the production cost of manufactured material and releasing it as a standard price.

#94. What is the Prerequisite of Standard Cost Estimate?

Answer: A costing variant can be used to generate a standard cost estimate. The costing variant includes the following settings for standard cost estimates:

  • The costing type specifies that the costing results can be updated as the standard price in the material master.
  • The valuation variation states that the materials are valued at the standard price; and
  • The BOM Application stipulates that costing must be released.

#95. What is the Process of Standard Cost Estimate?

Answer: The process of costing run is as follows:

  • Creation of Costing run
  • Selecting materials for costing run
  • Exploding BOM’s for costing run
  • Executing costing run
  • Analyzing the costing run
  • Marking of standard cost estimate
  • Releasing of standard cost estimate

#96. How to Calculate the Joint Product or Co-Product Cost in SAP?

Answer: The cost of the joint product will be calculated using a standard cost estimate in the costing run (T-Code CK40N). Furthermore, an apportionment structure must be created in the material master of the two joint products, which will decide how the cost of production will be distributed between the two co-products at the time of standard cost estimate.

#97. How to Calculate the Cost of By-Product?

Answer: The by-product is also listed as a negative component in the main product’s BOM (output). However, the cost of the by-product is unrelated to the cost of the main product. It is usually set at a standard price, which is either the expected cost of production or market value, whichever is lower.

#98. What are Normal Loss And Abnormal Loss in SAP?

Answer: In a manufacturing process, the normal loss is the difference between input and output materials. This is the average loss seen over a period of time, and it is already determined in the BOM.

The loss that is unique to a given production batch is referred to as abnormal loss. It is in addition to normal loss and is not considered when computing the standard BOM.

#99. What is Production Variance in SAP?

Answer: Production variance is the difference between net actual costs charged to the order and targeted costs based on the initial cost estimate and amount delivered to inventory.

#100. What is the Price Difference in SAP?

Answer: Price differences occur for materials valued at the standard price in all movements and invoices with a value that differs from the standard price.

At the end of this article, I hope you have a better understanding of SAP FICO interview questions and answers.

If you read these 100 important SAP FICO interview questions and answers on a regular basis, you will undoubtedly improve your understanding of FICO terms and their explanations, allowing you to perform well in your interview.

You may also read:

Print Friendly, PDF & Email

Leave a Comment