Wednesday, September 26, 2007

The Procure - to - Pay Cycle

The Procure - to - Pay Cycle

Introduction

SAP Business One has the capability to meet the procurement process needs of SMBs - small and medium scale businesses. In a typically organization, there's usually a purchasing department. The responsibility of this department is to handle the procurement of materials. However, this process impacts on other departments - inventory, material requirement planning, production and Financial. Suffice to say that, at any point in time, you are either impacting on stock quantity and/or stock value.

In this posting, I shall be explaining the procurement process in SAP Business One as it relates to inventory and of course financial. Ideally, the process starts with a purchase requisition is created and then purchase order. A goods receipt that is based on the purchase order is then created. Based on the goods receipt, an invoice is then created upon which the outgoing payment transaction is based. However, in SAP Business One, purchase requistion is not catered for.


Figure 1.

At this juncture, it is worth mentioning that SAP Business One leverages the draw document wizard to facilitate the creation of a target document (e.g Goods Receipt PO) based on a source document (e.g purchase order). During the copying process, options as to how the inheritance of definitions should be carried out can be customized if need be. It is important to state that the A/P Invoice is the only document that is mandatory in order to register a procurement process. Base documents such as the purchase order and the goods receipt PO are optional.

The Purchase Order
The purchase order is a document used to request a supplier to supply goods or services. This document usually contains strict conditions on which the supply is based. A purchase order can be tied to cost centers or projects. The essence is to allow for better analysis as to what it's actually meant for. Goods receipt and invoicing ideally references the purchase order.

You can minimize data entry by duplicating an existing purchase order. Also, when purchase order data such as the vendor and items are entered, default values are displayed based on the definition in the relevant master data. For example, the address of the vendor, the payment terms and payment systems, price and item description are copied from the corresponding master data.

The purchase order contains the header part, line details and the footer. The header part contain information about the entire purchase order such as document currency, document date and due date. The line item level contains information about the items ordered such as item code and name. The footer also displays general document information such as payment due and total discount value.

When a purchase order is created, no entry is made in accounting; however, the inventory status is updated based on the quantity ordered. This is reflected in the ordered and in stock fields in the inventory tab of the item master data and the inventory report. The Purchase Order can be accessed under:
Purchasing - A/P > Purchase Order

Figure 2 shows the Purchase Order screen.

Figure 2


Goods Receipt PO (GPO)
The second step in the procurement process in SAP Business One is the creation of goods receipt that is based on a purchase order. Ideally, referencing a previously created purchasing order creates this document. However, it can be created without referencing the purchase order. When you record the receipt of goods, the system updates the open item for the purchase order.

At this stage, it is pertinent for the appropriate department to check whether the correct items are delivered and whether the actual quantity has been delivered, over delivery and under delivery is also ascertained at this level. In more complex situation that involves perishable items like pharmaceuticals, the expiration date can also be validated at this stage.

It is possible to create several goods receipt by referencing a single purchase order especially when batch delivery is practiced. When a goods receipt is created based on a purchase order, the information entered in the purchase order is inherited. Hence, the elimination of the need for double entry. However, some of these definitions can also be edited or modified when creating the goods receipt.

When goods receipt PO is created in the system, the inventory status is updated by the quantity received. Also, if stocks are continuously managed, relevant accounting information is updated in financials. The Goods Receipt PO can be accessed under
Purchasing - A/P > Goods Receipt PO

Figure 3 shows the Goods Receipt PO screen.

Figure 3

AP Invoice
After purchase order and goods receipt creation, comes invoicing. When you reference a purchase order or goods receipt when creating an invoice, the system copies the data defined in the preceding document(s). This information includes vendor details, item code, item description and quantity. These inherited values can be modified, for example, installment payment. However, the system verifies if there are irregularities between the purchase order or goods receipt and the invoice. System messages are displayed accordingly depending on the business rule defined in the system and invoices can be blocked as a consequence. Basically what happens at the background is that when an invoice is based on a purchase order and goods receipt, the system copies the order prices from the purchase order document and the received quantities from the purchase order document. Furthermore, the system determines the quantities that are yet to be invoiced by calculating the difference between the quantity delivered and the quantity that was invoiced earlier. The system also calculates the expected value for the items, which is a product of the quantity to be invoiced and the order price. This value is not static. It can be modified accordingly. When an invoice is created, the corresponding vendor accounts is updated accordingly. The AP Invoice can be accessed under this path:
Purchasing - A/P > AP Invoice

Figure 4 shows the AP Invoice screen

Figure 4

Outgoing Payment
Most times, outgoing payment is based on account payable invoices. When a vendor is chosen, a list of all invoices awaiting payment is displayed. You simply click on the particular invoice to be paid and effect the transaction. When an outgoing payment transaction is created, corresponding journal entry is created. Payment could be made in check, bank transfer, credit card or cash. If you create outgoing payment for a vendor that has a pre-defined consolidating business partner, the journal entry is created against the consolidating business partner.

It is possible for outgoing payment to be based on one or more invoices that were fully paid. In such case, the transaction of the paid invoices and the outgoing payment are automatically reconciled. Furthermore, the amount due and the paid/credit fields in the paid invoice are updated accordingly and the status of the invoice changes to closed.
The outgoing payment can be accessed under this path:
Banking > Outgoing Payments > Outgoing Payment

Figure 5 shows the Outgoing Payment screen

Figure 5

It is important to state that workflow - approval procedures and document reversal - Goods Return and Credit Memo are not discussed here.

Increasing Profitability through Inventory and Financial Reports Analysis: A case for SAP Business One

Although inventory report and cash flow report are seen as independent reports to some extent, they are however interwoven. The perception of most SAP Business One users is that the cash flow report is a product of just "current cash transactions". Yea, to some extent this assertion is true; however, there is another leg to it.

The cash flow report gives the balances of cash accounts and accounts that are subject to cash flow in the future. Inventory (Stock) itself can be perceived as money that is tied down because asset increases when stock is procured. The purchased stock can be raw materials for a finished good(s) that will yield revenue in the future. At production stage, it is classified as work-in-progress (WIP). A number of journal entries are created during the production process in SAP Business One. When components are issued for production, the WIP account is debited and the stock account of the component is credited. When the production order is completed, receipt from production is created. The stock account of the product is debited by the actual value of the finished product and the WIP account is credited. In case variance occurs, the system debits the WIP account with a negative value and credits the WIP variance account.

From the foregoing, it can be deduced that the stock value increases by the cost of production tied to the production process. On receipt from production, it becomes a sales item that is expected to generate revenue. Inventory is also updated accordingly. However, the costs incurred during production represent payables. These payables need to be settled somehow, hence the need for cash flow report, which is a critical analysis of "money - in and money - out".

The Chief Financial Officer (CFO) is not interested in high inventory (over stocking) based on the premise that it is "money tied down". Keeping high inventory is not cost effective. This is because additional costs (such as carrying costs) are incurred especially while these stocks last in the warehouse. This is not to say that inventory should be kept so low as not to meet demands or orders.

Although, the amount of inventory to be kept at any point in time is ambiguous, the inventory turn ratio is a metric for determining inventory usage. Inventory usage is calculated as a ratio of the annual cost of goods sold to the average inventory.

For the purpose of illustration, let $1,000,000 be the annual cost of goods sold and $500,000 be the average inventory; obtained from profit and loss statement and balance sheet report.
Inventory Turn = Annual cost of goods sold/Average Inventory
= $1,000,000/$500,000
= 2

If through better inventory management and financial analysis, the inventory turn is increased to 10.
Average Inventory = Annual cost of goods sold/Inventory Turn
= $1,000,000/10
= $100,000

Reduction in inventory = $500,000 - $100,000
= $400,000
The implication therefore is that you can generate same sales with only $100,000 of average inventory.

Furthermore, if the carrying cost (which is based on weight/volume carried) is 20% of the average inventory, the savings will be
Savings = Reduction in Inventory x 0.20
=$ 400,000 x 0.20
= $80,000

Cross analysis of Inventory report and Financial reports such as Cash Flow, Balance Sheet and Profit and Loss Statement can lead to cost saving and ultimately, profitability. Hence, it would be nice to have a detailed and generic business intelligence report (that makes this analysis and more) like this by default in SAP Business One. What do you think?

Costing Methods in SAP Business One: An Overview - Part 1

Costing Methods in SAP Business One: An Overview - Part 1
Kehinde Eseyin (Systems Support Officer) Posted 6/13/2006


Inventory valuation is an integral part of a business, especially when stocks are involved. It has direct effect on the cost of sales, which is the summation of initial stock and inventory purchase less final stock. Hence, it is a sensitive phenomenon because it impacts on your financial reports - Balance Sheet and Profit/Loss and even Tax reports. From the foregoing, it can be said that, inventory valuation is one of the metrics for determining the profitability of a business.

SAP Business One supports only three types of costing or inventory valuation methods namely: Moving Average, FIFO and Standard Price. The golden rule is that, continuous stock management must be activated before this functionality can be leveraged. Continuous stock system is defined under: Administration > System Initialization > Company Details > Check default valuation method box (see figure below). Irrespective of the costing method leveraged, prices are calculated in local currency.

Moving Average: Inventory is valued using the cost price of the items. On receipt of goods, the value is automatically updated. A stock receipt transaction that affects accounting, debits the stock account while a release transaction that affects accounting credits stock/sales return account based on the cost price of the item.

Standard Price: When standard price is used as the costing method, a static price is defined for each item. On stock receipt, it is not automatically updated. The standard price method is advantageous in cases where you produce the items yourself. A stock receipt transaction that affects accounting debits the stock account based on the standard price defined for the item. Very often than not, variance does occurs, thus the difference between the standard price and the receipt document price will be posted to a variance account. A stock release posting on the hand, credits the stock account according to the standard price defined for the item.

FIFO: The FIFO inventory valuation method uses a "First- In- First Out" methodology.
This methodology ensures that when goods are received, a step-like arrangement or layer that is based on cost, quantities and entry date is created. And during goods release, the goods from the first layer (open) and their corresponding cost are used.

Thus, the choice of which of the costing method to use is a function of the objective to be achieved. Good enough, SAP Business One allows so much flexibility as it relates to costing system. Different costing method can be defined for different items and you can change the costing system of your items globally. However, it is important to note that continuous stock system cannot be deactivated after stock posting have been made.

In this posting, I have only given an Overview of the costing methods in SAP Business One. In my subsequent postings on the subject matter, I'd concisely analyze the journal implications of each of these methods for sales, purchasing, inventory and production transactions.

Tuesday, September 25, 2007

SAP REVIEWER

UNIT I: FUNDAMENTALS OF SAP BUSINESS ONE

MAIN MENU {includes modules} (afs pbb ips r)

ADMINISTRATION
FINANCIALS
SALES - A/R
PURCHASING – A/P
BUSINESS PARTNERS
BANKING
INVENTORY
PRODUCTION
SERVICE
REPORTS

MENU BAR
FILE, EDIT, VIEW, WINDOW, HELP, DATA GOTO, MODULE, TOOLS

TOOL BAR
PRINT PREVIEW, PRINT, SEND-EMAIL, SEND SMS, SEND FAX, EXPORT MS-EXCEL, EXPORT TO MS-WORD, LAUNCH APPLICATION, LOCK SCREEN,

FIND, ADD, FIRST DATA RECORD, PREVIOUS RECORD, NEXT RECORD, LAST DATA RECORD


To change company:
Administration > Choose Company

To change user:
Administration > Choose Company > Change User

To go to form of user maintenance: (asgu)
Administration > Set-up > General > Users

Two Input Tools


1. Selection List
2. Dropdown List

To change field labels: (if with authorization)
Ctrl + Double-click on the label

STATUS BAR {located at the bottom of the screen}
NAME, LENGTH, CONTENTS OF THE CURRENT FIELD

To display more technical info about the field: {can be used for creating queries or formatted searches}
View > Debug Information

To change various display parameters:
Administration > System Initialization > General Settings, Display tab

To change background image:
Administration > System Initialization > General Settings, Font&Bkgd tab





Different Display Parameters


Language, Color, Default Length Unit, Default Weight Unit, Date Format, Date Separator, Time Format, Display currencies on the right, Decimal Places, Decimal Separator, & Thousands Separator


To assign function keys F1 to F12 to most used transactions (user-defined shortcuts):
Tools > User shortcuts > Customize

To create user menu (user-defined menu):
Tools > User menu > Organize


To add forms under the user menu:

1. Open a document (eg. Sales a/r > Sales Order)
2. Go to Tools > User menu > Add to user menu
3. Highlight form. Click add.


To go to main window:
Ctrl + 0 or Window > Main Menu

To go to add mode:
Ctrl + A or Data > Add or Add Button in the toolbar


To customize main menu:

1. Go to Main Menu Window. Click Form Settings Icon (Rectangle with wheels Toolbar).
2. Check or Un-check Menu Items.


DRAG&RELATE {links two business objects to create a query}
Drag field to the entry in the navigation drag and relate tree.


To limit authorizations per user for using reports:
Administration > System Initialization > Authorizations > General Authorizations
Select General > DRAG&RELATE


UNIT II: MASTER DATA

1. Business Partners
2. Items and warehouses


(1) BUSINESS PARTNER MASTER DATA


Header Data (cbn f gc)
- code, business partner type, name, foreign name, group, currency


Tabs (gca ppap d)
- general, contact persons, addresses, payment terms, payment system, accounting, properties, details





To add BP Catalog number:
Inventory > Item management > BP Catalog No.

To create customer groups:
Administration > Set-up > Business Partners > Customer Groups

To create vendor groups:
Administration > Set-up > Business Partners > Vendor Groups

To create domestic customer:
Business Partners > Business Partner Master Data.
Change to add mode.

(2a) ITEM MASTER DATA

General area (I dip)
- item number, description, item group, prices
(gps i ppd)
Tabs
- general, purchasing, sales, inventory, planning, properties, details

To find an item:
Type *(keyword)


Item Master: Grouping Criteria

Can group products by

1. ITEM GROUP in the GENERAL AREA
2. MANUFACTURER in the GENERAL tab
3. PROPERTIES tab


1. To create new entries to the dropdown list under item group:
Choose DEFINE NEW in the list
2. To define item groups and properties in the administration:
Administration > Set-up > Inventory > Item Groups/Properties


(2b) WAREHOUSES

To define new warehouses:
Administration > Set-up > Inventory > Warehouses

Warehouse Fields (walda)
- warehouse code and warehouse name, address fields, location, drop ship, accounting tab

INVENTORY tab of the ITEM MASTER DATA

- Costing Method
- Warehouses
- Stock quantities
- Cost price
- Variance Account
- GL Account Determination
- Stock Account
- Allocation Cost Account

COSTING METHODS

1. moving average price
2. first in first out (fifo)
3. standard price (deals with variances)

KE To activate continuous stock management:
Administration > System Initialization > Company Details > Check default valuation method box
Note: Continuous stock management must be activated before this functionality can be leveraged.

To define whether the system calculates one price for all warehouses or not:
Administration > System Initialization > Company Details > Basic Initialization > Handle Price System per Warehouse checkbox



G/L ACCOUNT DETERMINATION

1. G/L Accounts by Item Level
Inventory > Item Master Data, Inventory tab

2. G/L Accounts by Warehouse
Inventory > Warehouses, Accounting tab

3. G/L Accounts by Item Group
Inventory > Item Groups, Accounting tab


To define default accounts:
Administration > Definitions > Financials > G/L Account Determination


UNIT III: DOCUMENT HANDLING { marketing documents in sales n purchasing}

General Structures of Documents
1. Upper Part (header)
- business partner, name, contact person,…

2. Middle Part
- contents tab, logistics tab, accounting tab
3. Lower Part (footer)
- buyer/ sales person, remarks,..

To add header and footer text:
Go to > Header & Footer (or RIGHT MOUSE CLICK), Insert predefined texts

To define predefined texts:
Administration > Definitions > General > Define Pre-defined Texts


FORM SETTINGS {used to customize documents}
- table format (show or hide)
- row format (details)
- document (default values)

DOCUMENT TYPES [in document, contents tab]
1. Item
2. Service

ROW TYPES IN DOCUMENTS [in document, contents tab]
1. T – text row
2. S – subtotal row
3. A – alternative item row (in a sales quotation)

To activate row type column:
Form Settings > Table Format

Friday, September 21, 2007

10 FAQs: Procurement Process in SAP Business One

10 FAQs: Procurement Process in SAP Business One
by Kehinde Eseyin(Systems Support Officer)


Q1. Can I create purchase requisition in SAP Business One?
A1. No. SAP Business One does not support purchase requisition.

Q2. What are the implications of creating a Goods Receipt (that is based on a Purchase Order)?
A2. * As a result of the accounting effect of the Goods Receipt PO, both the purchase order and the Goods Receipt PO cannot be amended.
* The Inventory status is updated.
* When using the draw document wizard, items that are already copied in full or partial are displayed in light gray in the purchase order.

Q3. What are the implications of creating an A/P Invoice?
A3. * The A/P Invoice cannot be changed.
* If the A/P Invoice is based on a Goods Receipt PO, then only the values gets updated; else stock quantity is also updated.
* When using the draw document wizard, items that are already copied in full or partial are displayed in light gray in the base document.

Q4. Can I reverse a transaction that has already affected my stock quantity and value?
A4. Yes. A/P Credit Memo allows you to reverse transactions that you already created an invoice for and the Goods Return functionality allows you to reverse transactions that have only affected stock quantity.

Q5. Does SAP Business One allow for partial and over deliveries?
A5. Yes. When you create Goods Receipt PO from a purchase order document, you can choose to increase or decrease the quantity. The later is called Over Deliveries while the former is called Partial Deliveries.

Q6. Which functionality in SAP Business One allows you to create a pro forma invoice?
A6. The A/P Reserve Invoice.

Q7. What is Split Purchase Order?
A7. Split Purchase order is a functionality that allows you to split a purchase order into child purchase order especially when dealing with more than one warehouse.

Q8. What is Landed Costs?
A8. The Landed Costs functionality in SAP Business One allows you to calculate the actual cost price of an item based on added costs incurred such as custom duties, insurance, tax, etc. The base document for the landed cost process is the Goods Receipt PO.

Q9. What is the use of the allocation cost account as it relates to the journal entries created when goods are procured?
A9. The Allocation Cost Account is used to enforce control by checking if the goods receipts PO and the A/P Invoice are the same.

Q10. What is the accounting implication of procuring non-inventory item on the Goods Receipt PO?
A10. There is no implication. For non-inventory items, SAP Business One does not create postings for the Goods Receipt PO even if you explicitly create one.

Friday, September 14, 2007

Certification Review Questions

August Certification Diet
by Kehinde Eseyin(Systems Support Officer)


1. How does the system calculate the stock available in the warehouse?
A. Instock + Ordered - Committed
B. Instock - Committed
C. Committed - Ordered
D. Committed + In stock - Ordered

Answer A.

At any point, it is possible for the system to determine the inventory level of an item in a warehouse or across warehouses. In determining this, the system adds the quantity in stock and ordered stock less committed stock.
In Stock + Ordered - Committed
The in stock is the actual stock quantity, the committed stock is the reserved stock as a result of committments made via sales order and reserved invoices. The ordered stock is the stocks that have orders placed on them via purchase orders or production orders. If the available stock for an item is negative, the value is displayed in red.


2. Which of the following document types can you create header and footer text for?
A. Business Partner master data
B. Sales Order
C. Item master Data
D. A/P Credit Memo

Answer: B, D

SAP Business One allows you to enter remarks and predefined text for marketing documents. You can't enter remarks for master data. To add header and footer text, choose Goto > Opening and Closing remark. Alternatively, right mouse click and choose opening and closing remark. Furthermore, you can insert predefined text. It is also possible to print out the header and footer remarks on a document.

3. It is possible to change the language settings of your SAP Business One application. True or False?

Answer: True

SAP Business One is flexible in that it allows you to change the language settings of your application. This can be done by accessing the following path
Administration > System Initialization > General Settings, Display Tab and then Language field

4. The system prevents automatic posting to sub ledger accounts when the active status of the posting period is set to "NO". True or False?

Answer: True
The purpose of the Active field is to allow or to block working with sales documents. If you set the field to "NO" (and the period is not locked), no sales documents can be created in SAP Business One during this period. This option can be used in order to block users from adding new sales documents after the posting period has ended. However, you will still be able to add purchasing documents, inventory transactions, manual journal entries.When the status is set to "YES" (and the period is not locked), you will be able to add all types of records: sales documents, purchasing documents, inventory transactions, manual journal entries, Master Data, and reconciliations.

5. How many concurrent same user access is possible on a SAP Business One company database?
A. 1
B. 2
C. 3
D. 4

Answer: B
It is possible to have only two concurrent user accesses on a company database.

6. On which side of an account is budget entered in SAP Business One?
A. Debit side
B. Credit side
C. Revenue side
D. Extra ordinary accounts

Answer A
In order to use the budgeting functionaliy of SAP Business One, it must first be activated under Administration > System Initialization > General Settings, Budget Tab and Check Budget Initialization field. Budget is entered on the debit side of an account. That is, the expense accounts, hence SAP Business One checks for debit budget.

7. You want to create a credit memo that is based on an invoice with installment. What are the options available for you for applying the credit memo amount to the installment.
A. Equally
B. First Installment
C. Last Installment
D. It is not possible to apply installment to credit memos

Answer: A, B, C
Installments are defined in the No of Installment field in the payment terms. Credit memos are used to reverse an invoice. It is possible to have installments defined for invoices. When creating credit memos for such invoices, the system allows you to distribute the credit memo amount equally, or assign the credit memo amount to the 1st installment, the 2nd and in that order. Also, you can assign the credit memo to the last installment, 2nd to the last and in that order.

8. Which of the following SAP Customer notes is termed priority 1?
A. SAP FAQNotes
B. SAP TopNotes
C. SAP HotNews
D. SAP HighNews

Answer: C
SAP notes are solution to known problems. SAP HotNews are called high priority notes because they contain notes on how to resolve or avoid problems that can cause system shutdown or data loss. SAP TopNotes are component and sub component based solutions. SAP FAQNotes contains most frequently asked questions and answers. Collections of SAP notes are published as SAP HotNews and SAP TopNews. There's nothing like SAP HighNews.

9. The methodology that helps you operate SAP Business One on a long term basis is called
A. SAP Early Watch Alert
B. Operation Concept
C. Support Desk
D. Escalation Handling

Answer: B
SAP Business One has a number of support tools, each with its own function. The implementation and operation concept is a support tool that guides the implementation and management of the system, especially on a long term basis. The SAP Early Watch Alert collects system data, analyzes it and generate recommendation report. The support desk is another support tool that allows you create problem messages and send to SAP from within SAP Business One. Message escalation and project escalation are also support offerings that are handled by team of experts.

10. Alternative item row type can be defined for which document type?
A. Purchase Order
B. Sales Order
C. Goods Issue
D. Sales Quotation

Answer: D
It is possible to include the row type field in marketing documents. The possible row type definitions are Blank, Text (T), Sub total (£) and Alternative item (A). The alternative item row type applies to only sales quotation. When it used, the value is not considered in sum calculation.



=======================



July Certification Diet
by Kehinde Eseyin(Systems Support Officer)


1. You are using special prices in SAP Business One and you observe blue rows in the special prices window. Blue rows shows that
A. The item rows are not in stock.
B. Special discount groups are the row items.
C. No special prices were defined for the item rows.
D. The item rows have validity/quantity based special prices defined for them.

Answer: D

There are business requirements in which you do not want special prices to depend directly on the business partners, but on the items and associated price lists. If a customer buys an item, and neither a special price nor a discount group has been defined for the customer or this item, the special prices for the price list applies. This is setup under Inventory > Price Lists > Hierarchies and Expansions. When the lines for special price are expanded, the special price is displayed in blue in the Hierarchies and Expansions window.

2. Commission can only be calculated for the following except

A. Sales Employee
B. Item group
C. Item
D. Customers

Answer: B
During system setup, under Administration > System Initialization > General Settings, BP Tab, you can define how commission is calculated. Commission can be awarded based on the sales employee, item or customer specified in the document. This setting influences where you can specify the sales commission percentage, but does not automatically calculate any commission transactions. This setting is not static; it can be changed at any time. Commission calculation cannot be defined for Item group.


3. You want to use the Pick and Pack manager in SAP Business One, what are the statuses available?
A. Open
B. Picked
C. Released
D. Blocked

Answer: A, B, C
The Pick and Pack Manager is used to handle the picking process. The process starts with the creation of a pick list, then to the reporting of picked quantities, and ends with the packaging and delivery of the picked items. The possible Pick and Pack statuses are Open, Released and Picked.
Open - Displays the open Sales Order or Reserve Invoice rows.
Released - Displays the released quantities ready to be picked that exist in the pick list
Picked - Displays the picked quantities.
Blocked is not valid status.


4. What happen when you define the opening balances function and the system currency differs from the local currency?

A. An error message appears
B. You must manually convert the balances
C. The balances are converted automatically
D. It is not possible to enter opening balances when different system and local currencies are used in a company.

Answer: C
When using the opening balances functionality, enter opening balances in the local currency in column OB (LC) only if data is to be entered in the local currency. If the system currency is different from the local currency, the system automatically calculates the opening balances in the system currency and displays the values in column OB (SC). Hence, it is possible to enter opening balances even when the local and system currencies differ and an error message is not displayed as a result. If a foreign currency has been defined for an account, the OB (FC) field will be active. The system automatically calculates the amounts in the local and system currencies, using the valid exchange rate on the value date. It is important to state that opening balance for a multi currency account can only be entered in local currency


5. Which of the following is/are true about the Data Transfer Workbench when it encounters an error?

A. Rollback occurs and all data records that are already imported are removed from the system
B. An error message is displayed and nothing happens.
C. The import process stops after a number of errors, yet to be imported records are stored in an error file
D. The import process stops after a number of errors and all records that have already been imported are retained in the system.

Answer: A, C, D

The Data Transfer Workbench is a tool for data migration. Another functionality that can be used for importing data into SAP Business One is the native import functionality. SAP Business One has a number of ways of handling errors while importing data into the system. When error is encountered while data upload is in progress, a rollback occurs and all data records already imported are removed from the system. Alternatively, the Data Transfer Workbench stops the import process after a certain number of errors and does not rollback. All records that are yet to be imported are stored in an error file while the records that are already imported remains in the system.

6. Which of the following are true about the uses of user defined fields in SAP Business One.
A. It is used for integration into document templates
B. It is a tool used to generate SQL statements
C. It is used to find objects
D. It is used to format data records

Answer: A, C
User defined fields can be used for document template integration, search objects, store additional information such as pictures and files and reporting. It is not a tool for generating SQL Statements. The Query Wizard and Query generator are tools used for generating SQL statements. However, user-defined fields can be displayed in the print layout designer or in the Query Generator window. Also, it is not used for formatting data records.


7. What are the levels of authorization available in SAP Business One?
A. None
B. Read Only
C. Full
D. Peer

Answer: A, B, C
SAP Business One has it's own in built authorization levels. Authorizations allow users to view, create, and update documents and you assign them according to data ownership definitions. This is to enforce some sort of data security and controlled access. By default, a new user has no authorizations. The three possible levels available are None, Read Only and Full.
None: the user has no access to that functionality.
Read Only: the user can only view, but not change data.
Full : the user is able to display and modify data for that functionality per module.
Peer is solely related to data ownership concept in which the user and the owner share the same manager on their corresponding employee records.

8. The types of Balance Sheet accounts includes the following except
A. Asset
B. Equity
C. Liability
D. Cost of Sales

Answer: D
A typical Chart of accounts is made of two major types of accounts, namely the balance sheet accounts and profit and loss accounts. For the balance sheet accounts, three types of accounts are available. They are Asset, Liability and Capital and Reserve, otherwise called equity. Cost of sales is a typical Profit and Loss accounts and not a balance sheet account.when a balance sheet report is processed, the asset account is displayed on the active side while the liability and equity accounts are displayed on passive side.

9. Where in SAP Business One is the system and local currencies configured.
A. Administration > System Initialization > Company Details
B. Administration > System Initialization > General Setting
C. Administration > setup > Financials > Currencies
D. Financials > Chart of Accounts

Answer: A
SAP Business allows you to manage your accounts using system currency, local currency and multi currency. These definition can be made under Administration > System Initialization > Company Details, choose Basic Initialization. The system and the Local currency can be the same or different, however, the reporting currency is the system currency. This definition is not made under Administration > System Initialization > General Settings. All currencies used in a company are defined under Administration > Setup > Financials > Currencies. The chart of accounts is accessed under Financials > Chart of Accounts. The chart of accounts is an index of all general ledger accounts; hence, system and local currencies are not defined there.

10. Is it possible to have a negative balance in a credit field? True or False.

Answer: True
It is possible to display credit balances in negative. This is setup under Administration >System Initialization >Company Details >Basic Initialization tab. By default, the debit balances are displayed with a negative sign. The system displays a credit balance with a negative sign because the credit balance depicts liabilities in an asset account. This setting is sensitive because it impacts on Opening balances for G/L account and business partners. Furthermore, the settings cannot be changed after transactions have been posted.



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June Certification Diet
Kehinde Eseyin(Systems Support Officer)



1.When you activate purchase account posting system, the G/L account determination contains additional accounts namely:
A. Purchase Account
B. PA receipt account
C. PA return account
D. PA offset account

Answer: A, C, D
Three accounts are added to the G/L account determination when purchase account posting system is activated in the system. They are Purchase account; PA return account and PA offset account.
Purchase Account: This is recorded in the journal entry along with the same amount that is recorded for the stock account when an A/P invoice or a goods receipt PO is created.
PA return account: This is recorded in the journal entry along with the same amount that is recorded for the stock account, when a goods return or an A/P credit memo is created.
PA offset account: This account is used to offset the purchase or purchase-return account, thus maintaining journal entries created by balanced purchasing documents
Purchase accounting posting system is activated under Administration > System Initialization > Company Details. Then select the Use Purchase Accounts Posting System indicator in the Basic Initializations tab

2.What are the two possible payment means in a payment wizard run?
A. Cash
B. Checks
C. Bank Transfer
D. Credit Card

Answer: B, C
The payment wizard automatically creates payment documents based on open invoices (payables and receivables) in the system. The payment wizard run supports two types of payment means namely Checks and Bank Transfer

3.Can a down payment request be changed? True/False

Answer: True
A down payment request is like a draft posting that shows that a payment is expected from a customer. A down payment request can be changed as long as its status is open. The down payment closes the down payment request.

4.You are implementing SAP Business One for a client, what is the minimum number of databases that should be created during the project implementation phase.
A. 1
B. 2
C. 3
D. 4
Answer: C
At least, three databases should be created during the implementation of SAP Business One. They are Demo, Production and Test databases.

5.What are the two types of SDK in SAP Business One?
A. Implementation
B. Development
C. Configuration
D. Testing

Answer: A, B
SDK is an acronym for software development kit. It is a tool used to further enhance the generic SAP Business One system. SDK is provided in two versions in SAP Business One. They are Implementation SDK and Development SDK. The former is used to add individual client requirement like form redesigning which does not necessarily require coding while the latter is used to develop add-ons to interface with SAP Business One.

6. Company XYZ uses continuous stock system, what are the costing methods that XYZ can use to manage its stocks.
A. FIFO
B. LIFO
C. Moving Average
D. Standard Price

Answer: A, C, D
Three valuation methods are available in SAP Business One. They are FIFO, Moving Average and Standard Price. These options are only available if stocks are continuously managed in the system. The system calculates the moving average price by dividing the total value of the stock through the amount in stock. In FIFO, the system stores every goods receipt in a separate layer. When goods issue is posted, the system uses the price of the item from the oldest layer, from the second layer and in that order. For standard price, a static price is specified.

7. Where do you set up G/L account determination in SAP Business One?
A. Administration > Setup > Inventory > Define warehouses
B. Administration > System Initialization > Company Details
C. Administration > Setup > Inventory > Define Item group and choose the Accounting Tab
D. Administration > Setup > Financials > G/L Account Determination

Answer: A, C, D
G/L Account determination can be setup under A, C, D above. It is not set up in Company Details (B). Essentially, G/L Account determination can be set up at the item level, warehouse level and item group level.

8. You are using the print layout functionality in SAP Business One, which field is used to define field labels or headings for the repetitive area.
A. Variable field
B. Calculation field
C. Data field
D. Text field

Answer : D
Text field is used to define labels or headings for the repetitive area. The calculation field is used to perform both defined and predefined calculation. The Data field prints the content of the master data and warehouse data. The variable field is used to print data that is not stored in any table but is calculated by certain procedures.

9. The default roles in SAP Business One Human Resources are
A. Purchasing
B. Sales Employee
C. Technician
D. Manager

Answer: A, B, C
The default role in SAP Business One Human Resources are purchasing, Sales Employee and Technician. Other roles can however be added as the need arises.

10. The three types of production orders in SAP Business One are
A. Standard
B. Special
C. Sales
D. Template
E. Disassembly

Answer: A, B, E
Three types of production orders are available in SAP Business One. They are Standard, Special and Disassembly production orders. The standard production orders are copied from the bill of materials. The special production orders are not necessarily based on the bill of materials. The disassembly production order is used to report the disassembly of a standard production order.
Sales and Template are not production order types but bill of materials types.



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May Certification Diet
Kehinde Eseyin(Systems Support Officer)


1. Which of the following about installments in SAP Business One is correct?
A. Installments can only be defined when posting the Invoice
B. Installments can only be defined in the payment terms window and cannot be changed in the invoice.
C. Installments can be defined in the payments terms window and can also be altered when creating the invoice
D. Installments can only be defined in G/L Account Determination.

Answer: C
Installments are defined as independent objects in the No. of installments field within the payment terms window. Furthermore, after installments are defined, they can be modified in the invoice. Installments are not defined in G/L Account Determination. When setting up installments, the installment rates, month and days are defined and added to the whole invoice to determine the due date for the individual installments.

2. Your company uses the Withholding Tax functionality in SAP Business One, at which point can withholding tax be calculated?
A. When posting the invoice
B. When posting the invoice and when posting the payment
C. When posting the payment

Answers: B.
The category field of the Define Withholding Tax window in SAP Business One has two options, namely Payment and Invoice. If Payment is chosen, the withholding tax is posted when payment is made and if Invoice is chosen, the withholding tax is posted upon invoice.

3. Which of the following is/are the component(s) of the SAP Business One Software Development Kit (SDK)?
A. Data Interface Server (DI Server)
B. Data Interface Application Programming Interface (DI API)
C. User Interface Application Programming Interface (UI API)

Answers: A, B, C
The SAP Business One SDK is used to develop additional functionality applications in SAP Business One. The applications developed are called Add-ons. The DI Server supports the integration with non-SAP systems. The DI API facilitates access between add-ons and the SAP Business One database. The third component which is the UI API facilitates access between screen elements in the SAP Business One client.

4. The Due Date for a business partner is calculated based on the metrics defined in the payment system for the business partner.
True or False?

Answer: False.
The payment system tab of the business partner master data contains payment information such as house bank details and payment methods. The payment terms contains payment data which are inherited by default in corresponding marketing documents. Such data includes due date and total discount allowed.

5. Where in SAP Business One are control accounts defined and/or managed?
A. Administration > System Initialization > General Settings.
B. Administration > Setup > Financial > G/L Account Determination
C. Administration > System Initialization > Company Details
D. Financials > Chart of Accounts

Answers: B, D
Control Accounts link the business partner accounts to the general ledger. A control account must be entered for every business partner in the system. Examples of control accounts are account payables and receivables, down payment payable and receivables, open debts. Default control account can be entered under Administration > Setup/Definitions > Financials > G/L Account Determination. You can define a G/L account as a control account under Financial > Chart of Accounts; then check the control account box. Control accounts are not managed or defined under A and C.

6. A company is solely involved in the sales of 2 years warranty items. Which of the following is correct for a Customer Equipment Card to be created automatically for all sold items?
A. Create a service contract template with the type "Serial" and assign it to all sales items (warranty managed) in the item master data.
B. Create a service contract template with the type "Customer" and assign it to all Customers in the business partner master data.
C. Create a service contract template with the type "Item group" and assign it to all sales items (warranty managed) in the item master data.
D. Create a service contract template with the type "Customer" and assign it to all sales items (warranty managed) in the item master data.

Answer: A
Service contract can be created for serial number managed items, special customers and item groups. The implication of creating service contract for serial number managed items in the item master data is that, when a delivery note or A/R Invoice is created for that item, the system automatically creates customer equipment card and service contract of the warranty service type. Assigning service contracts of the customer and item group types to the item or business partner master data will not achieve this aim.

7. You are trying to reference a customer equipment card and you keep getting an error message. The status of the customer equipment card is likely to have been set to
A. Active
B. Loaned
C. In Lab
D. Closed

Answer: C
When the status of a customer equipment card is set to returned, terminated or in lab, an error message is displayed when you try to access it. However, a customer equipment card can be accessed if the status is set to active or loaned. Closed is not a valid status for customer equipment card.

8. The SAP Business One Duty Manager is a telephone support service that is used instead of the SAP Business One Hotline support service when critical business processes are affected due to system abnormalities.
True or False

Answer: True
The Duty Manager Support service is used when critical business processes are affected as a result of system abnormalities. The answering machine for this number is checked regularly, even outside working hours. The hotline on the other hand is used basically to contact SAP support when the SAP portal cannot be accessed.

9. A User Defined Table in SAP Business One is identified by which prefix
A. ?
B. U_
C. @
D. $

Answer: C
User defined tables are identified by the @ prefix, followed by a unique code and then a name description by default. SAP Business One stores the user defined field under the description U_ (title). $ is closely associated with query syntax in SAP Business One e.g. $[Tablename.Fieldname]

10. Which of the following databases are supported by SAP Business One?
A. Oracle
B. Microsoft SQL Server
C. IBM DB2
D. Sybase

Answer: B, C, D
SAP Business One can be deployed on Microsoft SQL Server, IBM DB2 and Sybase. Oracle is not a supported database system.