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SAP P2P Cycle With Acct Entries

The Order-to-Cash (O2C) cycle in SAP encompasses the entire order processing lifecycle, from inquiry to payment receipt. Key accounting entries occur during the goods issue, billing, and payment receipt stages, involving inventory, accounts receivable, and revenue accounts. This process ensures efficient order management and accurate financial reporting within the SAP system.

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157 views4 pages

SAP P2P Cycle With Acct Entries

The Order-to-Cash (O2C) cycle in SAP encompasses the entire order processing lifecycle, from inquiry to payment receipt. Key accounting entries occur during the goods issue, billing, and payment receipt stages, involving inventory, accounts receivable, and revenue accounts. This process ensures efficient order management and accurate financial reporting within the SAP system.

Uploaded by

permendra.kumar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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The Order-to-Cash (O2C) cycle in SAP is a business process that covers the complete order processing

lifecycle, from order creation to the receipt of payment from customers. Here is a step-by-step overview
of the O2C cycle with the corresponding accounting entries:

### 1. Pre-sales Activities

**Step: Inquiry and Quotation**

- **Inquiry (VA11)**

- **Quotation (VA21)**

There are no accounting entries at this stage as these are purely sales documents.

### 2. Sales Order Creation

**Step: Create Sales Order (VA01)**

- **Accounting Entry:**

- No immediate accounting entry, as this is a sales document.

### 3. Availability Check and Delivery Scheduling

**Step: Availability Check (CO09)**

- **Accounting Entry:**

- No immediate accounting entry, this is an inventory management function.

### 4. Delivery Note Creation

**Step: Create Outbound Delivery (VL01N)**

- **Accounting Entry:**

- No immediate accounting entry, as this is a logistics document.


### 5. Picking and Packing

**Step: Picking (VL02N)**

- **Accounting Entry:**

- No immediate accounting entry, this is a logistics function.

**Step: Packing (VL02N)**

- **Accounting Entry:**

- No immediate accounting entry, this is a logistics function.

### 6. Goods Issue Posting

**Step: Post Goods Issue (VL02N)**

- **Accounting Entry:**

- **Inventory Account (Credit):** Decreases inventory

- **Cost of Goods Sold (Debit):** Recognizes the cost of the goods sold

- Example:

- Debit: Cost of Goods Sold (COGS)

- Credit: Inventory

### 7. Billing

**Step: Create Billing Document (VF01)**

- **Accounting Entry:**

- **Accounts Receivable (Debit):** Recognizes the amount due from the customer

- **Revenue (Credit):** Recognizes sales revenue

- Example:

- Debit: Accounts Receivable


- Credit: Revenue

### 8. Payment Receipt

**Step: Incoming Payment (F-28)**

- **Accounting Entry:**

- **Bank Account (Debit):** Increases cash in the bank

- **Accounts Receivable (Credit):** Clears the customer receivable

- Example:

- Debit: Bank Account

- Credit: Accounts Receivable

### 9. Post Processing

**Step: Account Reconciliation and Clearing (F-32)**

- **Accounting Entry:**

- No new accounting entries, this is a reconciliation function to ensure all transactions are properly
matched and cleared.

### Summary of Accounting Entries:

1. **Goods Issue:**

- Debit: Cost of Goods Sold (COGS)

- Credit: Inventory

2. **Billing:**

- Debit: Accounts Receivable

- Credit: Revenue
3. **Payment Receipt:**

- Debit: Bank Account

- Credit: Accounts Receivable

This completes the Order-to-Cash cycle in SAP with the corresponding accounting entries. Each step
involves specific transactions within the SAP system that ensure smooth processing and accurate
financial reporting.

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