SAP Textbook Notes and Key Terms

What process in SAP involves: purchasing, invoice verification, inventory management, warehouse management

MM

What process in SAP involves: MRP, production orders, BOMs, work centers, routing instructions, batch management

PP

What process in SAP involves: order entry, picking/packing/shipping, invoice, inquiries, quotes, sales reporting

SD

What process in SAP involves: General Ledger, AR, AP financial reporting, cash management legal consolodation

FI

What process in SAP involves: cost accounting and internal reporting by cost center, internal order, project, profit center, or other unit, profitability analysis

CO

In what SAP processes use the general ledger master accounts?

MM, PP, SD, FICO

In what SAP processes use the customer master accounts?

SD, FI

In what SAP processes use the vendor master accounts?

MM, PP, FI

In what SAP processes use the material master accounts?

SD, MM, PP, CO

highest level in a SAP instance; self contained unit with a separate set of master records and it’s own set of configuration tables

Client

Represents an independent legal accounting entity that contains a balanced set of books as required by law or regulation

Company Code

table driven customization to the SAP system to meet specific customer requirements; user sets values in tables to cause the system to function in a desired way

Configuration

set of linked activities that transform an input into a more valuable output; usually classified as support or operational processes

Business Process

data that drive the logic of the applications within the system; primarily used for defining the details of business processes; include system and technical functions in the SAP system

Control or Configuration data

What are the three types of data within SAP?

Control/Configuration
Master
Transaction

data that represents various business entities present in a system, both internal and external

master data

data that describes a business event or may be the result of a business proccess

transaction data

What are the general components of AIS?

People
Data
Information
Formal and documented procedures
Software
IT infrastructure
Internal Control

What are the five components of internal control for helping meet internal control objectives through COSO?

Control Environment
Risk Assessment
Control Activities
Information and Communication
Monitoring Activities

What are the common transaction related controls?

Authorized
Valid
Recorded
Recorded accurately

What are the control objectives that are met by COSO?

Reliable financial reporting
Effective and efficient operations
Compliance with laws and regulations

What are the duties that should be separated to minimize errors and frauds

Authorization
Custody
Recordkeeping
Reconciliation

Application control that: seeks to ensure that all required data has been entered before a transaction is recorded/updated; will not go forward until all is filled in

completeness check

What control objective(s) does a completeness check enhance?

Recorded (if based on primary key)
Accurate (if based on secondary attribute)

Ex of ___ check: When making a purchase online, the program will not let you place an order until all the fields are filled in

completeness

Application control that: determines if the characteristics entered in a field are a proper type

field check

What control objective(s) does a field check enhance?

accuracy

Ex of a ___ check: When entering in an address, is the information in the zip code box the correct format for a zip code?

field

Application control that: tests a numerical amount in a field against an upper OR lower predetermined value before a transaction is recorded/updated

limit check

What control objective(s) does a limit check enhance?

authorized
accuracy

Ex of a ___ check: credit limit balance or the fact that employees can work only 40 hours a week

limit

Application control that: tests a numerical amount against an upper AND lower limit on a field

range check

What control objective(s) does a range check enhance?

authorized

Ex of a ___ check: an organization may require a minimum value of items to be ordered and a certain maximum before special authorization is needed

range

Application control that: determines the correctness or logic of a relationship between two or more data items before transactions are recorded/updated

reasonableness test

What control objective(s) does a reasonableness check enhance?

accuracy

Ex of a ___ check: should you be paying a hourly worker $25,000 per month? What about the CEO?

reasonableness check

Application control that: determines if the data entered has the appropriate sign before the transaction is recorded/updated

sign check

What control objective(s) does a sign check enhance?

accuracy

Ex of a ___ check: program in the system uses debits and credits. Therefore there should be no negative entered into a column with a credit

sign

Application control that: determines that the data being input will fit into the assigned field before a transaction is recorded/updated

size check

What control objective(s) does a size check enhance?

accuracy

Ex of a ___ check: zip code field can only have 5 digits

size

Application control that: Compares the data entered into a field for either a transaction to master record to that in a field of another master record to verify that the data entered exists

validity check

What control objective(s) does a validity check enhance?

Accuracy

Ex of a ___ check: checking that the primary key entered is a valid primary key

validity check

Application control that: retrieves and displays other data related to the data that has been entered before a transaction is recorded/updated

closed loop verification

What control objective(s) does a close loop verification check enhance?

accuracy

Ex of a ___ check: upon entering a customer name, SAP shows the customer name and the customer number entered

closed loop verification

Application control that: Compares numerical data entered to a pre-determined number for ensuring accuracy

zero balance test

What control objective(s) does a zero balance check enhance?

accuracy

Ex of a ___ check: when entering in entries for GL, the balance should be zero. If it is not the system will not allow posting

zero balance

What are the application controls that are preventative (ALL 10 OF THEM)

Completeness check
Field check
Limit check
Range check
Reasonableness check
Sign check
Size check
Validity check
Closed loop verification
Zero balance test

legal or natural persons with whom you have a business relationship

Business partner (customer or vendor)

What is the primary key of a vendor master file

vendor number

internal document instructing the purchasing department to initiate steps to buy a material or procure a service by a certain date

purchase requisition

stock located in the warehouse that is not subject to any kind of usage restrictions

unrestricted use stock

stock that has been received but is in the process of incoming quality inspection and which has not yet been released for unrestricted use

stock in quality inspection

stock that is present in the company, but for various reasons, is not to be used and cannot be classified as unrestricted

blocked stock

What is the main function of production logistics(PP)?

guarantee material availability

created for materials that are produced internally

planned order

If goods are developed externally, who must turn the planned order into a purchase requisition?

MRP controller

What are the planning strategies within PP?

Make to stock production
Make to order production
Assemble to order production

production strategy used when the materials are not segregated and costs need to be tracked at material level (not sales order level); used if wanting to produce stock that is independent of orders

Make to stock production

used when a product is produced specifically for individual sales orders

Make to order production

used when the product or service is assembled on receipt of the sales order and key components are stocked in anticipation of sales

Assemble to order

The PP process is ended by the:

goods receipt

What is the primary element of the SD organizational structure

sales organization

What are the typical distribution channels?

wholesale, retail, direct

determine the responsibility for an organizational element to be distributed to customers

distribution channels

particular linkage between a sales organization, a distribution channel, and a division

sales area

Person or company that places an order for goods or services

sold to party

person or company that receives the goods

ship to party

person or company that receives the invoice for a delivery or service

bill to party

the person that settles the bill

payer

customer request to a company that they can provide a quotation or sales information without obligation to buy

inquiry

data that is stored about the frequently occurring material combos and quantities for a common delivery

item proposal

Billing of customers is done within which process of SAP?

SD

What is the smallest organizational unit for which a complete self contained set of accounts can be drawn up for purposes of external reporting?

company code

organizational unit the represents the area that the customer credit is awarded and monitored

credit control area

costs that arise through the consumption of goods and services tat originate from outside the company such as cost of items purchased from vendors, employee salaries, wages, purchased services, and costs of fixed assets

primary costs

cost elements that represent the activity values produced during internal cost allocations

secondary costs

Distribution is used to allocate:

ONLY primary costs

Assessments are used to allocate:

primary or secondary costs