SAP MM Account Determination

Purpose
The purpose of this page is to describe the main customizing settings for Account
Determination.
Overview
For every goods movement created for a valuated material, the SAP system can create
two types of documents: a material document and an accounting document. The SAP
system follows the accounting principle that for every material movement, there is a
corresponding document that provides details of that movement. In addition, an
accounting document is produced that describes the financial aspects of the goods
movement.
The material document and accounting (FI) document creation depend on the
movement type configuration.
Through the movement type configuration and based on the customizing settings
defined for the account determination the SAP System can do automatic account
postings.
To determine the customizing settings for Account Determination you should GO through the following customizing path:
SPRO -> IMG -> Materials Management -> Valuation and Account Assignment -> Account Determination.

Below sections describe the two ways to define the account determination: Account Determination Wizard and Account
Determination without Wizard.

Account Determination Wizard

It is a proposal from SAP System to define the account determination.
In this step, you can quickly configure the system to make automatic postings by answering the wizard's questions. The
wizard undertakes the functions of the following steps:
1. Defining valuation control
2. Grouping valuation areas
3. Defining valuation classes
4. Defining account grouping for movement types
5. Purchase account management
6. Configuring automatic postings
You can continue to use these transactions either in conjunction with or instead of the wizard.

Account Determination Without Wizard

In this step, you can manually define the settings for account determination in Inventory Management and Invoice
Verification.
Account determination without the wizard enables you to make a more complex configuration than account determination
with the wizard, but requires that you are already familiar with the principle of automatic account determination in the ERP
System.
You can configure account determination with the wizard in the first instance, for example. Then, if the wizard does not meet
your company's account determination requirements, you can work without it.
You have to work without the wizard if you use the material ledger (this is standard).

Define Valuation Control

It can be configured by the following customizing path: SPRO -> IMG -> Materials Management -> Valuation and Account
Assignment -> Account Determination -> Account Determination without Wizard-> Define Valuation Control.
It defines if the valuation areas will be grouped by activating the valuation grouping code. This makes the configuration of
automatic postings much easier.
In the standard SAP R/3 System, the valuation grouping code is set to active as default setting.
Firstly, you should create the valuation grouping code.
It corresponds to the transaction OMWM.
OMWM - Valuation Control

Group together Valuation Areas

It can be configured by the following customizing path: SPRO -> IMG -> Materials Management -> Valuation and Account
Assignment -> Account Determination -> Account Determination without Wizard-> Group together Valuation Areas.
In this step, you assign valuation areas to a valuation grouping code.
Valuation area corresponds to the organization level in which the valuation will occur. Or the valuation occurs at the plant
level or it occurs at the company code level.
The valuation grouping code makes it easier to set automatic account determination. Within the chart of accounts, you
assign the same valuation grouping code to the valuation areas you want to assign to the same account. The chart of
account is a list of accounts.
Within a chart of accounts, you can use the valuation grouping code:

to define individual account determination for certain valuation areas (company codes or plants)
Example:
The valuation areas 0001 and 0002 are assigned to company codes which use the same chart of accounts. For both
valuation areas, however, you would like to define a different account determination.
You must assign different valuation grouping codes (for example, 0011 and 0022) to both valuation areas.

to define common account determination for several valuation areas (company codes or plants)
Example:
Valuation areas 0003 and 0004 are assigned to company codes which use the same chart of accounts. Account assignment
for both valuation areas should be similar.
You assign the same valuation grouping code (for example, 0033) to both valuation areas. Thus, you only have to define
account assignment for both valuation areas once.
Requirements:

You must have activated the valuation grouping code in the step Define valuation control (OMWM).

You must have defined the valuation level in corporate structure Customizing. The valuation level is defined in
transaction OX14 where you should decide if the valuation will occur at the plant level or company code level.

You must have assigned each plant to a company code in "Enterprise structure" into the Customizing. When
assigning your plants, the valuation areas are defined automatically. To assign a plant to company code you should go to
transaction OX18.
OX14 - Define Valuation Level

Recommendation:
SAP recommends that you only use a valuation grouping code within a chart of accounts in order to prevent account
determination from becoming confusing.
Default settings
In the standard SAP system, valuation is predefined at plant level. All plants are grouped together via valuation grouping
code 0001.
Group together Valuation Areas corresponds to the transaction OMWD.
OMWD - Account Determination for Valuation Areas

Define Valuation Classes

It can be configured by the following customizing path: SPRO -> IMG -> Materials Management -> Valuation and Account
Assignment -> Account Determination -> Account Determination without Wizard->Define Valuation Classes.
In this step, you define which valuation classes are allowed for a material type.
If an user creates a material, he/she must enter the material's valuation class in the accounting data (Accounting 1 and 2
views). The ERP system uses your default settings to check whether the valuation class is allowed for the material type.

The valuation class is a key to group materials with the same account determination. The valuation classes depend on the
material type. Several valuation classes are generally allowed for one material type. A valuation class can also be allowed
for several material types.
The valuation class determines the G/L accounts which will be updated as result of the goods movement generated for the
material.
The valuation class makes it possible to:

Post the stock values of materials of the same material type to different G/L accounts

Post the stock values of materials of different material types to the same G/L account
MM03 - Display - Acoount 1 view

The link between the valuation classes and the material types is set up via the account category reference.
The account category reference is a combination of valuation classes. Precisely one account category reference is assigned
to a material type.
Requirements

You must have defined your material types.

You must have defined the chart of accounts.

You must have agreed with Financial Accounting which materials are assigned to which accounts.
Default settings
In the standard SAP R/3 System, an account category reference is created for each material type. The account category
reference is, in turn, assigned to precisely one valuation class. This means that each material type has its own valuation
class.
OMSK Account Category reference/valuation class

OMSK Account category reference button

OMSK - Valuation Class Button

OMSK - Material Type/Account category reference

Define Account Grouping (account modifier) for Movement Types

Using this function, you can assign an account grouping to movement types. The account grouping is a finer subdivision of
the transaction/event keys for the account determination.
The account grouping is provided for the following transactions keys:

GBB (offsetting entry for inventory posting)

PRD (price differences)

KON (consignment liabilities)

The account grouping in the standard system is only active for transaction key GBB (offsetting entry for inventory posting).
OMWN - Define Account Grouping for Movement Types

Purchase Account Management

It is used to attend legal requirement from specific countries (France, Italy, Finland, Belgium, Spain and Portugal). In this
step, you will define a specific valuation and a separate accounting document for Purchase Order postings.

Configure Automatic postings

In this step, you enter the system settings for Inventory Management and Invoice Verification transactions for automatic
postings to G/L accounts.
You can then check your settings using a simulation function.
What are automatic postings?
Postings are made to G/L accounts automatically in the case of Invoice Verification and Inventory Management transactions
relevant to Financial and Cost Accounting.
Example:
Posting lines are created in the following accounts in the case of a goods issue for a cost center:

Stock account

Consumption account
How does the system find the relevant accounts?
When entering the goods movement, the user does not have to enter a G/L account, since the ERP system automatically
finds the accounts for each posting based on the following data:

Chart of accounts of the company code

If the user enters a company code or a plant when entering a transaction, the ERP system determines the chart of accounts
which is valid for the company code.
You must define the automatic account determination individually for each chart of accounts.

Valuation grouping code of the valuation area

You must define the automatic account determination individually for every valuation grouping code within a chart of
accounts. It applies to all valuation areas which are assigned to this valuation grouping code.
If the user enters a company code or a plant when entering a transaction, the system determines the valuation area and the
valuation grouping code.

Transaction/event key
You do not have to define these transaction keys, they are determined automatically from the transaction (invoice
verification) or the movement type (inventory management). In this step, you can only insert the account number for each
transaction key.

Account grouping (modifier) (only for GBB, PRD and KOM)

Since the transaction key GBB is used for different transactions (for example, goods issue, scraping, physical inventory),
which are assigned to different accounts (for example, consumption account, scrapping, expense/income from inventory
differences), it is necessary to divide the posting transaction according to a further key: account grouping code.

Valuation class of material or (in case of split valuation) the valuation type

The valuation class allows you to define automatic account determination that is dependent on the material.
You can achieve this by assigning different valuation classes to the materials and by assigning different G/L accounts to the
transaction key for every valuation class.
Default settings:
G/L account assignments for the charts of accounts INT and the valuation grouping code 0001 are SAP standard.
OMWB - Configure Automatic Postings

OBYC - Maintain FI configuration

How to test my account determination settings?

You should go to transaction OMWB and click on simulation button. Then, insert the affected material, the correspondent
plant and the movement type. After that, click on account assignments button and you will see the simulations result.
OMWB - Simulation

Important:

Report DFKB1INT: run it in transaction SE38. It is used to shows us the possible values for the account determination
customizing settings. If the customer changed something here, it is not standard anymore.

Every movement of goods is followed by movement type only and without movement type use / without
help of movement type - no goods movement is possible in SAP. During goods movement of transaction
posting, movement type trigger transaction event key and G/L account assignment triggers based
transaction event key (OBYC) with valuation class where valuation class determines the valuation class
available in material master which is used for transaction posting. For automatic account determination,
the vital direct parameters involves are movement type, valuation class, chart of account, valuation area,
business key (transaction key), valuation grouping code{ valuation modification or valuation modifier},
account grouping code{general modification or general modifier },nature of G/L account ,posting keys and
value string.

Moderately understandable, only large vital factor - valuation class in material master determine G/L
account on goods movement for a movement type and then, all are happy on validation in/for business
process by cross checking accounting entries in each case/stage. Essential regard to account category
reference (which is very much responsible of having valuation class in material master), play grandparent
role by being silent friend for success to automatic account determination process.

The account category reference (ACR) is an artificial code of four characters which allows flexibility in
linking material type with valuation class. In reality, the valuation class is linked to an account category
reference and account category reference linked to material type. In other term account category
reference is used to simplify the assignment of permitted valuation class/valuation classes to the material
type/ material types.

Business Case-1: How to use Account Category Reference

Based on requirement, business can have one material type, one account category reference and one
valuation class by assigning material type to account category reference and then assigning account
category reference to valuation class. For example business can have one custom material type ZROM
(Raw Material) with custom account category reference (Z001) and new valuation class (3005) for Raw
Material(Raw material - inventory managed with quantity and value)

During material creation with transaction code: MM01 with certain material type manually or by any
uploading tool, only one permitted valuation class is defaulted for that material type by account category
reference. So in material creation process no chance of making any mistakes by users or by any
uploading tool.

Business Case-2: How to use Account Category Reference

Based on requirement, business can have one material type, one account category reference and
multiple valuation classes by assigning material type to account category reference and then assigning
account category to valuation classes. For example business can have one custom material type ZROM
(Raw Material) with custom account category reference (Z001) and new valuation classes i.e. (3005) for
Raw Material, (3006) for Chemicals and (3007) for Filter material (all materials are inventory manage with
quantity and value)

During material creation with transaction code: MM01 with certain material type manually or by any
uploading tool, only permitted valuation classes are defaulted for that material type by account category
reference . Here, there is a chance of entering wrong valuation class by user manually or through upload
file using a tool which needs to be validated.

Business can go for designing a custom transaction code where material can be created through
uploading file which can be verified by central material creation officer.
Business Case-3: How to use Account Category Reference
Based on requirement, business can have multiple material types, one account category reference and
multiple valuation classes by assigning material types to account category reference and then assigning
account category reference to valuation classes. For example business can have three custom material
types such as ZROM (Raw Material), ZCHE(Chemicals ) and ZFIL(Filter material ) with one custom
account category reference (Z001) and three new valuation classes ie.. (3005) for Raw Material, (3006)
for Chemicals and (3007) for Filter material (all materials are inventory manage with quantity and value)

During manual material creation with transaction code: MM01 or material creation by any uploading tool,
only permitted valuation classes are defaulted for that material type by account category reference. Here,
entering correct combination of material type for material and valuation class are expected through
manually or through upload file which needs to be validated.

Business can go for designing a custom transaction code where material can be created by referring
uploading file which can be verified by central material creation officer.

Also business can think of having material master creation form for any new material master creation, if
necessary material code/ material number is not available in system Users can fill the template of
uploading file with duly filled material master creation form for approval from central material creation
officer. On appropriate check and verification, if central material creation officer is happy, then he /she can
upload file with custom transaction code for new material code.