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You are here: Home / FICO / What is the use of reconciliation account in SAP FI Module?

What is the use of reconciliation account in SAP FI Module?

FICO Last updated on May 21, 2014 .

What is the use of reconciliation account in SAP FI Module?Reconciliation account in SAP is a general ledger account assigned to the business partner master record to record all transactions in the sub ledger. Posting to the sub ledgers are automatically get posted to the assigned reconciliation account in SAP by which the general ledger will always be up to date.

Reconciliation account creation in SAP is a prerequisite for creation of vendor master.

Every transaction in an account of a sub-ledger is automatically posted to the general ledger. This integration is guaranteed by the reconciliation account in SAP.

Reconciliation account in SAP must be assigned to every customer or vendor master record.

This is done be entering the respective General Ledger account in the Reconciliation account field of the customer master record. While posting to the customer master, the reconciliation account in SAP has following functions:

It ensures that the total of all General Ledger account balances is always zero. This is a prerequisite for creating a balance sheet at any time. Therefore, it is no longer necessary to transfer account balances from sub-ledger to General Ledger accounts, since the balances are updated automatically in the general ledger.

Via the reconciliation account in SAP, the screen lay out for posting to the customer master can be determined. For example, the fields for entering hedging transactions for foreign currency can be suppressed, if such transactions are not carried out in a company. Further Via the reconciliation account in SAP, currencies in which the corresponding customer account should be posted can be specified.

Generally, a common reconciliation account in SAP is assigned to several customer accounts. It’s displayed on the balance sheet under the balance sheet item “Sundry Debtors”.

Several reconciliation accounts are required if you want to have different account balances separately on the balance sheet, such as domestic receivables and foreign receivables.

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