Explanation of FI Line Item Texts created by Material Ledger

Explanation of FI Line Item Texts created by Material Ledger.png

If you use Material Ledger’s Actual Costing, then you would know that the Post Closing Step creates accounting documents depending on how the variances for the Material have been distributed. For example, a material with a price (or exchange rate) difference of $100 could be sold, scrapped, used in a production order that is complete, used in a production order that is not complete, transferred to another plant, or left in inventory. And this only refers to the differences that are created on the material itself (single-level), and not the differences that are transferred from other materials (multilevel) which have their own slew of Material Ledger postings. 

Because of this, it is easy to be overwhelmed by the volume of postings that are created by the Material Ledger’s closing entry and what they mean. Some companies choose to label the General ledger accounts appropriately to indicate what the posting is for, but if you do not understand the posting, it is easy to incorrectly label the General Ledger account. Also, you may not need a separate general ledger account for each scenario as that may lead to more General Ledger accounts than you need, and may create even more confusion.

Believe it or not, SAP does try to provide guidance on what each Material Ledger posting is for. It does so by inserting texts into each line item posting to indicate what it is (as described in SAP Note 2397606). The problem, is that these text explanations are sometimes cryptic and do not provide much clarity on what the posting is for. Also, there is very little information (online or elsewhere) that gives a more meaningful explanation for these text descriptions.

In the table below, I will try to explain (as best as I can) what texts are shown in the FI line items created by Material Ledger and what they mean.

SAP Material Ledger
SAP Material Ledger

Author: Paul Ovigele

Paul Ovigele has worked as an ERP financials consultant since 1997 in both North America and Europe, specializing in implementing the FI and CO modules along with their integrated areas for companies in industries such as consumer goods, chemicals, logistics, pharmaceuticals, apparel and entertainment. Paul has delivered numerous training sessions to finance professionals at both the functional and managerial levels, and he has presented at various SAP financials conferences around the world.

Module(s): Financial Accounting