Key SAP terms for each of the core SAP modules: FI , CO , MM , SD and PP

Definition, real-world example, and essential T-Code

SAP FI (Financial Accounting) – Key Terms

Term Definition Real-World Example T-Code
An independent accounting entity for legal Subsidiaries like BMW USA and BMW Germany
Company Code OBY6 (Define Company Code)
reporting have different company codes
A list of all GL accounts used in a company A retail company has accounts for sales,
Chart of Accounts (COA) OB13 (Define COA), FS00 (G/L Master Data)
code expenses, and assets
A company records rent payments in the G/L
General Ledger (G/L) Central ledger recording all transactions FBL3N (G/L Line Item Display)
account

Accounts Payable (AP) Records supplier liabilities Paying invoices from vendors like Dell or HP FBL1N (Vendor Line Items)

Tracking customer payments for software

Accounts Receivable (AR) Records customer payments due FBL5N (Customer Line Items)
services
Managing office buildings and machinery
Asset Accounting (AA) Manages fixed assets and depreciation AS01 (Create Asset), AW01N (Asset Explorer)
depreciation
Differentiating invoices, payments, and credit
Document Type Classification of accounting documents OBA7 (Define Document Types)
memos
Posting Key Controls debit/credit for transactions 40 for debit, 50 for credit in FI postings OB41 (Define Posting Keys)

Reconciliation Account Connects sub-ledgers to G/L Vendor balances updated in G/L automatically OBXR (Define Reconciliation Accounts)

Calendar year or April-March for financial

Fiscal Year Variant Defines the financial year period OB29 (Define Fiscal Year Variant)
reporting
Government-mandated tax deductions from
Withholding Tax Tax deduction at source before payment OBYZ (Withholding Tax Configuration)
payments
Bank Accounting Records bank transactions Processing incoming and outgoing payments FF67 (Manual Bank Statement)

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Dunning Process Reminders for overdue invoices Sending reminders for unpaid customer bills F150 (Dunning Run)

Clearing Account Temporary holding for transactions Suspense accounts for unmatched payments F-03 (Clear G/L Account)

Profit Center Accounting (PCA) Tracks financials by business unit Analyzing profits for different stores KE51 (Create Profit Center)

Document Splitting Splitting transactions for segment reporting Splitting costs by department or business line SPL2 (Document Splitting Analysis)

Automatic Payment Program (APP) Automates vendor/customer payments Scheduling bulk payments to suppliers F110 (Automatic Payment Run)

Credit Management Evaluates customer credit risk Setting credit limits for customers before sales FD32 (Customer Credit Management)

Foreign Currency Valuation Adjusts balances for FX changes Revaluing USD transactions in an EUR company FAGL_FCV (Foreign Currency Valuation)

Tax Codes Defines tax rates for transactions VAT and GST configuration for invoices FTXP (Define Tax Codes)

Financial Statement Version (FSV) Customizes balance sheet and P&L layouts Reporting different financial views OB58 (Define FSV)

Lockbox Processing Automated customer payment processing Banks sending payment details for processing FLB1 (Lockbox Processing)

Electronic Bank Statement (EBS) Automatic bank statement import Processing daily bank transactions FF_5 (Upload Bank Statement)

Cost Center Accounting Tracks costs by department Tracking IT department expenses separately KS01 (Create Cost Center)

Internal Orders Temporary cost collectors for projects Managing R&D project expenses KO01 (Create Internal Order)

SAP S/4HANA Finance Next-gen real-time finance solution Faster financial close and reporting Fiori Apps for S/4HANA Finance

Business Partner Centralized customer/vendor master Unified customer and vendor management BP (Manage Business Partner)

House Bank Represents a company’s bank account Storing bank details for payments FI12 (Define House Banks)

Parallel Accounting Maintains multiple GAAPs in SAP IFRS and local GAAP reporting for subsidiaries OB09 (Define Ledger)

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 SAP CO (Controlling) – Key Terms
Term Definition Real-World Example T-Code

Cost Center Organizational unit for cost tracking Tracking marketing department expenses KS01 (Create Cost Center)

Internal Order Temporary cost collector for specific tasks Tracking costs of a promotional campaign KO01 (Create Internal Order)

Activity Type Defines work activities in a cost center Machine hours for manufacturing KL01 (Create Activity Type)

Profit Center Tracks profitability of a business unit Analyzing profits of a regional branch KE51 (Create Profit Center)

Statistical Key Figure Measures non-financial data for allocations Number of employees for cost distribution KK01 (Create SKF)

Cost Element Categorizes cost postings in CO Salaries, rent, and material costs KA01 (Create Cost Element)

Allocating utilities expenses across

Overhead Cost Controlling Manages indirect costs KSU5 (Actual Assessment)
departments

Product Costing Calculates manufacturing costs Determining cost of a car model CK11N (Cost Estimate)

Cost Object Tracks individual costs for items Project costing for a new product launch KOH1 (Create Cost Object)

Activity-Based Costing Allocates costs based on activities Shipping costs based on delivery volume KSII (Activity Allocation)

Budgeting in CO Sets financial limits for cost centers Annual budget for IT department KP06 (Enter Plan Data)

Variance Analysis Compares planned vs actual costs Analyzing production cost deviations KOC4 (Cost Object Analysis)

Primary Cost Element Represents direct cost elements Salaries as a primary expense KA01 (Create Cost Element)

Secondary Cost Element Internal cost allocations Inter-departmental service charges KA06 (Create Secondary Cost Element)

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CO-PA (Profitability Analysis) Tracks profitability by market segment Profit analysis by product category KE30 (CO-PA Report)

Cost Allocation Distributes costs to different areas Allocating IT costs to departments KSV5 (Actual Distribution)

CO Integration with FI Links FI transactions to CO for reporting Real-time financial analysis Configuration in FICO

Settlement Transfers costs from orders to final objects Project cost settlement to cost center KO88 (Settlement of Internal Orders)

Revenue Element Defines revenue postings in CO Sales revenue tracking KA12 (Create Revenue Element)

Profitability Segment Analyzes profits at segment level Profit tracking per region KE21N (Manual Entry of CO-PA Document)

Standard Cost Estimate Pre-determined cost of production Pre-setting costs for manufactured goods CK40N (Standard Cost Estimation)

Costing Sheet Defines rules for overhead calculation Material cost surcharge calculation KZS2 (Change Costing Sheet)

SAP CO Reports Standard reporting tools for CO Cost center reports for analysis S_ALR_87013611 (Cost Center Report)

Splitting Structure Distributes costs between cost elements Dividing expenses between cost groups OKES (Maintain Splitting Structure)

Material Ledger Tracks inventory costs in CO Tracking real-time material cost variations CKM3 (Material Price Analysis)

CO-OM (Overhead Management) Tracks and controls overhead costs Analyzing administrative expenses KSB1 (Cost Centers: Actual Line Items)

SAP CO-PA Assessment Allocates costs to profitability segments Distributing advertising costs to products KEU5 (Actual Assessment CO-PA)

WIP Calculation Calculates work-in-progress costs Tracking unfinished production costs KKAX (WIP Calculation)

SAP CO-PC (Product Costing) Determines the cost of goods sold Costing for new machinery production CK13N (Display Cost Estimate)

Cost Center Hierarchy Organizes cost centers in structure Grouping cost centers by department KSH1 (Create Cost Center Group)

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 SAP MM (Materials Management) – Key Terms
Term Definition Real-World Example T-Code

Material Master Central repository of material-related data Details of raw materials, finished goods MM01 (Create Material)

Vendor Master Stores supplier information Maintains details of suppliers like IBM XK01 (Create Vendor)

Purchase Requisition Request for material procurement Requesting new laptops for employees ME51N (Create PR)

Purchase Order Official order placed with a vendor Ordering 100 steel sheets for production ME21N (Create PO)

Goods Receipt Confirmation of received materials Warehouse receiving an order from Dell MIGO (Goods Movement)

Invoice Verification Matching invoice with PO and receipt Checking vendor invoices before payment MIRO (Enter Invoice)

Transferring inventory from NY to LA

Stock Transfer Movement of stock between plants MB1B (Transfer Posting)
warehouse

Material Valuation Assigns financial value to materials Valuation of spare parts based on price MM02 (Change Material)

Batch Management Tracking inventory in batches Managing expiry dates for medicines MSC1N (Create Batch)

Material Requirement Planning (MRP) Ensures required materials are available Auto-generating purchase requests MD01 (Run MRP)

Reservation Blocking stock for specific use Reserving raw materials for urgent production MB21 (Create Reservation)

Consignment Stock Vendor-owned stock at company's site Stock of spare parts supplied on demand MB54 (Consignment Info)

Goods Issue Removing stock from inventory Issuing raw materials for production MIGO (Goods Issue)

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Physical Inventory Stock count verification Annual warehouse stock audit MI01 (Create Physical Inventory Doc)

Movement Types Defines stock movements in SAP 101 for goods receipt, 201 for issue OMJJ (Movement Type Configuration)

Valuation Class Groups materials for valuation Raw materials, semi-finished, finished goods OMWB (Valuation Class Config)

Source List Defines approved suppliers for materials Steel suppliers for car manufacturing ME01 (Maintain Source List)

Quota Arrangement Splits procurement across suppliers 50% from Supplier A, 50% from Supplier B MEQ1 (Create Quota)

Automatic Account Determination Links stock movements to G/L accounts Expense postings for raw material usage OBYC (Configure Account Determination)

Raw materials purchased, components made in-

Procurement Types Defines in-house vs external procurement MM02 (Material Master)
house

Release Strategy Approval process for purchasing Requiring manager approval for large orders OMGS (Define Release Strategy)

Service Procurement Manages service-related purchases Hiring external IT support ML81N (Service Entry Sheet)

Material Group Groups materials for classification Office supplies, IT equipment OMSF (Material Group Config)

Vendor Evaluation Rates suppliers based on performance Rating vendors on delivery time and quality ME61 (Maintain Vendor Evaluation)

Scheduling Agreement Long-term supply contract with vendor Quarterly supply of chemicals ME31L (Create Scheduling Agreement)

Outline Agreement Long-term purchasing contract Yearly deal with a raw material supplier ME31K (Create Contract)

Split Valuation Allows valuation of material by lot New and old stock priced differently OMW0 (Split Valuation Config)

Inventory Management Tracks material stock levels Monitoring warehouse stock movements MB52 (Display Warehouse Stock)

SAP MM Reports Standard reporting tools for MM Inventory, purchasing reports MB5B (Stock Movement Report)

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 SAP SD (Sales and Distribution) – Key Terms
Term Definition Real-World Example T-Code

Customer Master Stores customer-related data Retail customer details for invoicing XD01 (Create Customer)

Sales Order Order received from a customer Customer ordering 500 units of laptops VA01 (Create Sales Order)

Quotation Price offer to a customer Offering bulk discount for 1000 units VA21 (Create Quotation)

Billing Document Invoice generated for a sale Billing a customer after goods delivery VF01 (Create Billing Document)

Delivery Document Confirms shipment of goods Shipping 1000 phones to a retailer VL01N (Create Delivery)

Pricing Procedure Defines pricing rules for sales Applying discounts, taxes, surcharges V/08 (Define Pricing Procedure)

Credit Management Monitors customer credit limits Blocking sales order if credit exceeds FD32 (Maintain Credit Limit)

ATP (Available to Promise) Checks inventory availability for orders Confirming stock before promising delivery CO09 (Availability Check)

Sales Organization Represents a legal sales unit North America Sales, Europe Sales OVX5 (Define Sales Organization)

Distribution Channel Defines how products are sold Retail, Wholesale, Online Sales OVX6 (Define Distribution Channel)

Condition Type Defines different price components Discounts, surcharges, freight costs V/06 (Define Condition Type)

Sales Area Combination of sales org, channel, division North America Online Sales Division OVXG (Define Sales Area)

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Shipping Point Physical location for dispatch Warehouse shipping point for goods OVXD (Define Shipping Point)

Item Category Defines behavior of line items Standard, Free-of-charge, Returns VOV7 (Define Item Category)

Schedule Line Category Controls delivery schedules Partial or full deliveries allowed VOV6 (Define Schedule Line Category)

Output Determination Controls documents sent to customers Printing invoices, sending emails NACE (Maintain Output Types)

Rebate Processing Manages customer rebates Year-end discounts based on total sales VB01 (Create Rebate Agreement)

Route Determination Determines delivery route Shipping from nearest warehouse OVL2 (Define Routes)

Third-Party Sales Direct shipment from vendor to customer Dropshipping from supplier VA01 (Third-Party Order)

Intercompany Billing Billing between company codes Subsidiary charging headquarters VF04 (Create Intercompany Billing)

Returns Processing Handles customer product returns Customer returning defective goods VA01 (Create Return Order)

Debit Memo Adjusts customer invoice amounts Charging for additional services VF01 (Create Debit Memo)

Credit Memo Reduces billed amount for customer Compensating customer for overcharges VF01 (Create Credit Memo)

Billing Plan Schedules billing for contracts Monthly invoicing for services VA01 (Create Billing Plan)

Sales Document Flow Tracks status of sales transactions Checking if delivery is completed VA03 (Display Sales Order)

Listing and Exclusion Controls which products a customer can buy Restricting sales of hazardous items VB01 (Create Listing/Exclusion)

SAP SD Reports Standard reports for sales analysis Sales revenue, open orders reports V.13 (Sales Statistics)

Foreign Trade Handles export/import transactions Managing international trade compliance VI71 (Foreign Trade Reporting)

Freight Calculation Determines transportation charges Shipping costs based on weight and distance VT01N (Create Freight Order)

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 SAP PP (Production Planning) – Key Terms

Term Definition Real-World Example T-Code

Bill of Materials (BOM) List of components required for production Car manufacturing: engine, tires, seats CS01 (Create BOM)

Routing Defines the production process steps Drilling, painting, assembly processes CA01 (Create Routing)

Work Center Defines locations where production occurs Welding station, packaging area CR01 (Create Work Center)

Production Order Instruction to manufacture goods Producing 1000 smartphones CO01 (Create Production Order)

Planned Order Preliminary order before production System-generated plan to meet demand MD11 (Create Planned Order)

MRP (Material Requirements Planning) Ensures required materials are available Auto-generating production orders MD02 (MRP Run)

Capacity Planning Manages production workload Balancing machine utilization CM01 (Capacity Planning Overview)

Goods Issue Removes materials for production Issuing steel sheets for car manufacturing MIGO (Goods Issue)

Goods Receipt Confirms production completion Receiving finished products in stock MIGO (Goods Receipt)

Batch Management Tracking inventory in batches Managing expiry dates for pharmaceuticals MSC1N (Create Batch)

Production Version Specifies BOM and routing alternatives Using different BOMs for seasonal production C223 (Maintain Production Version)

Shop Floor Control Monitors real-time production Tracking daily assembly progress CO03 (Display Production Order)

Order Confirmation Confirms production completion Logging actual time and materials used CO15 (Confirm Production Order)

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Scrap Management Tracks defective products Logging faulty units from a batch MB1A (Scrap Movement)

Repetitive Manufacturing Continuous production without orders Automobile and food production MF01 (Create Repetitive Mfg Profile)

Production Scheduling Defines sequence of production activities Prioritizing urgent manufacturing orders CM25 (Production Scheduling Board)

Availability Check Verifies stock before production Checking if raw materials are available CO09 (Availability Check)

PP Reports Standard production planning reports Production performance analysis S_ALR_87099736 (Production Order Report)

Order Settlement Posts production costs to accounts Charging production expenses to cost centers KO88 (Order Settlement)

Customizes production based on

Variant Configuration Different car models with custom features CU50 (Configure Product Variant)
requirements

WIP (Work In Progress) Tracks unfinished production costs Partially assembled units in production KKAX (WIP Calculation)

Automatically issues components for

Backflushing Reducing manual stock postings MF42N (Repetitive Mfg Backflush)
production

Production Costing Calculates manufacturing expenses Cost analysis of car manufacturing CK11N (Cost Estimate)

Quality Management (QM) Integration Ensures product quality in production Inspection of finished goods QA32 (Quality Inspection Lot)

Non-stocked intermediate materials used in

Phantom BOM Sub-assembly for an engine that is assembled CS01 (Create Phantom BOM with BOM Usage)
production but not managed in inventory
within the main production process

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