Financial Reporting in a nutshell (Simplified)

There are two major reports that every controller/accountant needs to have in order to judge the state of his business at any given time. A Balance Sheet and a Profit & Loss Statement. That’s it. They might want to see other financial reports but everything else just manipulates parts of these to give them more detailed information.

As explained in a previous post (Chart Of Account Explained) we go over the 8 drawers or sections of a Chart of Account in SAP Business One. Well a Balance sheet shows you numbers from drawer
1  to 3 and a Profit & Loss Statement shows 4 to 8. That’s it. Simple right? Well.. keep reading.

When talking to Controllers/Accountants at a customer site you will often hear this phrase; sometimes in elevated tones;

“It needs to balance!”

Funny thing about a chart of accounts is if you add all the totals for each account together you get ZERO.

So no matter what, their company is worthless…

Just kidding.

It’s all a matter of Credits and Debits and I will not go into detail here since I am just supposed to explain the Balance Sheet and Profit & Loss Statement(P&L). But it all ties in so it might make sense to you by the end of this article.

Maybe.

Balance Sheet

Assets = Liabilities + Equity

See? you can’t escape it. The answer is always zero. 🙂

The point is, if you need to scope a specific financial report and someone starts talking to you about it needing to match the Balance Sheet, well you need to at least know where the numbers are coming from and how to interpret the differences.

SQL TRICK:

OACT is the Chart of Accounts Table. OACT.GroupMask represents the Drawer number. So for this you are looking for…. that’s right: WHERE OACT.GroupMask BETWEEN 1 AND 3

Anyways… moving on to….

Profit & Loss Statement

So the P&L has a little more sections to it but, trust me we can get through this together.

Sections are:

• Sales or revenue (DRAWER 4)
• Costs of Goods Sold or COGS (DRAWER 5)
• Gross Profit = Sales – COGS (Calculated Field)
• Expenses (DRAWER 6)
• Net Profit  = Sales – COGS – Expenses (Calculated Field)

So a Simple example of a P&L would be:

And that’s a P&L in a nut shell.

Ha, I’m a poet and I didn’t know it.

SQL TRICK:

OACT is the Chart of Accounts Table. OACT.GroupMask represents the Drawer number. So for this you are looking for…. that’s right: WHERE OACT.GroupMask BETWEEN 4 AND 8

In conclusion, I don’t think you can count yourself an accountant from this meager amount of explanation but I do hope it sheds some light into the murky waters that is Financial Reporting.

Best Regards,

Denis Doiron
Certified SAP B1 Consultant/Dev.

Source Taken from :SAP Business One Tech Tips: Financial Reporting in a nutshell (Simplified)