SAP is an ERP software. Its components have seamless integration with other components. This article explains the flows of information from Sales and Distribution (SD) to Financial Accounting and Controlling (FICO).

Do remember that all business transactions with an accounting impact are posted in Financial Accounting and Controlling. E.g. sales to customer on credit. An entry should be recognized in accounting to record the sales on credit.

In SAP, if the transactions have originated from SD the entry should be automatically created and posted to accounting. The automatic configuration should be properly set-up. The necessary g/l accounts should have been assigned to the account key.

Upon creation and approval of sales order, no accounting entry is created yet. An accounting entry is created during post of goods issue. The entry that would be created is:

Dr. Cost of Goods Sold
Cr. Inventory (cost)

Another entry is created upon posting of billing to customer. The entry would be:

Dr. Accounts Receivable
Cr. Sales Revenue
Cr. Output tax (if applicable)

The profit center and profitability segment are also automatically updated during posting of goods issue and billing to customer.

During display of customer line items, you can drill down and trace the original documents of the transactions. You can have a complete trail or document flow of the transactions.