No matter in which category you lie on, if you are a Beginner, Experienced or even Fresher and are looking for Top SAP FICO Interview Questions, then you are at the right place. Solving these SAP FICO Interview Questions can get you a lot of opportunities from many reputed companies worldwide. In Today's article, we will examine some of the most Frequent, Advanced SAP FICO Interview Questions that could surely help you in cracking your interview & landing you a dream career in SAP Business Applications and Technology.
About SAP FICO
According to a new research SAP, FICO has a market share of about 3.3%. So, you could still have the opportunity to move ahead in your career as an SAP FICO Consultant by solving these SAP FICO Interview Questions. Let’s discuss SAP FICO Interview Questions commonly asked by professionals at all levels. So Even if you are fresher or more experienced, you will learn a lot.
Commonly Asked SAP FICO Interview Questions and Answers
1. Explain the term SAP FICO?
In SAP FICO, FICO stands for ( Financial Accounting and Controlling). SAP FI takes care of accounting, financial statements, and tax computations, while SAP CO takes care of inter orders, cost sheets, inventory sheets, cost allocations, etc. The software stores data, tally them and retrieves the result based on the current marketing scenario. SAP FICO prevents data loss and also does the verification and reporting of data. Modules in SAP FICO are primarily used within a corporation to manage financial tasks within an international framework of languages and currencies.
2. Financial Accountings integrated into which other modules?
‘Financial Accounting’ is integrated into Modules of
Sales and Distribution
Material Management
Human Resource
Production Planning
Controlling financial transaction
3. Mention the Organization Elements in SAP FICO.
Organizational elements in SAP Financial Accounting are:
Company Code
Business Area
Chart of Account
Functional Area
4. Explain Posting Key and its Function.
Posting Key in SAP FICO is a two-digit numerical used to determine the transaction type entered in the line item.
Posting key help us determines following
Account Types
Types of posting. Debit or Credit
Field status of the transaction
5. What is APP in SAP FICO?
APP in SAP FICO stands for ‘Automatic Payment Program’.APP is a tool SAP provides companies to pay its vendors and customers. APP tools help companies avoid any mistakes that generally occur in posting manually. Also, when companies have many employees, payment through an APP becomes very much feasible.
6. What are the Financial Statements Version in SAP also mentioning its uses?
Financial Statement Version or FSV in SAP FICO is a reporting tool that extracts final accounts from SAP. It helps us to extract final accounts like Profit and Loss Account and Balance Sheet. We could use multiple FSVs for generating the output of various external agencies such as Banks and other statutory authorities.
7. How does SAP FICO take care of taxes?
Significant Issues faced are tax slabs are not similar in all countries. Also, there are additional taxes applicable there. SAP FICO has a tax procedure already defined in it for various nations, and the users are free to get the information regarding the same. The Tax amounts can be sent to stocks by default, or the users are free to make challenges in them as per their needs and convince. Thus, taxes are not an issue with the SAP FICO.
8. For a company code, how many Currencies could we configure in SAP FICO?
Company Code in SAP FICO is just a code we need to enter into the system whenever we want to generate Loss or profit statements. Company Code Access is not given to all the employees the same. Users could configure up to 3 currencies, among which one generally remains the local one, and the other can be considered parallel.
9. Importance of Financial Statements in any Business?
Financial Statements help businesses enable themselves to keep an eye on the objectives for which a specific amount is sent, including all its news.
Company keeping a digital record of all the funds obtained or transferred to any other account. This will enable them to frame documents for the future on which some necessary plans and decision-making strategies could be based.
In a few cases, financial statements help businesses reduce their taxes. In addition, the users could access the record of all the financial transactions anytime the same is required.
10. How many periods are there in SAP FICO
SAP FICO has a total of 165 periods, among which four are considered very special. Generally used when it arrives to describing any data that is related to the fiscal year. A user is free to consider the particular period when the demand for the same is felt.
11. Explain the credit control area in SAP?
Credit Control Area in SAP is an organizational unit specifying and controlling customer credit limits. Any User can set a credit limit for their customer using the credit control area in SAP FICO to immune their company from the risk of bad debts and multiple outstanding receivables. With the help of SAP, companies can block deliveries to their customer based on their credit limit and the accounts received in their account.
12. Are you familiar with any significant applications for SAP FICO?
SAP FICO is known for some of its primary applications in Financial Accounting. Financial accounting is widely considered for handling many tasks that matter to organizations. We can easily manage all that matters in accounting with this approach. It also has applications in Asset and Cost Accounting. SAP FICO can also manage the Project system accounting reliably. The users are free to consider it for Consolidation. In addition, SAP FICO has large-scale applications in Real Estate, one of the emerging global domains in the present scenario.
13. What do you understand by the term “dunning” in SAP?
‘Dunning’ in SAP FICO is the process of issuing payment chasing letters to customers. SAP helps us determine which customers should receive the letters and for which overdue items. Dunning helps us print different letters depending on the due payment date with a reminder. Dunning level on the customer master, help us know which letter has been issued to the customer.
14. What is WRICEF?
WRICEF 'W' Stands for Workflow, 'R' for Report, 'I' for Interface, 'C' for Conversion, 'E' for Enhancement, and 'F' for Forms. It's a Typical SAP implementation involving different custom developments that need to address various business requirements. Custom developments in SAP implementation projects could be broadly classified into six distinct categories of development types: workflow, report, interface, conversion enhancement, and forms (WRICEF)
15. What is a Special Period in SAP FICO?
"Special Periods" are referred to as posting periods that SAP permits. They are a maximum of four and are mainly utilised for year-end closing activities. Made possible by dividing the last posting period into more than one, but a maximum of four, periods. Typically, We should count the last posting period in all the postings in these particular periods. It is impossible to determine the special periods automatically based on the posting date of the document. We must manually enter the particular period in the document header in the 'posting period' field.
One Time vendors, as the name suggest, are primarily the one dealing with high cash transactions. Creating new master records for every vendor trading partner is not practical. So, ONE TIME VENDOR features in SAP allow a dummy vendor code that we could use in invoice entry the information, usually stored in the vendor master.
17. What is the difference between ‘Residual Payments’ and ‘Part Payments’ methods of allocating cash?
The two main methods for allocating partial cash from the customer are the 'Residual Payment and 'Part Payment' methods. For example, A $100 invoice is generated. Now, the customer has only paid $70. Now, this $70 will be offset and would leave the remaining balance of $30. Residual payment will clear the invoice for the total value of $100, and a new invoice is generated for the remaining balances of $30.
18. What recurring entries also mention their purpose?
Recurring entries help us eliminate the need for the manual posting of Accounting documents which do not change from month to month. For example, an expenditure document can be developed and planned for the last days of each month or whenever an individual wants it. Usually, multiple recurring entries are created at one go and processed as a batch month end using transaction.
19. What is a Year Shift Explain with an example?
SAP FICO System only understands the calendar year and not any broken fiscal year, e.g. Any fiscal year like April 2012 to March 2013. It will not understand and accept this as a year. We need to classify one of the years as a calendars year for SAP. If any business, the fiscal year is not a calendar year but a combination of the different months of two different calendar years. Since SAP FICO only comprehends the Calendar year, Any other month falling into another year has to be adjusted into the same fiscal year by shifting the year using the +1 and -1 sign. Such a Shift in the year is known as the 'year shift'.
20. Explain your understanding of the baseline method and decline balance method?
The baseline method is a straight-line depreciation method. We calculate the depreciation based on a defined percentage or life of the asset, which we must maintain in the asset master. It also could be calculated by subtracting an asset's cost and expected salvage value and then dividing by the expected years to be used.
Straight Line Depreciation
For example, If any acquisition value of an asset is Rs. 10000, the life of the purchase is maintained as 20 years. Therefore, the system will calculate depreciation @ Rs. 500 annually for 20 years.
Declining Balance Method
The declining balance method is also called the written down value method because, in this method, we record significant depreciation expenditures in the initial years of an asset's life and more insignificant depreciation during the latter years. It can be computed by multiplying an asset's book value and depreciation rate. For example, if a 10% declining balance method is chosen, we will calculate the depreciation for the first year will be Rs2,000. In the second year, the base for the calculation of depreciation will be Rs. 18,000 and depreciation will be Rs. 1,800.
21. How to confirm Data Uploaded is correct in SAP FICO?
To verify Uploaded Data, We use Legacy balance upload GL accounts, primarily created for uploading the opening balance. Ideally, at least 5 Legacy balance upload GL accounts should be created, like:
Legacy balance upload Customer
Legacy balance upload Vendors
Legacy balance upload Inventory
Legacy balance upload GL accounts
Legacy balance upload Fixed Asset
Once we have uploaded the Data, We need to Check the closing balance in all the accounts mentioned above. Zero will confirm the correct upload in all the required fields. We can also pass a JV for verifying the balance in all these accounts once our uploading activity is over.
22. What is Cost Center, Profit Center Controlling?
Cost Center in SAP FICO is a component where the costs occur inside an organization. A cost Center is an organizational unit within a controlling area representing locations where costs occurred. It helps us to capture the costs of an organization. It does not generate revenue directly but incurs additional expenses to operate. On the other hand the Profit Center in SAP FICO is an organizational unit for internal control in SAP Controlling. Helping organizations manage costs and revenues and evaluate a specific unit within their company. Profit Center evaluates the profit and loss of individuals and independent areas of an organization.
23. How to perform profitability analysis in SAP Co? What are different types of profitability analysis?
Organizations use SAP CO-PA to analyze the market segments classified as products, business area, customers, sales area, etc. SAP CO Profitability Analysis (CO-PA) helps us evaluate market segments, classified according to customers, products, and orders, or any combination of these three. Also, it depends on Strategic business units or areas concerning the company's profit or contribution margin.
Different Types of profitability analyses supported are
Account-Based
Costing Based
24. How can we upload the opening Balance of the vendor while uploading the vendor’s master data?
We could update the balances of our vendors & customers line by line, i.e., all the available items in legacy systems must be uploaded as open items in SAP. While uploading, we need to fill in the purchase or sales invoice numeral in the reference field for help in the future clearing. Also, the suitable open items will be cleared automatically while receiving or making payment. We need to make sure to upload the baseline date.
25. What are the standard Stages of SAP FICO Payment Run?
Standard stages for the SAP payment run are
Documenting of parameters (Details like Vendor Accounts, Company Codes, Payment Methods)
Scheduling Proposal– The system will propose the list of the invoice paid
Payment Booking- Booking of the actual payments in the ledger
The best strategy for preparing for the SAP FICO interview is to gather study materials, practice mock interviews, and work on behavioral or soft skills. You should also review the job description and refresh your SAP FICO knowledge.
What are the components of FICO in SAP?
FICO in SAP comprises two main modules: Finance (FI) for financial accounting and Controlling (CO) for management accounting.
What is SAP FICO uses?
SAP FICO is used for financial accounting, management accounting, financial reporting, and decision-making within organizations.
Does SAP FICO have coding?
While configuration and customization involve settings, SAP FICO doesn't typically require extensive coding. Custom enhancements may involve ABAP programming in some cases.
Conclusion
In this article, we have explored Some Important SAP FICO Interview Questions. Also, we have divided the entire article into three sections Easy, Hard and Intermediate, and each candidate could prepare accordingly.
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