Cash Journal in SAP Finance

Purpose:

There are numerous reasons why a business might record transactions using a cash Journal instead of a cash account. Daily cash balances are easy to access and determine. Mistakes can be detected easily through verification, and entries are kept up-to-date since the balance is verified daily.

Usage:

A cash journal is used as a financial journal that contains all cash receipts and payments, including bank deposits and withdrawals. Entries in the cash journal are then posted into the general ledger. Larger firms usually divide the cash book into two parts: the cash disbursement journal that records all cash payments, such as accounts payable and operating expenses, and the cash receipts journal, which records all cash receipts, such as accounts receivable and cash sales.

A cash Journal, or petty cash log, is a ledger for keeping track of small cash purchases. Some small businesses find cash Journal especially useful because these companies tend to need small quantities of easily available supplies to make up for unpredictable shortfalls. Others, like tech companies, usually use their cash Journals less frequently because they are less likely to have urgent needs for tangible items.

Cash Journal in SAP:

Can create multiple cash journals in a Company Code as required by the Business. With this functionality for one company code -

• A separate cash journal for each currency can be created.

• Cash Journal can post to Vendor, Customer and General Ledger Accounts.

• Run several cash journals in each company code.

Configuration Steps:

• Create Cash Journal:

A 4 digit alphanumeric key can be given to each cash journal. While posting cash journal transaction, the particular cash journal in which the cash transaction needs to be posted to needs to be selected. Once the Cash journal is created, the following needs to be defined for the same.

• Company Code

• Currency in which the Cash journal is to be maintained.

• Ledger to which the Cash journal posts.

• G/L Account to which the Cash Journal Business transactions.

• Document Types for:

• GL to GL

• Outgoing payments to vendors/Customers.

• Incoming Payments to Vendors/Customers.

• Create Business Transaction Types

The various business transactions in a Cash Journal would be as below:

• Expense (E)

• Revenue (R)

• Cash Transfer from Cash Journal to Bank (B)

• Cash Transfer from Bank to Cash Journal (C)

• Customers-Incoming/Outgoing Payment (D)

• Vendor – Outgoing /Incoming Payment (K)

• Create Business Transactions

Business Transaction can be created in SAP in two places

• Cash Journal itself, while creating the posting.

• Customizing (IMG)

• Account Determination

Each Cash Journal can have a separate Cash Journal Account for postings in a Cash Journal. Also According to different business transaction the GLs can be configured with an offsetting Account. The derivation rules can be made for the Cash Journal Postings in Customizing (IMG).As General Ledger Accounts are impacted as per this configuration it is very important . Further it updates the Financials.

• Number Range for Cash Journal Documents:

Cash Journal Document Number range needs to be maintained and assigned to the Cash Journal for usage.

Steps:

Postings to Cash Journal Accounts can be as per below steps:

• Select Company Code and Cash Journal.

• Check the Opening Balance, Closing Balance, receipts, payments.

• Enter a Business Transaction you want to post. (If not exist can create a new Business Transaction.)

• Enter Currency, Amount, tax Code as required.

• Simulate and Save the entry.

• At the end of the day check the entries and post the entries, which will create follow on documents in FI.

• Check the follow on FI entries created.

• Print the Cash Journal if required.

Ledgers in Cash Journal:

Separate Cash Journals can be created to facilitate different ledgers. Ledgers represent different Accounting principle followed by a company. For example IFRS, US GAAP etc. Hence while creating a Cash Journal in customizing the ledger for which the cash journal is maintained needs to be mentioned.

Posting to Accounting Document in SAP:

Cash Journal entries are made on a daily basis, the individual entry can be transferred to General Accounting or on a daily at the end of the day the total entries can be posted to Accounting. Once you save an entry the same remains in the Cash Journal once the Entries are selected and Post button is selected the entries create an Accounting document In Financial Accounting. The entries are as below.

Journal entries in Accounting General Ledger:

• Expenses:

1. ExpenseDr.

To Cash Journal. Cr.

• Revenue:

2. Cash Journal Dr.

To Revenue. Cr.

• Cash Transfer:

• Cash Journal to Bank:

3. BankDr.

To Cash Journal. Cr.

• Bank to Cash Journal:

4. Cash JournalDr.

To Bank. Cr.

• Accounts Receivable:

5. Customer Payment ReceiptDr.

To Customer. Cr.

6. Cash JournalDr.

To Customer Payment Cr.

• Accounts Payable:

7. Vendor Payment Dr.

To Cash Journal. Cr.

8. Cash Journal Dr.

To VendorCr.

SAP screen shots:

Go through the cash journal in the below SAP screen shot. Points to be considered are:

1. Post and Save Clicks.

2. Follow on Document.

3. Opening/ Closing Balance.

4. The green light in the posting means that the transactions have been posted to FI.

5. The period for which the transactions are viewed.

Rahi Shah