- SAP Managed Tags
- Important questions arising while understanding document splitting
1. Why is document splitting used in enterprises and what benefits do companies get from document splitting?
Generally, the document is split as per the category assigned to general ledgers.
If the company wants a financial statement based on profit center, segment, or business area, then document splitting functionality is used to generate financial statements such as the balance sheet and profit & loss statement.
2. Key benefits a company gets from document splitting are:
Financial statements based on these three objects.
The company gets an overview/performance of profit centers, segments, or business areas if document splitting is active based on different objects.
It is helpful in important decision-making.
3. What is the main functionality of document splitting?
The main functionality of document splitting is to map general ledger as per different categories and split line items as per characteristics defined. There are three characteristics in general ledger accounting.
4. How many types of document splitting are there in SAP ERP?
There are three types of document splitting:
- Active Document Splitting: Active document splitting is done when we post vendor invoice/customer invoice, it splits document on basis of expense/income line items having profit center and payables/receivables line items are split according to the expense/income lines having profit center.
- Passive Document Splitting: Passive document splitting is taking place when there are outgoing/incoming payment documents are posted; it splits document based on payables/receivables line items having profit center in vendor/customer invoice & bank line items splits on this basis.
- Zero-Balance Document Splitting: Zero balance document splitting is applicable to balance out debit or credit side of profit center and segment only. If there is an imbalance in profit center and segment, then zero-balance account is automatically generated setoff imbalance debit or credit side of line item.
5. By default, document splitting will it get activated by SAP with configuring the company code in the system or not?Yes, it is true that document splitting is by default activated by SAP itself with configuring the company code in the system and document splitting characteristics for general ledger are activated at client level.
Configurations Steps
Node- SPRO/SAP Reference IMG/Financial Accounting/General Ledger Accounting/Business Transaction/Document Splitting
- Classify G/L Accounts for Document Splitting: General ledger account is classified as per different category. Here, general ledger accounts are derived from balance sheet or profit & loss statement can be known.
2. Classify Document Types for Document Splitting: Document types are classified for document splitting and here, business transaction and variant is assigned to each document type. If we created a new document type, then it is mandatory to classify that document type.
(Note: There are many standard document types are already there in SAP & they are also classified)
3. Define Document Splitting Characteristics for General Ledger Accounting: Document splitting characteristics for general ledger accounting are defined if business wants financial statements based on objects. There are three objects available through which documents are splitting are done.
Objects:
- Profit Center
- Business Areas
- Segments
Here, in this image characteristic at profit center level is applied and another thing is Mandatory Field check box is marked due to this marking each line item has mandatory field for profit center. And Zero Balance check box gives remark that if it is marked then profit center must be balanced for both debit and credit side, so zero balance clearing account will automatically post if profit center is imbalanced.
- 4. Define Zero-Balance Clearing Account: Zero balance clearing account is assigned in this transaction.
Select standard for assignment
Assign account
5. Activate Document Splitting: In this node we can activate or deactivate document splitting according to the requirement of the company.Note: In constant standard 0DFLT is selected
To deactivate this tab of deactivate
6. Edit Constant for Non assigned Processes:- Here, select default constants
And then click on assignment of values under dialog structure of independent constants, fill business area and segment as default.
- Now double click on Assignment of Profit Centers in Dialog Structure
Then assign profit center at controlling level set as default. If there is no assignment available in profit center field, then it will take from here.
Real Time Scenarios of Types of Document Splitting
Scenario-1 Active Document Splitting
Entry View of Vendor Invoice with GST & TDS
Explanation: In the above vendor invoice Expense 01 has profit center 1 & Expense 02 has profit center 2, here on basis of these two-line items another line items of GST, Trade payables and TDS also split in the ratio of 2:1 as per expense line items. In this manner each line item will get profit center automatically by the system & document splits when we click on general ledger view.
In this way active document splitting is applicable to vendor invoices and same as in customer invoices.
General Ledger View of Vendor Invoice
Above simulation of general ledger view of vendor invoice after active document splitting is applicable.
Scenario-2 Passive Document Splitting
Entry View of Outgoing Payment Document
Explanation: At the time of outgoing payment & incoming payment of vendor invoices and customer invoices only passive document is applicable and here, document line items of outgoing bank, cash discount received & trade payables are split as per trade payables line items ratio of vendor invoice, another point is no profit center is entered it will be capture automatically by the system from vendor invoice trade payables line items ratio in 2:1.
General Ledger View of Outgoing Payment Document
Simulation of outgoing payment passive document splitting.
(Note: In passive splitting cash discount line items splits in entry view and get two different line-item numbers & it will get item number as per the number of profit centers in vendor invoice.)
Scenario-3 Zero-Balance Document Splitting
Entry View of General Ledger Document
In the general ledger document, there are three-line items with three different profit centers and Expense 01 debited has profit center 1, Expense 02 credited has profit center 2 & Expense 03 debited has profit center 3.
In this document profit centers are imbalanced.
| Line Items | Profit Center | Profit Center Debit | Profit Center Credit |
| Expense-01 Debited | 1 | 1 | N/A |
| Expense-02 Credited | 2 | N/A | 2 |
| Expense-03 Debited | 3 | 3 | N/A |
The above table shows missing profit centers either in debit balance or credit balance.
To correct this imbalance in the profit center zero-balance clearing line items automatically generated by the system and fulfill missing profit center balance and its amount also filled as per line item of expense.
This is how zero-balancing document splitting works.
General Ledger View of GL Document
Simulation of general ledger document in general ledger view zero balance clearing line items fulfills missing debit or credit side of profit center and this same scenario is applicable when defined characteristics is segment or business area.
Thank you for reading & hope it will make ease in understanding.
With Best Regards
