Top 50 SAP FICO Interview Questions

📌 1. What is SAP FICO?

SAP FICO stands for Financial Accounting (FI) and Controlling (CO). It’s an integrated module in SAP ERP that helps organizations manage financial transactions and internal cost accounting. FI handles statutory reporting while CO supports internal management reporting.

📌 2. What are the main components of SAP FICO?

FI: General Ledger, Accounts Receivable, Accounts Payable, Asset Accounting, Bank Accounting, Special Purpose Ledger.

CO: Cost Element Accounting, Cost Center Accounting, Profit Center Accounting, Internal Orders, Product Costing, Profitability Analysis (CO-PA).

📌 3. Explain the organizational structure in SAP FI.

Key elements:

Client: Highest level.

Company Code: Smallest legal unit for which balance sheets are created.

Business Area: Internal unit for segment reporting.

Chart of Accounts: Structure of all G/L accounts.

Fiscal Year Variant: Defines accounting periods.

📌 4. What is a company code? How is it different from a business area?

A company code is an independent accounting unit for which legal financial statements are created.
A business area is used for internal reporting across company codes — like branches or product lines.

📌 5. What is the purpose of a Chart of Accounts (CoA)?

It’s a structured list of all G/L accounts used by one or more company codes. It defines how accounts are grouped for reporting.

📌 6. How many Chart of Accounts can be assigned to a company code?

One operating chart of accounts is mandatory. Additionally, you can have one group CoA for consolidation and one country CoA for local statutory requirements.

📌 7. What is a fiscal year variant?

It specifies the start and end of the fiscal year and how many posting periods and special periods are in it. It can be calendar or non-calendar.

📌 8. What is a posting period?

A posting period is a time frame (usually a month) during which transactions can be posted. It ensures entries are recorded in the correct accounting period.

📌 9. Explain the purpose of Field Status Groups.

They control which fields are mandatory, optional, suppressed, or displayed while posting to a G/L account.

📌 10. What is the difference between a cost center and a profit center?

Cost Center: Tracks only costs. Example: HR department.

Profit Center: Tracks both revenue and costs — measures profitability. Example: Business unit.

📌 11. How do you configure Automatic Payment Program (APP)?

Steps:

Configure payment methods.

Set up house banks.

Define bank determination.

Maintain vendor master data.

Run proposal, review, and execute payment.

📌 12. What is the use of Recurring Entries?

Recurring entries are used for repetitive postings like rent, leases, or insurance premiums to automate monthly postings.

📌 13. Explain Dunning in SAP.

Dunning is sending reminders to customers for overdue invoices. SAP automates this by defining dunning levels, forms, charges, and intervals.

📌 14. What is an Account Group and why is it used?

An Account Group controls the number range and field status for G/L, vendor, and customer master records.

📌 15. What is Parallel Accounting?

Parallel Accounting allows multiple ledgers to be maintained for different accounting principles (e.g., IFRS vs local GAAP).

📌 16. Explain the process of Asset Accounting in SAP FICO.

It manages fixed assets lifecycle: acquisition, depreciation, transfer, revaluation, and retirement. It’s integrated with FI for balance sheet reporting.

📌 17. How do you perform foreign currency valuations?

Open items in foreign currencies are revalued at period-end to reflect current exchange rates. SAP posts unrealized gain/loss automatically.

📌 18. What is the difference between General Ledger and Sub Ledger?

General Ledger: Overall accounts for the company.

Sub Ledger: Detailed individual accounts (e.g., customer, vendor, asset) that reconcile to G/L via reconciliation accounts.

📌 19. What is a Special Purpose Ledger?

It’s an additional ledger for customized reporting outside standard ledgers.

📌 20. How do you handle taxes in SAP FICO?

Taxes are handled using tax codes and procedures. SAP calculates input/output taxes automatically and posts to relevant accounts.

📌 21. Explain the integration between FI and CO.

When primary cost elements are posted in FI (like expenses), they flow to CO for internal reporting. Example: salaries posted in FI update cost centers in CO.

📌 22. What happens when you post a vendor invoice?

Vendor account is credited, expense (or asset) account is debited, open item created for payment, taxes are calculated.

📌 23. How do you reverse a cleared document in SAP?

Use FBRA to reset the clearing document, then FB08 to reverse the original document.

📌 24. What is the difference between Parking and Holding a document?

Parking: Stores complete documents for later review/approval with a doc number.

Holding: Saves incomplete drafts, no doc number assigned.

📌 25. How do you handle errors in Automatic Payment Program?

Check proposal log, correct blocked invoices, vendor master data, payment methods, or open items. Update and re-run proposal.

📌 26. How do you perform year-end closing in SAP FICO?

Open special posting periods.

Post accruals/deferrals.

Reconcile accounts.

Perform foreign currency valuation.

Close periods.

Carry forward balances.

📌 27. What are Validations and Substitutions in SAP FICO?

Validations: Check data consistency when posting.

Substitutions: Automatically replace entered values with correct ones based on rules.

📌 28. Explain the use of Document Splitting.

Splits line items by segments/profit centers to provide segment reporting as per IFRS.

📌 29. What are Internal Orders?

Temporary cost collectors for tracking costs related to specific jobs, projects, or tasks.

📌 30. Explain how Cost Element Accounting works.

Primary cost elements link FI expense accounts to CO objects. Secondary cost elements record internal cost flows within CO.

📌 31. How do you migrate data during SAP FICO implementation?

Using tools like LSMW or BAPIs for master and transactional data migration. Testing and reconciliation are critical.

📌 32. What are the steps in a SAP FICO implementation project?

Project prep → Blueprint → Realization (configuration) → Testing → Data migration → Final preparation → Go-live → Support.

📌 33. Explain SAP S/4HANA Finance – key differences from classic FICO.

Universal Journal combines FI and CO tables, real-time reconciliation, faster close, simplified data model, and new Fiori apps.

📌 34. How do you handle intercompany transactions?

Post intercompany invoices via intercompany accounts, set up cross-company codes, reconcile using clearing accounts.

📌 35. What is New General Ledger (New GL)?

Combines classic GL with Profit Center Accounting, Special Purpose Ledger, and Document Splitting — supports parallel accounting.

📌 36. Explain the difference between Classic GL and New GL.

New GL supports parallel ledgers, document splitting, real-time integration, segment reporting. Classic GL does not.

📌 37. What is a House Bank? How do you configure it?

A House Bank represents your company’s bank in SAP. You define bank keys, bank accounts, and assign them to company codes.

📌 38. How do you ensure data security and authorization in SAP FICO?

Through roles and authorizations, segregation of duties, profile generation, and audit trails.

📌 39. Explain Cost Center Hierarchy and Controlling Area.

Cost Center Hierarchy: Defines structure/grouping of cost centers.

Controlling Area: Organizational unit for CO, under which cost elements, cost centers, profit centers are managed.

📌 40. How do you perform Bank Reconciliation in SAP?

Upload bank statements manually or electronically. Match bank entries to open items using manual or automatic reconciliation.

📌 41. What is a Reconciliation Account?

A G/L account that links sub-ledgers (AP, AR, AA) to the General Ledger for automatic posting.

📌 42. How do you post accruals in SAP?

Use recurring entries or manual accrual postings to match expenses to correct periods.

📌 43. Explain Real-Time Integration between FI and MM.

When you do GR (Goods Receipt) or IR (Invoice Receipt), FI automatically posts entries — stock and vendor liabilities are updated.

📌 44. What is Withholding Tax and how is it managed?

SAP supports automatic withholding tax deduction at the time of vendor payment or invoice posting, complying with legal requirements.

📌 45. How do you block a vendor for payment?

Set the payment block in vendor master or at invoice level to prevent APP from picking it up.

📌 46. Explain One-Time Vendor.

Used for infrequent vendors. Instead of creating a separate vendor master, the details are entered at transaction time.

📌 47. What is the Lockbox in SAP?

Automated process to match incoming payments to customer invoices — widely used in US banking.

📌 48. Explain the Fast Entry Screen.

Enables quick data entry of multiple line items in transactions like FB50 (GL), F-02 (Journal).

📌 49. How do you clear open items?

Use transaction F-32 (customer), F-44 (vendor), or F-03 (G/L) to match debits and credits to clear items.

📌 50. What are Posting Keys?

Define whether an entry is debit or credit, what account type is allowed, and the data fields used during document entry.