The ultimate objective of any ERP solution be it SAP R/3 or Oracle is to produce a reliable set of financial statements so that investors can rely on them to make better financial decisions. In SAP, a balance sheet and Profit & Loss account are available through the report RFBILA00. One just needs to specify the timeframe for which financial statements are needed from SAP. SAP will generate balance sheet / profit and loss account in the way the chart of accounts is structured transaction OB13.

SAP has a wonderful feature by which it automatically carries forward past balances in the new fiscal year. IT is not neccesary to close the old fiscal year and make closing entries inorder to open the new financial year in SAP. SAP carries forward the balance in the profit and loss account to the "Retained Earnings" account and the balance sheet account balances are carried forward to each of the individual accounts.

The only caution that is needed in carrying forward balances is to make sure that balance carried forward, is that in case the procedure is performed at the end of the year, postings made to the old fiscal year will not adjust the balance carried forward. This is beacuse SAP R/3 will not understand the postings made to the old fiscal year.

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