hi guys this is pradeep so today I'm going to take one very common interview questions particularly it is uh from receivables under payable very often you will get a interview questions that what is reconciliation account what is reconciliation process what is sub ledgers what is special jail transactions what is alternate reconciliation account so these are the areas today we are going to explore and I am going to take one small scenario where we will practically use it so that it will help you in your interview so let's move into the PPT and let's try to understand what is this reconciliation account first okay so here you can see first let's take example of reconciliation account so uh in Erp it may be sap or Oracle so you will find that very common concept is there Ledger and subletters so Ledger means you know already what is ledger now let's understand what is sub ledger so let me take a practical example for example let's say uh every month the user need to prepare the balance sheets every month the user need to prepare the balance it and let's say we have 1000 vendors are there for 1000 vendors we are posting different type of transactions so if transactions our invoices somewhere we are going to have uh payments are there somewhere maybe we are making payments for our advance so it is practically not possible that before month end or before closing our books of accounts so we will close all our books of accounts and we will see what is our payable balance or what is our receivable balance because ultimately in balance it you are going to show that this is our reconciliation this is our accounts receivable or this is the amounts we will recover from our customer this is the amount which we are going to make the payment to the vendor that balance we are going to so if we don't have anything something called reconciliation then what we will do we will take all the balances all the individual transactions related to particular vendors in individually we will take vendor number one and we will see what are the different transactions are there similarly vendor 2 all the transactions are there then we are going to do a consolidation or we are going to do a summation then finally that balance we are going to show in the balance sheet the all the balances related to payables or receivables in the balance rate in the asset or liability as per their uh the nature of their particular projects which is practically impossible because if when millions of transactions are there and before closing the books of accounts so if we will our user is going to perform this task then it is very very difficult so to understand this one I have taken a small example so here you can say let's say here we have these are the couple of vendors are there and now whatever the transactions for example let's say vendor one there is a invoice so that's why vendor credit balance 10 000. now for vendor 2 there is same vendor one that is some payment done so vendor debited Bank credited so that is why it is 2000 payment then for vendor 2 there is ah we can say there is a credit balance again three thousand like this you will find different transactions are there or multiple transactions we have now we are going to do all this consolidation and final balance we are going to show in the balance sheet so this is our balance which we are going to show in the balance set now here two three or three four lines are there which we can do it but now just imagine in business when millions of records are there so how it is possible how we can show that in the balance sheet in receivables or in payables so that is why instead of that we are going to use one GL account we are going to use one GL account and this is nothing but we can say this is our accounts payable so this one we will take accounts payable Sunday creditor anything you can take here and all the transactions whenever we are going to post with our vendor immediately the same entry also will be copied in our this particular account in accounts payable or in Sunday credited so if there will be a credit transaction then here also you will find a credit transaction of 10 000. if there is a debit transaction so here also you will find a debit transaction of 2000 will be there so like this every transactions also we will or it's automatically system is going to copy in this particular accounts payable account then finally any point of time because and it's it is going to be reported or it will be recorded online it's not like in month and we will perform some activities or we are going to do a batch processing then only this balance is going to reflect in the accounts payable account or accounts receivable account it's not like that immediately the transactions we are going to post with our user is going to post with our vendor or our supplier or our customer so immediately our accounts payable or accounts receivable account is going to update so any point of time we will take the balance of this particular GL account not this transx if we need a detailed analysis of our vendors we want to do a customizing report we want to do a vendor line entries then of course we are going to take this account or the individual accounts we are going to check otherwise we are just going to check this balance so that means any point of time you will find that in this account the all the transactions are reflected here so that's why this transaction will show you that 12 200 credit balance and which is payable so now this amount we are going to show in the balance sheet as our current liability or our payable twelve thousand twelve hundred this is the concept of reconciliation account now how you are going to answer this one in interview if question is there what is reconciliation process or reconciliation account so you can say that in sap Finance we have a concept of sub ledgers and ledgers are there now these are all your sub lasers so these are our sub ledgers your accounts your suppliers your customers your assets because the same concept is also there in the asset so you will find the subleasers are nothing but individual Master records so when we are going to perform different transactions so in the books of accounts we have to create the sub ledgers example suppliers different suppliers we are going to create and simultaneously we are also going to create the reconciliation account or we are going to create the GL Masters so you know how to create the GL Masters in FS double zero you are going to create the GL Masters so let's say we have created accounts payable accounts payable and this is our GL account let's say GL account number 2000 and we will make that GL account 2000 in every supplier account same concept I'm explaining on accounts payable but same is applicable on receivables also so if same GL account we are going to make in every payable account is it mandated to we will take only one accounts payable account or one GL account not required maybe or practically if we'll see there are multiple GL accounts are created let's say we have domestic vendors are there and we have some foreign vendors overseas vendors are there so we may create two reconciliation accounts so we will create one reconciliation account 2000 another reconciliation account two zero zero one now if we are going to have one domestic supplier so that domestic supplier we are going to connect with 2000 if it is overseas vendor supplier then that we are going to so every our local transactions domestic transactions are going to reflect in this account and on overseas transactions are going to reflect in this account so that means every sub Ledger will reflect with your GL so that whenever there will be any transactions we are going to post with our supplier immediately it is going to update in the balance it account this is nothing but your balance sheet account so accounts payable is your balance it account accounts receivable is also your balance sheet account so in real time this transaction is going to reflect in your balance sheet account or your job uh this accounts payable account or accounts receivable account so that any point of time if we want the details we are not going to check the sub Ledger details or these vendor details customer details rather we are going to check the balances of 2000 so once I will show you this one in the system practically you will get more clarity so uh then what settings we have to do here so every transactions which we are going to post with sub Ledger it immediately it will be also updated in our GL accounts this process is nothing but your reconciliation process so it is reconciliation between your sub Ledger and ledger so this one is our GL Master this is our GL which you have created in fs00 and this is your sub Ledger now let's take one sub Ledger or we will take one supplier and we will see what account it is there so we will first we will check functional point of view then same data also we are going to check from the table point of view then we will see the mapping like a can we directly post something to the particular rgl account so we will we will also try that one so that you will get a complete Clarity related to this reconciliation account the real use of reconciliation account practically I'm going to show you in the second part so after this completing this video continue the second part so that you will get more clarity on this particular topic thank you