Background/Scenario
The 2018 implementation of IFRS9 further altered the previous classification and measurement regulations for banks. We must set up debit/credit settings for Loans Management, Collateral Management, Bank Customer Accounts, Business Partners, etc. through SAP Bank project implementations. Debit/credit, also known as Soll/Haben in German, / or / in Chinese and / or / in Japanese, is a key idea in our configuration.

We are aware that bank accounting differs significantly from regular enterprise accounting, and the SAP Bank solution reflects actual accounting principles. This article aims to explain and offer a simple method for understanding the notion of debit/credit and will aid us in understanding and remembering bank accounting entry regulations, particularly those that apply after 2018.

This introduction may be useful for understanding bank accounting treatment and entries prior to IFRS9 even though it focuses on bank accounting entries within the IFRS9 structure.

Three stages to understand the idea
Remember, in Step 1, that Assets = Liabilities Plus Equity.

Step 2: Assets equal Liabilities plus Capital plus Income less Expenses plus Dividend.

Step 3: Substitute IFRS9 into the equation above.
Financial assets available for sale + Equity method investments + Loans at amortised cost + Securities held to maturity + Property and equipment + (Account) The left side of the equal sign equals cash + central bank balances + interbank balances without central bank items + central bank funds sold and securities purchased under resale agreements + securities borrowed + total financial assets at fair value through profit or loss + fair value through other comprehensive income + financial assets available for sale +

Deposits + Central bank funds purchased and securities sold under repurchase agreements + Securities loaned + Financial liabilities at fair value through profit or loss + Other short-term borrowings + Other liabilities + Provisions + Liabilities for current tax + Deferred tax liabilities + Tier 1 capital items + Supplementary capital items as undisclosed reserves or subordinated debt + Trust preferred securities + The right side of the equal sign = Deposits + Central bank funds purchased and securities sold under repurchase agreements + Securities loaned + Financial liabilities (Revenue of Corporate Bank Global Transaction Banking and Commercial Banking – Expenses of Corporate Bank Global Transaction Banking and Commercial Banking) plus (Revenue of Currency and Fixed Income Certificate Sales & Investment Bank Trading – Expenses of Currency and Fixed Income Certificate Sales & Investment Bank Trading) plus (Revenue of Origination & Advisory – Expenses of Origination & Advisory) plus (Revenue of Core Banking – Expenses of Core Banking) plus (Revenue of Investment Bank Trading Other Bank Business Segment Income – Other Bank Business Segment Expenses) + (Other Interest Income – Other Interest Expense) + (Other Commission and Fee Income – Other Commission and Fee Expense) + Other Remaining Income – Cash Dividends – Stock Dividends.

Enterprise inventories are not often included in a bank’s balance sheet, but I would retain them there; “Other assets” should come before “Assets for current tax” and “Deferred tax assets;” and the equation as a whole might be broadened.

Enterprise inventories are not often included in a bank’s balance sheet, but I would retain them there; “Other assets” should come before “Assets for current tax” and “Deferred tax assets;” and the equation as a whole might be broadened.

Read the equation in step 3 above once more, focusing on the signals +/-.

You may skip a whole function module, or step 3, just like we did when reading ABAP, but we may continue reading now and return to step 3.

The knowledge follows.

We merely recall the following for bank accounting:
Debit-Soll:
Anything marked “+” on the equation’s left side is rising.

Credit-Haben: Anything marked as rising on the right side of the equation with a “+.”

Conclusion
Beyond the aforementioned guidelines, the equation could be applied to daily SAP Banking configuration:
1. Write anything beginning with “-,” increasing, to Credit-Haben;

2. Write anything beginning with “-,” increasing, to Debit-Soll;

3. Write anything with a “+” on the left side that is decreasing to Credit-Haben;

4. Write anything with a “+” on the right side that is decreasing to Debit-Soll.

5. No negative item appears in accounting entries in double-entry accounting.
The aforementioned rule may assist us in comprehending or remembering the IFRS 9 bank accounting rules and in correcting the accounting settings in the SAP Bank modules (BCA, Loans, Collateral Management, etc.).

I hope you like this easy and successful strategy!