SAP Financial Accounting (SAP FI) Practice Exam

Which of the following best describes a recon account's function?

1. It represents unpaid customer invoices

2. It groups similar accounts for ease of management

3. It consolidates transactions before final reporting

4. It balances the subsidiary ledger accounts with GL

The correct answer is: It balances the subsidiary ledger accounts with GL

A recon account, specifically in the context of SAP Financial Accounting, serves the important role of maintaining a balance between the subsidiary ledger accounts and the general ledger (GL) to ensure that financial data is accurate and consistent. This account acts as a bridge that reflects the cumulative balances from various subsidiary accounts, such as accounts receivable or accounts payable, to the corresponding GL account. When transactions are recorded in the subsidiary ledgers, they don't immediately impact the GL. The recon account ensures that all postings made in the subsidiary ledgers are accurately reflected in the GL. This alignment helps in the reconciliation process, providing a clear audit trail and ensuring that there are no discrepancies between the subsidiary accounts and the GL. The other options do not accurately describe the core function of a recon account. Unpaid customer invoices pertain specifically to accounts receivable and do not encapsulate the broader role of reconciling subsidiary accounts to the GL. Grouping similar accounts is more about categorization rather than reconciling functionality. Lastly, while consolidating transactions before final reporting is a part of the financial closing process, it is not the primary function of a recon account. Instead, it focuses on balancing to ensure financial integrity and accurate reporting.