Comparison of Financial and Management Accounting

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Controlling Area (Management Accounting)

Controlling area nothing but Costing or Management Accounting. Management
Accounting offers many tools, such as cost controlling and revenue controlling that can
be used to prepare operating data for business analysis and management decisions
Comparison of Financial and Management Accounting

 Management accounting contains all the functions that are necessary for effective
cost and revenue controlling. It covers all the aspects of management controlling,
such as management accounting, cost accounting, different types of valuations,
and flexibility. It also includes many tools for compiling information for company
management
 Financial accounting allows the creation of financial statements (Income
statement and Balance sheet) for external reporting purpose. These reporting
requirements are usually prescribed by various general accounting standards, such
as International Accounting Standards (IAS), Generally Accepted Accounting
Principles (GAAP) and International Financial Reporting Standards (IFRS). There
are also various legal requirements set by relevant financial authorities, such as
tax audit
 Financial Accounting is the standardized accounting intended for external users. It
allows the generation of reports such as balance sheet, cash flow statement,
retained earnings statement, or profit & loss statement
 Management accounting generally refers to non-standardized accounting
approach for internal reporting, which helps in decision making for the
management. The reports generated within management accounting are product
cost reports, cost center reports, contract margin reports, profit center reports, and
so on
Typical Tasks in Management Accounting:
 Cost Element accounting classifies the costs and revenues posted to management
accounting
 Overhead cost controlling examine the origin of costs in the functional areas of an
enterprise
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 Product cost accounting is used to cost and evaluate the cost of goods
manufactured for a product and the costs associated with providing a service or
when carrying out a project (Plan and actual)
 Profitability analysis deals mainly with analyzing the effects of enterprise
activities on the external market. It enables you to determine how successful the
enterprise is in different market segments and how profitability has evolved over a
period of time
 Profit Center Accounting analyzes the success of the profit centers in the
enterprise
Flow of values with in Management Accounting

 With in the overhead cost controlling area, costs can be posted to cost centers,
internal orders, and processes from other SAP applications
 Cost Centers can then allocate costs to other cost centers, internal orders, and
processes in Activity Based Costing
 Internal orders can settle costs to cost centers and to processes in Activity Based
Costing (ABC) (as well as to other internal orders)
 Central cost flows can exist between overhead cost controlling and product
costing
 Cost objects can receive direct cost posting from financial accounting, costs from
cost centers, costs calculated from internal orders, and costs allocated from
activity based costing process
 Profitability accounting components also are tightly integrated with overhead cost
controlling and product cost controlling. Profit center accounting receives
statistical cost postings from all other management accounting components
The following components we discuss in controlling area

 Cost Element Accounting: classifies the costs and revenues posted to management
accounting
 Overheads Management
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o Cost Center: Cost Center means wherever cost incurs or group of cost
incur. Cost centers nothing but department in the organization. Ex:
Finance dept, Accounts dept, Production dept etc
o Internal orders: Internal orders are cost collectors which help in detailed
analysis of overhead cost. Internal order nothing but internal task in the
organization
 Profitability Management
o Profitability analysis
o Profit center accounting
 Product Costing
Features of controlling area:

 We can assign one or more company codes to controlling area based on business
requirement
 Only one company code is assigned to a controlling area if the management
reporting and financial reporting framework are similar
 1:1 Assignment, the currencies, chart of accounts, and number of posting periods
of the controlling area and company code are similar. Fiscal year variants can be
different in terms of the number of special periods but the number of posting
periods should be the same.
 1:n Assignment, This enables cross company code controlling where value flows
can happen in CO across the two company codes. These inter company code
flows are managed using reconciliation postings (this is not required in version
6.0 ECC). Same chart of accounts must be used in management accounting and in
the assigned company code
Master data and transaction data:

 Master data refers to data which is unchangeable over a long period of time while
transaction data that is assigned to the master data
 Master data,
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o Cost Elements
o Cost Centers
o Activity Types
o Statistical Key Figures
 Transaction Data
o Line Items
o Total Records
Standard Hierarchy:
H1
Global
H1000 H2000
H3000
India USA
H1100 H1200 H1300

Corporate Finance and Admin S&D
H1110 H1210
Management Admin
H1120 H1220
Internal Service Human Resource
H1230
Purchasing
The standard hierarchy is normally defined by taking into consideration the internal areas
and structure that align with the various functional areas in the organization chart of the
customer.
Normally, the standard hierarchy can be defined based on existing structures of
departments and the reporting requirements of the customer organization. We book
expenses and revenues end nodes only
1) Maintain Controlling Area

Path: SPRO- SAP Reference IMG- Controlling- General Controlling- Organization-
Maintain Controlling Area (Tcode: OKKP)
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Execute
Double click on Maintain Controlling Area
Click on New Entries (F5)
Controlling Area
Click on COArea=CCode
Company Code
Enter
CoCd>CO Area Controlling area same as company Code
CCtr Std. Hierarchy
Document type SA
Save and enter and enter
Double click on Assignment of Company Code(S) folder
CoCd
Save
Double click on Activate components/Control indicators
Fiscal Year
Cost Centers 1 component active
Select AA: Activity type
Order management 1 component active
Commit. Management 1 component active
Select Profit center Acctg
Select projects
Select Sales orders
Select Cost object
Select W.Commit.Mgt
Select Variances
Save and enter
2) Maintain Number Ranges for Controlling Documents
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In this Activity we create number ranges for controlling business transactions. There are
two types of number assignment:
 Internal
When saving a data record, the SAP System assigns a sequential number that lies
within the corresponding number range interval.
 External
When saving a data record, either you or an external system assigns a number.
You need to ensure that the number lies within the corresponding number range
interval.
Ex:
 Planning Number Ranges

o RKP1 Planning Primary Costs
o RKP2 Planning Activities
o RKP3 Planning Secondary Costs
o RKP4 Planning Statistical Key Figures
o RKP5 Planning Revenues Types etc
 Transfer Postings
o COIN CO through postings from FI
o RKU1 Repost Costs
o RKU2 Repost Revenues
o RKU3 Repost Line Items etc
Path: Same path (Tcode: KANK)
Execute
Click on Copy (F7)
From..... 0001
To.....
Enter and enter
Click on Groups (F6)
Observe business transactions in CO
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3) Maintain Versions
Definition: Versions enable you to have independent sets of planning and actual data.
In planning, you use versions to configure alternative scenarios based on different
assumptions. For example, the different versions can represent different employment
markets, price and wage increases, or sales programs.
You normally configure the most likely scenario in version 000. The plan data you enter
there forms the basis for calculating planned prices for activity types, and determines the
rates with which activities containing actual amounts can be settled. Version 000 also
contains all actual data postings. The plan and actual data for version 000 can be used in
plan/actual comparisons and variance analysis.
In this IMG activity you edit the general version definition on the client level.
When you create a controlling area, the SAP system automatically creates version 000,
valid for five fiscal years. The first fiscal year depends on the control indicator you set
when you created the controlling area:
 If the indicator is set for the current year or earlier, the five-year period begins
with the current year.
 If the indicator is set for future years, the five-year period begins with the earliest
of these years as the first year.
Recommendation:
 If you want to plan in a single version only, use version 000.
 Actual primary cost data entry and actual data from internal activity allocation all
post to version 000. SAP therefore recommends you use this version for all
plan/actual comparisons.
Path: Same path (Tcode: OKEQ)
Execute
Select 0 Plan/actual version
Double click on Settings for Profit Center Accounting folder
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Controlling area
Enter
Click on New entries (F5)
Year
Select online transfer
Select Line items
ExRateType M
Save and Enter
Double click on General Version Definition Folder
Select 0 Plan/actual version
Double click on Controlling Area settings folder
Select 0 Plan/Act - Version
Double click on Settings for Each fiscal year
Observe whether system is giving five years for version
Note:
Online Transfer: This indicator controls whether the postings should be transferred to
Profit Center Accounting for each activity.
If the indicator is not activated, you need to transfer the postings manually using the
available programs.
Version Locked: Indicator used to lock a version against changes to planning values. You
cannot change planning values in locked versions. If necessary, you can remove this
indicator and carry out changes to planning.
Line items: Indicator controlling whether line item documents are written for each change
made to the plan totals records. The line item documents record each change to planning.
Integrated Planning: Determines whether to transfer plan data from the Cost Center
Accounting component (CO-OM-CCA) or the Activity-Based Costing component (CO-
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OM-ABC) to other components (such as the Profit Center Accounting component), and
whether to write line items for each change in the plan data.
Line item documents keep a record of every planning change
This function does the following:
All available plan records for controlling area/version/fiscal year are posted as
line items. The system posts these line items to the AC interface.
Any existing line items in the plan allocation transactions (plan assessment,
distribution, or accrual calculation) are posted to the AC interface as well and made
available to other components.
Copying Allowed: This indicator specifies whether this version may be used as a
reference for generating values for another version within a copy procedure. You can also
choose which of the maintained longtexts you want to copy. You can check the results of
the copy procedure in a list.
Note
The indicator for copying the version is only relevant for internal orders and WBS
elements when the "Plan integration with Cost Center Accounting" indicator is active and
the affected orders or elements are plan-integrated. You are thus always able to copy
overall plan values from internal orders or WBS elements.
4) Maintain Standard Hierarchy

Definition: Tree structure representing all cost centers belonging to a controlling area
from a Controlling perspective.
You can combine cost centers into cost center groups. You can then create cost
center hierarchies from these groups by combining the groups according to decision-
making area, area of responsibility, or management area.
A cost center hierarchy comprises all cost centers for a given period and therefore
represents the whole enterprise. This hierarchy is known as the standard hierarchy.
Model Standard Hierarchy:
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Path: Accounting - Controlling - Cost Center Accounting - Master Data - Standard

Hierarchy - OKEON - Change (Tcode: OKEON)
Controlling area
Enter
Group Name
Enter
Select Standard Hierarchy
Click on Create
Choose Lower-level Group
Group Name 3000 Administration Expense
Enter
Select 3000
Click on Create
Choose Group at Same Level
Group Name 2000 Logistics
Enter
Select 2000
Click on Create
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Group Name 4000 Production
Enter
Select 4000
Click on Create
Group Name 1100 Management
Enter
Select 2000
Click on Create
Choose Lower-Level Group
Group Name 2200 Energy
Enter
Select 2000
Click on Create
Group Name 2300 Buildings
Enter
Select 4000
Click on Create
Group Name 4100 Services
Enter
Save (Ctrl+S)
5) Create Cost Center

Definition: Master data determines the structure of the given application component in
the SAP System and remains essentially unchanged in a live system, that is, in the current
settlement periods
The cost center structure can reflect the structure of your organization. It
generally remains constant over long periods. You can execute cost center planning to
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reflect your cost center structure and generate periodic cost center and area reports, which
can be passed on to the person responsible for analysis. These reports help identify
economic weaknesses and planning errors in individual cost centers. To be able to
compare results effectively, you should not make changes to this data.
Path: Accounting - Controlling - Cost Center Accounting - Master Data - Cost Center -
Individual Processing - KS01 - Create (Tcode:KS01)
Cost Center 2210
Valid From
Enter
Name Electricity
Description Electricity
Person Responsible
Cost Center Category G (Logistics)
Hierarchy Area
Currency INR
Save
System will through following warning message: “Profit Center Accounting active but no
profit center specified (CCtr 2210)”
Ignore warning message
Cost Center 2220

Valid From
Enter
Name Water
Description Water
Person Responsible
Cost Center Category
Hierarchy Area
Currency INR
Save
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Cost Center 2230

Valid From
Enter
Name GAS
Description GAS
Person Responsible
Cost Center Category G (Logistics)
Hierarchy Area
Currency INR
Save
Note: Create following cost centers

 2310 – Admin Buildings
 2320 – Warehouse Buildings
 2330 – Production Buildings
 3100 – General Admin
 3200 – HR
 3300 – S&D
 3400 – Accounting
 3500 – Purchasing
 3600 – Cafeteria
 4110 – Fitter
 4120 – Electrician
 4130 – Painter
 4210 – Production I
 4220 – Production II
 1100 – Management
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6) Define Cost Center Categories

In this IMG activity you define cost center categories.
You define the categories yourself (such as P for a production cost center or A for an
administration cost center), or you can use the cost center categories supplied by SAP.
You activate/deactivate the following indicators for each cost center category:
 Lock primary postings
 Lock secondary postings
 Lock revenue postings and revenue planning
 Lock commitment update
 Lock primary cost planning
 Lock secondary cost planning
 Lock consumption quantities
The SAP System defaults this indicator when you create cost center master data. You can
overwrite the default values if you wish.
Path: SPRO- SAP Reference IMG- Controlling- Cost Center Accounting- Master Data-
Cost Centers- Define Cost Center Categories (Tcode: OKA2)
Execute
CCtC
Name Administration
Select ActRev
Select PlnRev
Save (Ctrl+S) and enter
7) Define Time-Based Fields for Cost Centers

In this step you determine on the client level, independently of organizational units such
as controlling area or chart of accounts, whether master data table fields are historically
relevant or not
You can maintain master data for cost centers, cost elements, activity types, and business
processes as time-based. Changes to any other time interval are possible at any given
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time. Data storage is also time-based. In this way, you can store multiple database records
for a master data record, each holding different information.
The time-based dependencies are determined by SAP and cannot be changed. The
following dependencies are possible:
 Not time-based
 Day-based
 Period-based
 Fiscal Year-based
Path: SPRO- SAP Reference IMG- Controlling- Cost Center Accounting- Master Data-
Cost Centers- Define Time-Based Fields for Cost Centers (Tcode: OKEG)
Execute
Select which field you want to maintain as time based as either ‘Not time-based’, ‘Day
based’, ‘Period based’, or ‘Fiscal Year Based.
Creation of Cost Element
Cost Element Accounting is the part of accounting where you enter and organize costs
incurred during a settlement period. It is thus not an accounting system as such, but rather
a detailed recording of data that forms the basis for cost accounting
Types of Cost Elements:
 Primary Cost Elements: When you create primary cost elements, the SAP System
checks whether a corresponding general ledger (G/L) account exists in Financial
Accounting (FI).
 Secondary Cost Elements: These cost elements will be useful within controlling
area for settlement/assessment of costs from one component to other components
“All costs are expenses but all expenses may not be costs”
As per ICWAI Act, 1959, we decide what expenses are costs. As per this Act, financial
expenses are not costs
1. Manual Creation of Cost Elements

a. Through G/L Master Record (Tcode:FS00)
G/L Account 400010
Company Code
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Click on Edit Cost Element (F8)

Valid From
Enter
CElem category 1 (Primary costs/cost-reducing revenues)
Save (Ctrl+S)
b. Through Path
Path: Accounting - Controlling - Cost Element Accounting - Master Data - Cost Element
- Individual Processing - KA01 - Create Primary (Tcode:KA01)
Double click on KA01 - Create Primary
Cost Element 400100
Valid From
Enter
CElem Category 1 (Primary costs/cost-reducing revenues)
Save (Ctrl+S)
2. Automatic Creation of Cost Elements

a. Select Automatic Creation of cost elements in chart of Accounts (Tcode:
OB13)
Click on position button
Chart of Accts
Enter
Select Chart of Accounts
Click on Details (Ctrl+Shift+F2)
Integration Section
Controlling Integration 2 Automatic creation of cost elements
b. Make Default Settings
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Path: SPRO- SAP Reference IMG- Controlling- Cost Element Accounting- Master Data-
Cost Elements- Automatic Creation of Primary and Secondary Cost Elements- Make
Default Settings (Tcode: OKB2)
Execute
Chart of Accts 4001
Enter
Acct from Account to CElem cat.
400000 400009 1
400011 400099 1
400101 499999 1
c.Create Batch Input Session

Cost Elements- Automatic Creation of Primary and Secondary Cost Elements- Create
Batch Input Session (Tcode: OKB3)
Execute
Controlling Area 4001
Valid from 01.04.2011
Valid to 31.12.9999
Session Name SAPUSER
Batch input user SAPUSER
Execute (F8)
d. Execute Batch Input Session

Cost Elements- Automatic Creation of Primary and Secondary Cost Elements- Execute
Batch Input Session (Tcode: SM35)
Execute
Select SAPUSER
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Click on Process (F8)

Select Display Errors Only
Enter
Click on Exit Batch Input (F12)
3. Change Field Status Group G001 to G004 in Cost Elements G/L Master
records (Tcode: FS00)
G/L Account 400010 (Rent A/C)
Company code
Click on Change
Go to Create/Bank/Interest Tab
Field Status Group G004 (Cost Accounts)
Save (Ctrl+S)
G/L Account 400100 (Service A/C)

Company code
Click on Change
Field Status Group G004 (Cost Accounts)
Save (Ctrl+S)
Postings to Cost centers

1. General Posting
Path: Accounting- Financial Accounting- General Ledger- Posting- FB50 - Enter G/L
Account Document (Tcode: FB50)
Click on Company Code (F7)
Company Code
Enter
Document date
Posting Date
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G/L Acct D/C Amount in doc. Curr Cost Center

400010 (Rent A/C) S Debit 25000 2210
290100 (Bank A/C) H Credit 25000
Post (Ctrl+S)
Go to Menu bar
Document – Display Document
Go to Menu bar
Environment – Document Environment – Accounting Documents
Choose Controlling Document
2. Cost Centers: Actual/Plan/Variance

Path: Accounting - Controlling - Cost Center Accounting - Information System - Reports
for Cost Center Accounting - Plan/Actual Comparisons - S_ALR_87013611 - Cost
Centers: Actual/Plan/Variance
(Tcode: S_ALR_87013611)
Fiscal Year 2011
From Period 1
To Period 12
Plan Version 0 (Plan/Actual Comparison)
Select Groups Section
Or value(s) 2210 (Electricity Dept)
Execute (F8)
Cost Element Groups

Definition: You can collect cost elements with similar characteristics in cost element
groups
Ex:
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Path: Accounting- Controlling- Cost Element Accounting- Master Data- Cost Element
Group- KAH1 – Create (Tcode: KAH1)
Cost Element Group CEL_GROUP
Enter
CEL_GROUP Cost Element Group
Select Cost Element Group CEL_GROUP
Click on Cost Elements (Shift+F4)
400000 400100
Enter
Save (Ctrl+S)
Planning
Activity Independent Primary Cost Planning: You plan activity-independent primary
costs, subdivided by cost element, on the cost centers to which you later also assign the
actual costs. Most cost elements are planned in this way (for example, material costs, raw
material and operating supply costs, etc.).
Activity Dependent Primary Cost Planning: You plan activity-dependent primary costs as
follows on a cost center(s)/cost center group:
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 By cost element(s)/cost element group

 Based on the activity type(s)/activity type group
This means that you can plan a fixed amount and a variable amount for your primary
costs. Variable costs are the costs incurred in producing a given activity, proportional to
the quantity of activity produced. You can calculate target costs based on the costs split
and the operating rate (actual activity quantity related to the plan activity quantity).
Target costs for costs planned by value are comprised of:
 Plan fixed costs
 Plan variable costs adapted to the actual operating level (= target costs of the
actual operating level)
Ex:
You plan salaries on a production cost center based on the manufacture of the finished
product X. The planned activity type is Production hours FST.
Activity Type FST: 1000 hrs
Cost element Total costs Fixed costs
430000 $600,000 $200,000

To produce 1000 hours of activity type FST, costs of $400,000 (Total Costs – Fixed
Costs) are required. This amount represents the variable costs. The portion of fixed costs,
$200,000, is incurred irrespective of the activity quantity.
For activity-dependent costs, which are planned based on quantity, the following
formulas apply:
Variable target quantity = Variable plan quantity X Operating rate
Fixed target costs = Fixed target quantity X Fixed price
Variable target costs = Variable target quantity X Variable price
To achieve useful comparisons of the plan and actual costs of a period, you need a
consistent basis. Plan and actual costs are compared on the basis of actual activity.
The system uses the operating rate to adjust the plan costs of a period to the actual
activity.
The operating rate is based on the following formula:
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Operating rate = (Actual activity / Plan activity) X 100

The plan costs adapted to actual costs in this manner are called target costs. In variance
calculation, the system calculates target costs for each cost center and business process in
each period. The values are calculated according to the following formulas:
 For activity-dependent costs that were not incurred through internal activity
allocations:
The value-based viewpoint is in the foreground here, even if you enter additional
quantities during planning.
Fixed target quantity = Fixed plan quantity

Fixed target costs = Fixed plan costs
Variable target costs = Variable plan costs X Operating rate
Total target costs = Fixed plan costs + Variable plan costs X Operating rate
For these costs, the emphasis is on value-based calculation, even if additional
quantities are entered when planning.
 For credit records from internal activity allocations:
Fixed target costs = Fixed plan costs X Operating rate
If an activity type or a business process participate as senders in
predistribution of fixed costs, the fixed costs are not corrected with the
operating rate (see: Predistribution of Fixed Costs). In this case:

 For all activity-independent costs:
Variable target costs = Variable plan costs

 For activity-dependent costs from internal activity allocation.
Fixed target quantity = Fixed plan quantity
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Fixed target costs = Fixed target quantity X Fixed price

+ Fixed target quantity X Variable price
+ Variable target quantity X Fixed price
Variable target costs = Variable target quantity X Variable price.
Here, the emphasis is on quantity-based calculation because allocation takes place
via activity quantities. The target costs can vary with the operating rate because
the variable target quantity is included in the fixed target costs.

If during activity allocation you assigned the fixed costs using
predistribution of fixed costs, (see: Predistribution of Fixed Costs), the
target costs are calculated as follows:
In this case, the fixed costs are not dependent on the operating rate.

1. Activity Independent Planning
a. Maintain planning profile
Definition: Planning profile is a facilitator to plan data for the cost elements and revenue
elements
Path: SPRO- SAP Reference IMG- Controlling- Cost Center Accounting- Planning-
Manual Planning- Define User Defined Planner Profiles
(Tcode: KP34)
Execute
Profile
Description Planner Profile for
Enter
Select Profile
Double click on General Controlling Folder
Planning area Cost ctrs: Cost element/activity inputs
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Select Cost ctrs: Cost element/activity inputs

Double click on Layouts for controlling
Layout 1-103 (Cost/revenue elements)
b. Set planner profile

Path: Accounting - Controlling - Cost Center Accounting - Planning - KP04 - Set Planner
Profile (Tcode: KP04)
Planner profile
Enter
c. Planning of cost elements and revenue elements

Path: Accounting - Controlling - Cost Center Accounting - Planning - Cost and Activity
Inputs - KP06 - Change (Tcode:KP06)
Version 0 (Plan/Act – Version)
From period
To Period
Fiscal Year
Cost Center
Cost element Group CEL_GROUP
Select Form-Based
Click on Overview screen (F5)
Total plan costs 100000
Save (Ctrl+S)
Note:
In "Free entry" mode only those characteristic values for which plan data already exists in
the databank will be displayed. New characteristic values can be entered here and
inserted in the rows as a rule; all characteristic values are shown in the header area.
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In "Form-based entry" mode, all characteristics values with valid master data for
characteristics will be displayed in the rows. No new characteristic values can then be
entered here.
d. Report
Path: Accounting - Controlling - Cost Center Accounting - Information System - Reports
for Cost Center Accounting - Plan/Actual Comparisons - S_ALR_87013611 - Cost
Centers: Actual/Plan/Variance (Tcode:S_ALR_87013611)
Controlling area
Fiscal year
From period
To period
Plan version 0 (Plan/Act – Version)
Cost center
Execute (F8)
Observe Report Actual cost, Planned Cost, Abs variance and Var. (%) against each cost
element and total cost
Activity Types
Definition: Activity types classify the activities produced in the cost centers within a
controlling area.
Use of Activity Types: To plan and allocate the activities, the system records quantities
that are measured in activity units. Activity quantities are valuated using a price
(allocation price).
In Overhead Cost Controlling, costs based on the activity quantity of an activity
type are posted separately in fixed and variable portions. When you divide the activities
of a cost center into activity types, you should consider whether the costs can be allocated
effectively to the activity types.
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The prices of the activity types of a cost center can be either entered manually, or
calculated by the system based on the costs allocated to the activities. Prices can be
calculated either using plan costs or actual costs.
You can plan, allocate, and control costs either at the activity type level of a cost
center, or at the cost center level. You can enter actual costs at the cost center level.
Typical examples of activity types for cost centers are machine hours, labor hours,
setup hours, quality testing hours, administrator hours, CPU minutes or units produced.
1. Create Internal Activity Allocation Cost Element

Definition: This is a secondary cost element which can be used within controlling area to
allocate costs from one department to other departments. In sender cost center, internal
activity allocation cost element will be credited and in receiver cost center, internal
activity allocation cost element will be debited
- Individual Processing - KA06 - Create Secondary (Tcode:KA06)
Double click on KA06 - Create Secondary
Cost Element 500100
Valid From
Enter
Name Labor Activity
Description Labor Activity
CElem category 43 (Internal Activity Allocation)
Save (Ctrl+S)
Cost Element 500200

Valid From
Enter
Name Machine Activity
Description Machine Activity
Save (Ctrl+S)
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Cost Element 500300

Valid From
Enter
Name Setup Activity
Description Setup Activity
Save (Ctrl+S)
2. Define Activity Type

Path: Accounting- Controlling- Cost Center Accounting- Master Data- Activity Type-
Individual Processing- KL01 – Create (Tcode: KL01)
Activity type 500100
Enter
Name Labor Activity
Description Labor Activity
Activity Unit H (Hour)
CCtr categories * (Applicable to all cost centers)
ATyp Category 1 (Manual Entry, Manual Allocation)
Allocation Cost elem 500100 (Labor Activity)
Save (Ctrl+S)

Enter
Name Machine Activity
Description Machine Activity
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Allocation Cost elem 500200 (Machine Activity)

Save (Ctrl+S)

Enter
Name Setup Activity
Description Setup Activity
Allocation Cost elem 500300 (Setup Activity)
Save (Ctrl+S)
Note:
Activity type Category: Activity type category is determining the method of activity
quantity planning and activity allocation
3. Activity type group

In this activity, we group activities which are useful to allocate, planning and reporting
Path: Accounting- Controlling- Cost Center Accounting- Master Data- Activity Type
Group- KLH1 – Create (Tcode: KLH1)
Activity type group ACT_GROUP
ACT_GROUP Production Activities
Click on Activity Type (Shift+F4)
500100 500300
Enter
Save (Ctrl+S)
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4. Activities Planning
Path: Accounting- Controlling- Cost Center Accounting- Planning- Activity
Output/Prices- KP26 – Change (Tcode: KP26)
Version 0 (Plan/Actual Version)
From Period 8
To period 8
Fiscal year
Cost Center
Activity Group ACT_GROUP
Select Form-Based
Click on Overview Screen (F5)
Activity type Plan Activity Capacity Fixed Price Variable Price
500100 20000 24000 50 75
500200 200 250 100 150
500300 10 12 500 1000
Save (Ctrl+S)
5. Allocation of Activities
Path: Accounting- Controlling- Cost Center Accounting- Actual Postings- Activity
Allocation- KB21N – Enter (Tcode: KB21N)
Send. CCtr SAtyType Rec. CCtr Total Quantity
2210 500100 2220 50
2210 500100 2230 100
Save (Ctrl+S)
6. Cost Centers: Actual/Plan/Variance (Tcode: S_ALR_87013611)

Controlling area
Fiscal year
From period
To period
Plan version 0 (Plan/Act – Version)
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Cost center
Execute (F8)
Observe Report Actual cost, Planned Cost, Abs variance and Var. (%) against each
Activity type and total cost (In Sender Cost Center and In Receiver Cost Center)
Statistical Key Figures

Statistical key figures are tracing factors to allocate expenses from department to other
department
You assess the costs for the cafeteria to the individual cost centers, based on the number
of employees in each cost center. To do this, you need to enter the number of employees
in each cost center as a statistical key figure.
You can define statistical key figures as either:

 Fixed values
 Totals values
Key figures defined as fixed values are valid as of the posting period, and in all
subsequent posting periods of the fiscal year.
The statistical key figure Employees is defined as a fixed value. In period 1 of the fiscal
year, you post 10 Employees on cost center 4100. The system then automatically posts 10
employees in periods 2 through 12.
In period 6, the number of employees is increased to 15. This means that in period 6, you
post 15 Employees on the cost center. The system automatically posts 15 employees in
periods 6 through 12.
Key figures defined as Totals values are valid only in the posting period in which they are
entered.
You define the statistical key figure Telephone units as a totals value. In period 1 of the
fiscal year, you post 1000 Telephone units on cost center 4100. The system posts 1000
telephone units in period 01 only.
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1. Create Statistical Key Figures

Path: Accounting- Controlling- Cost Center Accounting- Master Data- Statistical Key
Figures- Individual Processing- KK01 – Create (Tcode: KK01)
Stat. key figure TEL100
Enter
Name Telephone Units
Stat. key fig. UnM. UN (Unit)
Select Tot. Values
Save (Ctrl+S)
Stat. key figure EMP100
Enter
Name Employee
Stat. key fig. UnM. EA (Each)
Select Fxd. Values
Save (Ctrl+S)
Stat. key figure CPU100
Enter
Name CPU Minute
Stat. key fig. UnM. MIN (Minute)
Select Fxd. Values
Save (Ctrl+S)
2. Statistical Key Figure Group

Definition: Statistical key figure group will be useful for planning and allocation.
Path: Accounting- Controlling- Cost Center Accounting- Master Data- Statistical Key
Figure Group- KBH1 – Create (Tcode: KBH1)
Statistical Key Figure Group H100
Enter
H100 Statistical Key Figures Group
Click on Statistical Key Figure (Shift+F4)
TEL100
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EMP100
CPU100
Enter
Save (Ctrl+S)
3. Planning Statistical Key Figures

Path: Accounting- Controlling- Cost Center Accounting- Planning- Statistical Key
Figures- KP46 – Change (Tcode: KP46)
Version 0 (Plan/Act – Version)
From period 1
To period 12
Fiscal year 2011
Cost Center 2210 (Electricity Dept)
To
or group
Stat. key figure
To
or group H100
Select Form-Based
TEL100 24000
EMP100 100
CPU100 2880000 (100 systemX24hoursX60MinutesX20days)
Save (Ctrl+S)
4. Actual Statistical Key Figures Posting

Path: Accounting- Controlling- Cost Center Accounting- Actual Postings- Statistical Key
Figures- KB31N – Enter (Tcode: KB31N)
Rec. CCtr StatKF Total Quantity
2210 TEL100 1900
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2210 EMP100 98
2210 CPU100 2500000
Save (Ctrl+S)
5. Plan/Actual Comparision Report for statistical key figures

Path: Accounting- Controlling- Cost Center Accounting- Information System- Reports for
Cost Center Accounting- Plan/Actual Comparisons- Additional Characteristics-
S_ALR_87013618 - Range: Statistical Key Figures
(Tcode: S_ALR_87013618)
Fiscal Year 2011
From Period 8
To Period 8
Plan Version 0 (Plan/Actual Version)
Cost Center Group
Or value(s) 2210
Statistical key figure group H100
Or value(s)
Execute (F8)
We can see variance between planning and actual
Adjustment Postings
You can repost primary costs manually using transaction-based reposting, whereby the
original cost element is always retained. This function is designed mainly to adjust
posting errors.
You should always adjust posting errors in the application component where they
occurred. This ensures that external and internal accountings are always reconciled. You
can only adjust posting errors involving one cost accounting object (a cost center for
example) using a transaction-based reposting in Controlling (CO).
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1. Reposting of line items

Path: Accounting - Controlling - Cost Center Accounting - Actual Postings - Manual
Reposting of Costs - KB11N - Enter (Tcode: KB11N)
CCtr(Old) Cost Elem Amount CCtr(New)
2210 400010 10000 2220
Enter
Save (Ctrl+S)
Periodic Processing in Cost Center Accounting

Period-end closing in Overhead Cost Controlling is part of the work carried out at period-
end throughout the entire organization.
The tasks required at period-end, and the sequence in which they must be carried out,
depend on what system functions you use and which cost accounting method. This topic
describes the basic elements of period-end closing. The explanations assume that you are
using all the features available.
Periodic Reposting
Periodic reposting is posting aid that enables you to adjust postings made to your cost
centers or business processes, internal orders, or WBS elements. It has the same result as
transaction-based reposting. The results of transaction-based reposting have a direct
effect on the actual costs of the sender and the receiver, whereas periodic reposting has a
one-time effect on actual costs at period-end closing.
Postings relevant to Controlling (CO) such as telephone costs, postal charges, insurance,
and so on are entered in Financial Accounting (FI) and posted to an allocation cost center
or a business process. These are used exclusively for cost collection. This minimizes the
number of different account assignments you have to make when entering data in FI. At
the end of the period, the collected costs are reposted to the cost centers or business
processes which incurred the costs by of means user-defined keys (fixed values or
dynamic tracing factors)
1. Create and execute periodic reposting cycle
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Path: Accounting- Controlling- Cost Center Accounting- Period-End Closing- Single

Functions- KSW5 - Periodic Reposting (Tcode: KSW5)
Go to Menu bar
Extras- Cycle- Create
Cycle ELE100
Start Date 01.11.2011
Enter
Text Electricity Expenses
Click on Attach Segment (Shift+F8)
Segment name ELE101 Electricity Expenses
Go to Segment Header Tab
Sender values
Sender Rule 1 Posted Amounts
Share in % 100
Select Act. Vals
Receiver Tracing factor 3 Fixed Percentages
Go to Sender/Receiver Tab
Sender
From To
Sender 2210
Cost Elements 400000 499999
Receiver
From To
Cost Center 2220 2230
Go to Receiver Tracing Factor Tab
Receivers
Cost Ctr Portion/Percent
2220 40
2230 60
Two times go back
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Period 8
Fiscal year 2011
Deselect Test Run
Cycle ELE100
Execute (F8)
2. Plan/Actual Comparision Report (Tcode: S_ALR_87013611)
Distribution
Distribution is used to allocate the primary costs of a cost center. The following
information is passed on to the receivers:
 The original cost element (that is, the primary cost element) is retained.
 Sender and receiver information (for example, the identities of the sender and
receiver cost center/business process) is documented using line items in the CO
document.
You can use the information system to analyze the distribution results according to
sender and receiver relationships.
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1. Create Distribution Cycle and Run Distribution Cycle

Path: Accounting - Controlling - Cost Center Accounting - Period-End Closing - Single
Functions - Allocations - KSV5 - Distribution (Tcode:KSV5)
Go to menu bar
Extras – Cycle – Create
Cycle ENR100
Enter
Text Distribution of Energy
Segment name ENR101 Distribution of Energy to Prod
Sender Values Section
Share in % 100
Select Act. Vals
Receiver Tracing Factors Section
Receiver Rule 3 Fixed Percentages
Go to Sender/Receivers Tab
Sender Section
From To
Cost Center 2210
Receiver Section
From To
Receivers Section
2220 40
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2230 60
Two times go back
One time go back
Period 9
Fiscal year 2011
Deselect Test Run
Cycle ENR100
Execute (F8)
Assessment
Assessment is a method of allocating primary and secondary costs in Cost Center
Accounting and Activity-Based Costing. The following information is passed on to the
receivers:
 The original cost elements are assigned cumulatively, or in groups, to assessment
(secondary) cost elements. The original cost elements are not recorded on the
receivers
 Sender and receiver information (sender cost center, receiver cost center, or
business process) appears in the Controlling (CO) document.
Allocation through assessment is useful when the composition of the costs is unimportant
for the receiver. For example, the assessment of cafeteria costs to a cost center need not
be broken down further.
You can use the information system to analyze the assessment results by assessment cost
element according to sender and receiver relationships.
1. Create Assessment Cost Element

- Individual Processing - KA06 - Create Secondary (Tcode:KA06)
Controlling area
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Enter
Cost element Assessment
Valid from
Enter
Name Assessment
Description Assessment cost element
CElem category 42 (Assessment)
Save (Ctrl+S)
2. Create Assessment Cycle and Run Assessment Cycle

Path: Accounting - Controlling - Cost Center Accounting - Period-End Closing - Single
Functions - Allocations - KSU5 - Assessment (Tcode:KSU5)
Go to menu bar
Cycle CAF100
Enter
Text Assessment Cafeteria
Segment name CAF101 Assessment Cafeteria
Assessment CEle Assessment
Share in % 100
Select Act. Vals
Receiver Rule 3 Fixed Percentages
Sender Section
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From To
Cost Center 2210
Receiver Section
From To
Receivers Section
2220 40
2230 60
Two times go back
One time go back
Period 9
Fiscal year 2011
Deselect Test Run
Cycle CAF100
Execute (F8)
Indirect Activity Allocation

You can use indirect activity allocations to automatically allocate planned and actual
activities.
You can specify keys to allocate activity, which is not possible when you use manual
activity input in the plan or actual activity allocation. In addition, if calculating the sender
activity quantities involves too much time or expense, the R/3 System can determine the
activity quantity inversely based on the activity of the receivers.
If you execute indirect activity allocation without completing planning for the
combination cost center/activity type, you must activate the actual price indicator in the
activity type master data.
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1. Create Indirect Activity Allocation Cost Elements for Canteen (Tcode: KA06)
Cost Element 500400
Enter
Name IAA-CANTEEN
Description IAA-CANTEEN
CElem Category 43 (Internal Activity Allocation)
Save (Ctrl+S)
2. Create Indirect Activity Type for Canteen (Tcode: KL01)
Enter
Name Canteen
Description Canteen
Activity Unit EA (Each)
ATyp Category 2 (Indirect determination, indirect allocat)
Allocation Cost elem 500400
Price Indicator 1 (Plan price, automatically based on
activity)
Save (Ctrl+S)
3. Planning Activity Types (Tcode: KP26)
Version 0
From period 9
To period 9
Fiscal year 2011
Cost Center 2240 (Cafeteria)
To
or group
Activity Type 500400
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To
or group
Select Form-Based
Fixed Price 20
Save (Ctrl+S)
4. Post Statistical Key Figures in Cost Centers
Path: Accounting- Controlling- Cost Center Accounting- Actual Postings- Statistical Key
Figures- KB31N – Enter (Tcode: KB31N)
Rec. CCtr StatKF Total Quantity
2210 EMP100 20
2220 EMP100 30
2230 EMP100 50
Save (Ctrl+S)
5. Create Indirect Activity Allocation Cycle and Run IAA Cycle
Path: Accounting- Controlling- Cost Center Accounting- Period-End Closing- Single
Functions- Allocations- KSC5 - Indirect Activity Allocation
(Tcode: KSC5)
Go to Menu bar
Cycle IAA100
Enter
Text Canteen Expenses Distribution
Segment name IAA101 Canteen Expenses Distribution
Rule 3 Quantities Calculated Inversely
Share in % 100
Select Act. Values
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Rule 1 Variable Portions
Var. Portion Type 5 Actual Statistical Key Figures
Sender Section
Cost Center 2240 (Canteen)
Activity type 500400 (Canteen)
Receiver Section
From To
From To
Activity type ZZZZZZ
Stat. key Fig EMP100
Two times go back
One time go back
Period 9
Fiscal year 2011
Deselect Test Run
Cycle IAA100
Execute (F8)
Period :
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Fiscal year :
Select Test Run
Select Details list
Cycle :
Start date :
Execute (F8)
Click on Sender (Shift+F4)
Observe values
One time go back
Click on Receivers (Shift+F5)
Observe values
Two times go back
Deselect Test run
Execute (F8)
Internal Orders
Internal orders nothing but internal tasks in the organization. Internal orders are also cost
objects like cost centers. Internal orders are cost collectors which help in detailed analysis
of overhead costs. Ex: By using overhead orders for the two trade fairs, the costs for these
are collected separately on the related overhead orders
Real Order Vs Statistical Order

Internal orders can be created as real orders or statistical orders. The selection of this is
done in the order master data. In case of real orders, primary costs are collected in the
order. These costs on the real order can be subsequently settled to other cost objects like
cost centers.
Internal orders can be created as statistical orders when details of cost posted against a
cost center are required. Here, the primary cost entry is assigned to the cost center as well
as the statistical internal order during posting
This is why costs in the statistical orders cannot be settled
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Types of Internal orders:

1. Overhead Orders: are created in order to monitor internal overhead costs and are
typically settled to cost centers
2. Investment Orders: Investment orders are used to capture costs related to
investment on assets and are typically settled to cost centers
3. Accrual orders: Accrued orders are used for the purpose of offsetting accrued
costs calculated in management accounting
4. Order with revenues: Internal orders with revenues that are used to collect costs
as well as revenues and typically meant for capturing sales and related costs for
areas which are not part of the organization’s core business
Order Settlement:
Two methods are available for defining a settlement
1. Basic Settlement: Basic settlement allows us to settle 100 percent of the costs to
cost center or to one general ledger account under one cost element. This
settlement data is entered in the order master record, in the field period-end
closing
2. Extended Settlement: Extended settlement, in contrast, allows us to create our
own settlement rule in the order master record. These settlement rules can be used
to settle costs to one or more receivers which could be a WBS element, sales
order, profitability segment, and so on.
Order type: Order type consists of parameters how you want to settle expenses from
internal orders to other objects. Order type consists of settlement profile,
1. Settlement profile determines
a. Requirement for cost settlement
b. Valid settlement receivers
c. Valid distribution methods (% rates, equivalence numbers, amounts)
d. Document management settings
2. Purposes of settlement profile
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a. Allocation Structure (Source Cost Element -> Settlement cost

element)
b. Source Structure (for settlement by cost element)
c. PA transfer Structure (Cost Elements -> PA Value Fields)
1. Create Internal Settlement Cost Element (Tcode: KA06)

Cost Element Settlement
Valid From
Enter
Name Settlement
Description Settlement cost element
CElem category 21 (Internal settlement)
Save (Ctrl+S)
2. Maintain Allocation Structures

During settlement, costs incurred under the primary and secondary cost elements by a
sender are allocated to one or more receivers. When you settle by cost element, you settle
using the appropriate original cost element.
Path: SPRO- SAP Reference IMG- Controlling- Internal Orders- Actual Postings-
Settlement- Maintain Allocation Structures (Tcode:OKO6)
Execute
Select A1 Co allocation structure
Double click on assignments folder
Select 025 Settlements
Double click on Source folder
From Cost El 400000
To cost elem. 499999
Double click on Settlement cost elements folder
Receiver Cat. CTR (Cost Centers)
Settlement cost elem. Settlement
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3. Maintain Settlement Profile

In the settlement profile, you define a range of control parameters for settlement. You
must define the settlement profile before you can enter a settlement rule for a sender.
If you want to settle the costs each time to just one cost center or just one G/L account,
you need a settlement profile. As you cannot maintain the settlement parameters during
settlement to a receiver, you must save the settlement profile either in the order type or in
the model order or reference order.
Path: Same path (Tcode: OKO7)
Execute
Double click on Maintain Settlement Profiles
Select 10 All Receiver
Observe allocation structure and valid receivers and Don’t Disturb values
Two times go back
Double click on “Enter Settlement Profile in Order Types”
Order category 01 (Internal Order (Controlling))
Enter
Order type 4001 Motor Pool
Settlement prof. 10 (All Receivers)
Planning Profile 000001 (General Budget/Plan profile)
Budget Profile 000001 (General Budget Profile)
Object Class OCOST Overhead Costs
Residence time 1 3 (Months)
Status Profile 00000002 (Internal Orders)
Click on Assign/Change Intervals Button which is against number range interval
Click on Yes
Enter
Go to Menu bar
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Group – Insert Group

Text Motor Pool
From number 90001
To number 95000
Enter
Double click on 4001 Motor Pool (Order Type) (It will be converted from block color to
blue color)
Select Motor Pool
Click on Element/Group (F5)
4. Maintain Number ranges for Internal order settlement document

Path: Same Path (Tcode: KO8N)
Execute
Click on Maintain groups (F6)
Select Standard Accounting document
Double click on controlling area (4001) which is located not assigned section
Click on Element/Group (F5)
5. Create internal order

Path: Accounting- Controlling - Internal Orders - Master Data - Special Functions - Order
- KO01 - Create (Tcode:KO01)
Order type
Enter
Controlling area
Enter
Description AP28CC4001
Click on Settlement rule (Shift+F5)
Cat Setle Rec. Percent
CTR 30.00
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CTR 20.00
CTR 50.00
Save
Ignore warning messages
Order number
Internal Order Statuses:

Internal order creation: We can’t post expenses and revenues to internal order
Internal order release: We can post expenses and revenues to internal order and
settlement the order
Technically Complete: We can post expenses and revenues and Settle Internal order
Internal order close: We can’t post expenses and revenues to internal orders
If you select release immediately in order type, no need to release manually. System
will release internal order creation level
6. Change Internal Order (Tcode: KO02)

Order
Enter
Go to Control data Tab
Click on release
Save
7. Planning
Path: Accounting - Controlling - Internal Orders - Planning - Cost and Activity Inputs -
KPF6 - Change (Tcode: KPF6)
Version 0 (Plan/Actual Version)
From period
To period
Fiscal year
Order
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Cost element 400010

To 400012
Select Form-Based
Click on Overview screen (F5)
Cost element Description Total Plan Costs
400010 Rent A/C 20000
400011 Petrol Expense A/C 12000
400012 Vehicles Maintenance A/C 5500
Save (Ctrl+S)
8. Actual Posting to Internal order (Tcode: FB50)

Click on Company code (F7)
Company code
Enter
Document date
G/L acct D/C Amount in doc. Curr Internal Order

400010 (Rent A/C) S Debit 25000 90001
Post (Ctrl+S)
9. Internal order Actual/Plan/Variance Report

Path: Accounting - Controlling - Internal Orders - Information System - Reports for
Internal Orders - Plan/Actual Comparisons - S_ALR_87012993 - Orders:
Actual/Plan/Variance (Tcode: S_ALR_87012993)
Controlling area
Fiscal year
From period
To period
Plan version 0 (Plan/Actual Version)
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Value (S)
Execute (F8)
Budgeting for Internal Orders

1. Maintain Budget Profile
Definition: In this activity, we maintain parameters for budgets. You need to
specify the following:
o Start year for budgeting
o Period into the past, from the start year, for which budgeting is possible
o Period into the future, from the start year, for which budgeting is possible
o Whether the budget is based on overall or annual values
Path: SPRO- SAP Reference IMG- Controlling- Internal Orders- Budgeting and
Availability Control- Maintain Budget Profile (Tcode: OKOB)
Execute
Double click on Maintain Budget Profile
Select 000001 General Budget Profile
Observe following sections
Time Frame Section:
Past: Value which specifies how far into the past you can plan/budget for. The start year
is the reference point. Ex: The start year is 1997 and the value entered here is 5. You can
thus plan/budget as far back as 1992 inclusive.
Future: Value which specifies how far into the future you can plan/budget for. The start
year is the reference point. Ex: The start year is 1997 and the value entered here is 5. You
can thus plan/budget for the years up to and including 2002.
Start: Value which determines the start year for planning/budgeting. The reference value
is the current fiscal year. The start year results from adding the value you enter here to the
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current fiscal year. Ex: The current fiscal year is 1994 and 3 is defined as the value.
When you then call up the planning/budgeting function, the year first offered for
processing will be 1997.
Two times go back

Double click on Maintain budget profile in order types
Click on position button
Order type
Enter
Budget Profile 000001 (General Budget Profile)
2. Define Tolerance Limits for Availability Control

Path: Same Path (Tcode: OKOC)
Execute
COAr Prof. Tr. Grp Act. Usage in %
4001 000001 ++ (All Activity 1 (Warning) 90
Groups)
4001 000001 ++ (All Activity 3 (Error Message) 100
Groups)
3. Budgets for Internal Order

Path: Accounting- Controlling- Internal Orders- Budgeting- Original Budget- KO22 –
Change (Tcode: KO22)
Order
Enter
Overall 50000
2011 50000
Save (Ctrl+S)
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4. Budget Report
Path: Accounting- Controlling- Internal Orders- Information System- Reports for Internal
Orders- More Reports- S_ALR_87013019 - List: Budget/Actual/Commitments (Tcode:
S_ALR_87013019)
Controlling Area
Or Value(S)
Settlement
1. Maintain Settlement Profiles
Definition: In this activity, you define a range of control parameters for settlement. Your
must define the settlement profile before you can enter a settlement rule for sender
Path: SPRO- SAP Reference IMG- Controlling- Internal Orders- Actual Postings-
Settlement- Maintain Settlement Profiles (Tcode: OKO7)
Execute
Double click on Enter Settlement Profile in Order Types
Click on Position button
Order type
Enter
Settlement Profile 10 (All Receivers)
One time go back
Double click on Maintain Settlement Profiles
Select 10 All Receivers
Observer parameters in settlement profile
2. Change status in Internal Order (Tcode: KO02)

Order
Go to Control data tab
Click on Tech. Complete
Save (Ctrl+S)
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3. Settlement of Internal Order

Path: Accounting- Controlling- Internal Orders- Period-End Closing- Single Functions-
Settlement- KO88 - Individual Processing (Tcode: KO88)
Order
Settlement Period
Fiscal Year
Processing type Automatic
Deselect Test Run
Execute (F8)
Click on Details List (Ctrl+Shift+F3)
4. Change status in Internal Order (Tcode: KO02)

Order
Click on Close
Save (Ctrl+S)
Important Notes:
 Internal Order Creation: We can’t post documents to internal orders
 Internal Order Release: We can post documents to internal order and settlement of
the order
 Technically Complete: We can post documents and settle the order
 Internal Order Close: We can’t post documents to internal orders
 We can’t close internal order if there is balances in internal order
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Profit Center Accounting (EC-PCA)
1.1 Purpose
Profit Center Accounting (EC-PCA) lets you determine profits and losses by
profit center using either period accounting or the cost-of-sales approach. It also lets you
analyze fixed capital and so-called “statistical key figures” (number of employees, square
meters, and so on) by profit center. Consequently, you can calculate all key figures
commonly used in cost accounting (return on investment, cash flow, sales per employee,
and so on).
A profit center is a management oriented organizational unit used for internal
controlling purposes. Dividing your company up into profit centers allows you to analyze
areas of responsibility and to delegate responsibility to decentralized units, thus treating
them as “companies within the company”.
The essential difference between a profit center and a business area is that profit
centers are used for internal control, while business areas are more geared toward an
external viewpoint.
The profit center differs from a cost center in that cost centers merely represent
the units in which capacity costs arise, whereas the person in charge of the profit center is
responsible for its balance of costs and revenues.
Period Accounting:
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In period accounting, business results are represented according to cost and revenue
elements. This makes it possible to recognize which factors of production cause the costs
which are incurred. The total costs for the period can then be compared to the total
revenues earned during the same period. These costs include the costs of all the goods
and services produced in the period, regardless of whether or not they were sold, plus the
goods and services produced in previous periods and sold in this period.
Cost of Sales Accounting:

The more market oriented cost-of-sales approach compares the costs to the corresponding
quantity structure of the revenues. Revenues are only compared to the costs incurred for
the quantity of goods or services sold.
Revenue XXXX
X
Cost XXXX
Profit (Revenue - Cost) XXXX
1. Maintain Controlling Area Settings
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Path: SPRO- SAP Reference IMG- Controlling- Profit Center Accounting- Basic
Settings- Controlling Area Settings- Maintain Controlling Area Settings (Tcode:0KE5)
Execute
Standard Hierarchy
Select Elim.of int.business Vol.
PCtr Local Currency Type 20 (Controlling Area Currency)
Select Store Transaction currency
Dummy Profit Center: Data is posted to a dummy profit center when the original account
assignment object is not assigned to a profit center. This ensures that the data in Profit
Center Accounting is complete. The data in the dummy profit center can then be
transferred to the correct profit center later by means of assessment or distribution. We
can maintain one dummy profit center under one controlling area
Standard Hierarchy: The standard hierarchy is a tree structure which displays the
organization of all the profit centers in one controlling area.
The profit center area is an end point in the tree structure which is not at the top and can
have profit centers assigned to it when you maintain the standard hierarchy.
The summarization area is used to summarize the data on the profit centers beneath it,
although it does not itself contain any profit centers.
By definition, the system always regards the profit center hierarchy which was entered
when the controlling area was created as the standard hierarchy.
Elim.of int.business Vol.: Elimination of internal business volume ensures that transaction
data between two objects of the same type that are assigned to the same profit center
(such as two cost centers or two orders) is not updated in account-based Profit Center
Accounting.
Example:
Secondary allocation between cost centers:
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C100 ---> C200 where both cost centers are assigned to profit center P100
If elimination of internal business volume is active, no data is posted in Profit Center
Accounting.
Store Transaction Currency: This indicator controls whether or not the transaction
currency is updated when actual or plan data is transferred from other components to
Profit Center Accounting.
Setting this flag increases the data volume, since the totals records need to be broken
down according to the transaction currency.
The indicator has no effect on direct entry of data in Profit Center Accounting. If a
corresponding layout is used, values can be entered or planned in the transaction
currency, even if the indicator has not been set here.
Note: Whenever you enter into system, we should do set controlling area (Tcode: OKKS)
2. Create Dummy Profit Center

Path: SPRO- SAP Reference IMG- Controlling- Profit Center Accounting- Master Data-
Profit Center- Create Dummy Profit Center (Tcode: KE59)
Execute
Double click on ’EC-PCA: Create Dummy Profit Center’
Dummy profit center
Click on Basic data (F5)
Name Dummy profit Center
Description Dummy profit Center
Profit Center Group
Save (Ctrl+S)
3. Define Standard Hierarchy
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SH_4001
Global
H1000 H2000 H3000

India USA UK
H1100
H1200 H1300
Service Revenue (X)
Service Revenue (Y) Service Revenue (Z)
Path: SPRO- SAP Reference IMG- Controlling- Profit Center Accounting- Master Data-
Profit Center- Define Standard Hierarchy (Tcode: KCH4)
Execute
Global
Select _______
Click on Lower Level (Ctrl+F3)
H1000 India
Select _______
Click on Same Level (Shift+F5)
H2000 USA
Select _______
Click on Same Level (Shift+F5)
H3000 UK
Save (Ctrl+S)
4. Define Segment
Definition: If you then define your profit centers, you can enter an associated segment in
the master record of a profit center. The segment is then derived from the assigned profit
center during posting. As per IFRS (International Financial Reporting Standards), we
need to prepare financial statements based on segments. This is legal requirement
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Path: SPRO- SAP Reference IMG- Enterprise Structure- Definition- Financial

Accounting- Define Segment
Execute
Segment Description
4001 Service Revenue Segment
4002 Retail Segment
4003 Whole Sale Segment
5. Set Control Parameters for Actual Data

Path: SPRO- SAP Reference IMG- Controlling- Profit Center Accounting- Basic
Settings- Controlling Area Settings- Activate Direct Postings- Set Control Parameters for
Actual Data (Tcode: 1KEF)
Execute
From Year
Select Line items
Select online transfer
Save (Ctrl+S)
Locked: This indicator lets you lock a combination of controlling area and "From" fiscal
year for further actual postings.
Line Items: Indicator whether line item documents should be written each time you
transfer actual data.
Online Transfer: This indicator controls whether the postings should be transferred to
Profit Center Accounting for each activity. If the indicator is not activated, you need to
transfer the postings manually using the available programs.
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Master Records
1. Create profit center
Path: Accounting - Controlling - Profit Center Accounting - Master Data - Profit Center
- Individual Processing - KE51 - Create (Tcode: KE51)
Profit Center
Enter
Name
Long text
Person Respons.
Profit Ctr Group
Segment
Click on Activate (Shift+F1)
Profit Center
Enter
Name
Long text
Person Respons.
Profit Ctr Group
Segment
Profit Center
Enter
Name
Long text
Person Respons.
Profit Ctr Group
Segment
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2. Create Revenue Elements (Tcode: KA01)

Definition: It is a bridge to flow revenues to profit center
Cost Element
Valid From
Enter
CElem Category 11 (Revenues)
Save (Ctrl+S)
3. Assign Profit Centers in Cost Centers (Tcode: KS02)

Cost Center
Enter
Profit Center
Save (Ctrl+S)
Ignore Warning messages
Postings
1. Expenses booking (Tcode: FB50)
Company code
Enter
Document date
G/L acct D/C Amount in doc. Curr Cost Center

400100 S Debit 25000 2210
290100 H Credit 25000
Post (Ctrl+S)
Go to Menu bar
Document – Display
We can see entry
Environment- Document Environment- Accounting Documents
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System will generate three documents (Accounting document, Profit Center Document
and controlling document)
2. Change field status group G001 to G029 in revenue G/L Accounts (Tcode:FS00)
G/L Account
Company Code
Click on Change
Field Status Group G029 (Revenues)
Save (Ctrl+S)
3. Post Revenues to profit centers (Tcode: FB50)

Company code
Enter
Document date
G/L acct D/C Amount in doc. Curr Profit Center

290100 S Debit 25000
300100 H Credit 25000 1000
Post (Ctrl+S)
Go to Menu bar
Document – Display
We can see entry
Environment- Document Environment- Accounting Documents
System will generate three documents (Accounting document, Profit Center Document
and controlling document)
4. Profit Center Line item report
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Path: Accounting - Controlling - Profit Center Accounting - Information System -

Reports for Profit Center Accounting - Line Item Reports - KE5Z - Profit Center: Actual
Line Items (Tcode: KE5Z)
Record type
Version
Controlling area
Company Code
Posting period
Fiscal year
Profit center
Execute (F8)
Profit Center Planning
1. Maintain number ranges for profit center planning
Path: SPRO- SAP Reference IMG- Controlling- Profit Center Accounting- Planning-
Basic Settings for Planning- Define Number Ranges- Define Number Ranges for Local
Documents (Tcode: GB02)
Execute
Click on Groups (F6)
Select ‘Planned doc. from direct posting with GB01’
Click on Maintain (Shift+F5)
Company Code
Enter
Click on Insert Interval (Shift+F1)
Year
From number
To number
Enter
2. Profit Center Planning
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Path: Accounting- Controlling- Profit Center Accounting- Planning- Costs/Revenues-

7KE1 – Change (Tcode: 7KE1)
Version
From period
To
Fiscal Year
Company Code
Profit Center
Account Number 300000
To 499999
Click on overview screen (F5)
Account no. PrCtr report curr.
400100 100000
300100 150000-
Save (Ctrl+S)
3. Profit Center Group: Plan/Actual/Variance

Path: Accounting- Controlling- Profit Center Accounting- Information System- Reports
for Profit Center Accounting- Interactive Reporting- S_ALR_87013326 - Profit Center
Group: Plan/Actual/Variance (Tcode: S_ALR_87013326)
From period
To period
Fiscal year
Plan version
Or values
Execute (F8)
Financial Statement Versions

We prepare financial statements as per schedule VI in Companies Act, 1956. We can
create ‘N’ number of financial statements versions as per different legal requirement. Ex:
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Companies Act, Income Tax Act, Banks etc. Financial statements consist of profit and
loss account and balance sheet.
1. Create Financial Statements Versions
Path: SPRO- SAP Reference IMG- Financial Accounting (New)- General Ledger
Accounting (New)- Master Data- G/L Accounts- Define Financial Statement Versions
(Tcode: OB58)
Execute
Fin.Stmt.version
Name
Maint. Language
Chart of Accounts
Click on Fin. Statement Items (Shift+F8)
Click on Create Items (F5)
Profit and Loss Account
Balance sheet
Enter
Select Profit and Loss Account
Expenses
Incomes
Enter
Select Expenses
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Enter
Select Incomes
Enter
Select Balance Sheet
Enter
Select Liabilities
Enter
Select Assets
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Enter
Select end nodes and assign accounts
2. Financial Statements for Company Code, Business Area, Profit Center and
Segment wise
Path: Information Systems- Accounting- Financial Accounting- General Ledger-
Information System (New)- Financial Statement / Cash Flow- General- Actual/Actual
Comparisons- S_PL0_86000028 - Financial Statement: Actual/Actual Comparison
(Tcode: S_PL0_86000028)
Currency Type
Company Code
Or
Business Area
Profit Center
Or
Segment
Ledger 0L
FIS Annual Rep.Struc 4001
Fiscal Year /2FY 2011
Posting period /2PF 1
Posting period /2PT 12
Fiscal Year /3FY 2010
Posting period /3PF 1
Posting period /3PT 12
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Execute (F8)
New General Ledger Accounting

Customers already using Classic General Ledger Accounting can choose whether or not
to switch to new general ledger accounting. Such customers therefore don’t have to
activate new general ledger accounting. After release upgrade, classic general ledger
accounting (Totals Table GLT0) still remains active. There are, of course, several
advantages to activating new general ledger accounting
In case of new installations, new general ledger accounting is activated as standard in
mySAP ERP.
Advantages of New General Ledger Accounting:
1. The new general ledger uses an extended data structure as standard. You can also
add customer fields to the totals table in the general ledger, for inclusion in
financial statements
2. By splitting documents in real time (Online Split), you can prepare financial
statements for entities such as segments and profit centers.
3. Reconciliation between CO and FI – making time consuming reconciliation
activities a thing of the past
4. The new general ledger offers the option of managing multiple ledgers with in
general ledger. This is a possible option for mapping parallel financial reporting
in SAP system
Customization in New General Ledger Component
1. Convert Classic General ledger to new general ledger accounting

Path: SPRO- SAP Reference IMG- Financial Accounting- Financial Accounting Global
Settings- Activate New General Ledger Accounting
(Tcode: FAGL_ACTIVATION)
Execute
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Up to SAP 4.7 EE (Enterprise Edition). We need to activate. From ECC (Enterprise

Central Component) versions, default activation of new general ledger accounting. No
need to activate
A glance at the database tables clearly illustrates how considerably the standard data
structures has been enhanced
Classic General Ledger Accounting New General ledger accounting
Total Table (GLT0) Total Table (FAGLFLEXT)
Field Description Field Description
BUKRS Company Code BUKRS Company Code
RYEAR Fiscal Year RYEAR Fiscal Year
RACCT Account Number RACCT Account Number
RBUSA Business Area RBUSA Business Area
COST_ELEM Cost Element
RCNTR Cost Center
PRCTR Profit Center
RFAREA Functional Area
Segment Segment Report
So – On So – On So – On So – On
Tcode: SE11
Database table GLT0
Click on Display
Observe table fields (63 Fields)
One time go back
Database table FAGLFLEXT
Click on Display
Observe table fields (142 Fields)
Compare GLT0 and FAGLFLEXT Tables fields
What is scenario definition?
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A scenario defines which fields are updated in the ledgers (In general ledger view) during
posting (From other application components)
Scenarios provided by SAP:
 Cost Center Update (FIN_CCA): Update of sender cost center and receiver cost
center fields)
 Preparation for consolidation (FIN_CONS): Update of consolidation transaction
type and trading partner fields
 Business area (FIN_GSBER): Update sender cost center and receiver business
area fields
 Profit Center Update (FIN_PCA): Update of profit center and partner PC fields
 Segmentation (FIN_SEGM): Update of segment, partner segment and PC fields
 Cost of sales accounting (FIN_UKV): Update of sender cost center and receiver
functional area fields
Path: SPRO- SAP Reference IMG- Financial Accounting (New)- Financial Accounting
Global Settings (New)- Ledgers- Fields- Display Scenarios for General Ledger
Accounting
Execute
Observe scenarios and scenario fields
You can’t define customer specific scenarios
2. Assign scenarios to ledgers

Global Settings (New)- Ledgers- Ledger- Assign Scenarios and Customer Fields to
Ledgers
Execute
Select 0L
Double click on Scenarios folder
Observe following scenarios are assigned to our ledger (0L)
Scenario for General Ledger Accounting Long Text
FIN_CCA Cost Center Update
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FIN_CONS Preparations for Consolidation

FIN_GSBER Business Area
FIN_PCA Profit Center Update
FIN_SEGM Segmentation
FIN_UKV Cost of Sales Accounting
Save (Ctrl+S)
3. Define Ledger Groups

Path: Same path
Execute
Ledger Grp LG
Description Ledger Group
Enter
Select LG
Double click on Ledger Assignment Folder
Ld Rep.Ledger
0L (Leading Ledger) X
L5 (IAS)
4. Define and Activate Non-Leading Ledgers

Path: Same path
Execute
Ledger L5 (IAS: International Accounting
Standards)
Enter
Company code 4001
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FV (Fiscal Year Variant) K4 (Calendar year)

Var. 1000
Enter
Click on No
5. Define Document Number Ranges for General Ledger View

Global Settings (New)- Document- Document Number Ranges- Documents in General
Ledger View- Define Document Number Ranges for General Ledger View
Execute
Company code 4001
Click on change interval
Click on Insert interval (Shift+F1)
No 06
Year 2012
From number 0600000000
To number 0699999999
Enter
6. Enter G/L Account Document for Ledger Group

Path: Accounting- Financial Accounting- General Ledger- Posting- FB50L - Enter G/L
Account Document for Ledger Group (Tcode: FB50L)
Company Code
Enter
Document date
Posting Date
Ledger Group LG
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400010 (Rent A/C) S Debit 25000 2210
Post (Ctrl+S)
Go to Menu bar
Click on General Ledger View
Parallel Currencies
For every company code, we can maintain 3 three local currencies. One currency will be
maintained in company code and two additional currencies we can maintain in new
general ledger
1. Maintain parallel currencies
Global Settings (New)- Ledgers- Ledger- Define Currencies of Leading Ledger
Execute
Company code 4001
2nd Local currency
Crcy type 30 (Group Currency)
ExRate Type M
Srce curr 1
TrsDte type 3 (Translation Date)
2. Enter G/L Account Document for Ledger Group

Path: Accounting- Financial Accounting- General Ledger- Posting- FB50L - Enter G/L
Account Document for Ledger Group (Tcode: FB50L)
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Company Code
Enter
Document date
Posting Date
Ledger Group LG

400010 (Rent A/C) S Debit 25000 2210
Post (Ctrl+S)
Go to Menu bar
Click on Display currency (F8)
Select Group Currency
Enter
Document Splitting
You can use the document splitting procedure to split up line items for selected
dimensions (such as receivable lines by profit center) or to affect a zero balance setting in
the document for selected dimensions (such as segment). This generates additional
clearing lines in the document. Using the document splitting procedure is the prerequisite
for as well as an essential tool for drawing up complete financial statements for the
selected dimensions at any time.
You can choose between displaying the document with the generated clearing lines either
in its original form in the entry view or from the perspective of a ledger in the general
ledger view.
For document splitting to be possible, the individual document items and the documents
must be classified. Each classification corresponds to a rule in which it is specified how
document splitting is to occur and for which line items.
SAP delivers a set of standard rules that should usually prove sufficient. If not, you can
define your own set of rules and adapt these according to your needs.
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Example
Example: 1
Suppose a vendor invoice containing the following items is entered:
Posting Key Account Segment Amount
31 Payables -100
40 Expense 0001 40
40 Expense 0002 60
Document splitting then creates the following document in the General Ledger view:

31 Payables 0001 -40
31 Payables 0002 -60
40 Expense 0001 40
40 Expense 0002 60
Example 2: Payment
The payment for the above vendor invoice then contains the following items when
entered:

50 Bank -95
25 Payables 100
50 Cash Discount Received -5
Document splitting then creates the following document in the General Ledger view:

50 Bank 0001 -38
50 Bank 0002 -57
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25 Payables 0001 40

25 Payables 0002 60
50 Cash Discount Received 0001 -2
50 Cash Discount Received 0002 -3
Document Splitting Method: Splitting method contains the rules governing how the
individual item categories are dealt with.
1. Classify G/L Accounts for Document Splitting

Path: SPRO- SAP Reference IMG- Financial Accounting (New)- General Ledger
Accounting (New)- Business Transactions- Document Splitting- Classify G/L Accounts
for Document Splitting
Execute
Chart of Accounts
Enter
MM Integration
1. Define plant
Definition: Plant is an operational area.
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Path: SPRO- SAP Reference IMG- Enterprise Structure- Definition- Logistics - General-
Define copy, delete, check plant (Tcode: OX10)
Execute
Double click on Copy, delete, check plant

Click on copy org.object (F6)
From plant : 1000
To plant :
Enter, Enter, enter and enter
One time go back
Double click on Define Plant
Go to position button
Plant :
Enter
Select ______
Click on Detail (Ctrl+Shift+F2)
Name1 : Bollaram Plant
Click on Address (Shift+F5)
Name : Bollaram Plant
Street : Bollaram
House number : 1-234
Postal code : 123456
City : Hyderabad
Country : IN
Enter
Save and enter
2. Maintain storage location
Definition: A storage location is the place where stock is physically kept within a plant.
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Path: SPRO- SAP Reference IMG- Enterprise Structure- Definition- Materials

Management- Maintain storage location (Tcode: OX09)
Execute
Plant :
Enter
Click on Select all (F7)
Click on Delete (Shift+F2)
Enter
SLoc Description
_____ Raw Material
_____ Semi Finished
_____ Finished Goods
Save and enter
3. Maintain purchasing organization
Definition: the purchasing organization is responsible for all purchasing activities

(including the processing of requests for quotations and purchase orders.
Path: Same path (Tcode: OX08)

Execute

Purch.Organization :
purch.Org.Descr. : Pur. org for ______
Save and Enter
4. Assign plant to company code
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Path: SPRO- SAP Reference IMG- Enterprise Structure- Assignment- Logistics -

General- Assign plant to company code (Tcode:OX18)
Execute

CoCd :
Plnt :
Save and enter
5. Assign purchasing organization to company code
Path: SPRO- SAP Reference IMG- Enterprise Structure- Assignment- Materials

Management- Assign purchasing organization to company code (Tcode:OX01)
Execute
Go to Position button
Purchasing Org. :
Enter
CoCd :
Save and enter
6. Assign purchasing organization to plant
Path: same path (Tcode: OX17)

Execute

POrg. :
Plnt :
Save and enter
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7. Define Attributes of Material Types
Definition: Whenever you create a material master record, you must assign it to a
material type.
Path: SPRO- SAP Reference IMG- Logistics General- Material Master- Basic Settings-
Material Types- Define Attributes of Material Types (Tcode: OMS2)
Execute
Material type : ROH
Enter
Select ROH
Double click on Quantity/Value updating
Valuation Area :
Material type : ROH
Select Qty updating
Select Value update
Save and enter
8. Maintain Company Codes for Materials Management
Path: SPRO - SAP Reference IMG- Logistics General- Material Master- Basic Settings-
Maintain Company Codes for Materials Management (Tcode: OMSY)
Execute
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Company code :
Enter
Year :
Period :
Select ABp
Save and enter
9. Set Tolerance Limits for Price Variance
Path: SPRO- SAP Reference IMG- Materials Management- Purchasing- Purchase

Order- Set Tolerance Limits for Price Variance (Tcode: OMEU)
Execute
Select
CoCd TlKy
0001 PE
0001 SE
Click on Copy as (F6)
Company code :
Enter
Company Code :
Enter
Save and enter
10. Set Tolerance Limits
Path: SPRO- SAP Reference IMG- Materials Management- Inventory Management and
Physical Inventory- Goods Receipt- Set Tolerance Limits (Tcode: OMC0)
Execute
Select
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CoCd TlKy
0005 B1
0005 B2
Click on Copy as (F6)
Company code :
Enter
Company Code :
Enter
Save and enter
11. Maintain Default Values for Tax Codes
Path: SPRO- SAP Reference IMG- Materials Management- Logistics Invoice

Verification- Incoming Invoice- Maintain Default Values for Tax Codes (Tcode:OMR2)
Execute

Company Code :
Save and enter
12. Edit PO Supplement Text in Invoice Verification
Path: Same path (Tcode: OMR8)

Execute
Click on order Text: general
CoCd :
Select PO Text
Save and enter
Two Time go back
Click on notifiable order text types
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CoCd ID
_____ F03
_____ F07
Save and enter
13. Set Tolerance Limits
Path: SPRO- Materials Management- Logistics Invoice Verification- Invoice Block- Set
Tolerance Limits (Tcode: OMR6)
Execute
Select
CoCd TlKy
0005 AN
0005 AP
0005 BD
0005 BR
0005 BW
0005 DQ
0005 KW
0005 LA
0005 LD
0005 PP
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0005 PS
0005 ST
0005 VP
Click on Copy As (F6)
Company Code :
Enter
Company Code :
Enter
Company Code :
Enter
Company Code :
Enter
Company Code :
Enter
Company Code :
Enter
Company Code :
Enter
Company Code :
Enter
Company Code :
Enter
Company Code :
Enter
Company Code :
Enter
Company Code :
Enter
Company Code :
Enter
Save and enter
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14. Define Valuation Control
Definition: we can group together valuation areas by activating the valuation grouping
code.
Path: SPRO- Materials Management- Valuation and Account Assignment- Account

Determination- Account Determination Without Wizard- Define Valuation Control
(Tcode: OMWM)
Execute
Select valuation grouping active

Save and enter
15. Group Together Valuation Areas
Path: Same path (Tcode: OMWD)

Execute
Valuation area :
Enter
Val.Grpg.code :0001
Save and enter
16. Define Valuation Classes
Definition: you define which valuation classes are allowed for a material type. The
valuation class is a group of materials with the same account determination. If a
transaction is to be posted to different accounts depending on the valuation class, create
an account determination for each valuation class in the step Create automatic postings.
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Path: Same path (Tcode: OMSK)

Execute
Click on Valuation class

Valcl ARef
3000 0001
3001 0001
3002 0001
3003 0001
Save and enter
One time go back
Click on Material type/Account category reference
Material type : ROH
ARef : 0001
Save and enter
17. Create G/L Master Records (Tcode: FS00)
17.1. Raw Material A/C
G/L Account : 290500

Company Code :
Click on create
Go to Type/description Tab
Account Group : ASST Assets
Select Balance sheet Account
Short Text : Raw Material A/C
G/L Acct Long Text : Raw Material Account
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Select only balances in local crcy

Select line item display
Sort Key : 001
Field Status Group : G006
Select post automatically only
Save
17.2. GR/IR Clearing A/C

Company Code :
Click on Create
Account Group : LIAB Liabilities
Short Text : GR/IR Clearing A/C
G/L Acct Long Text : GR/IR clearing Account
Tax Category :*
Select Posting without tax allowed
Sort Key : 001
Save
For MM Integration, Tax procedure and Tax Codes required
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Tax procedure
Definition: Tax procedure will be developed country wise. Tax procedure is assigned to
country
1. Define Condition Type
Path: SPRO- Financial Accounting- Financial Accounting Global Settings- Tax on
Sales/Purchases- Basic Settings- Check Calculation Procedure (Tcode: OBYZ)
Execute
Double click on Define Condition Types
Condition type : 3601 Service Tax
Access Sequence : MWST
Condition Class : D Taxes
Calculation Type : A Percentage
Condition Category : D Tax
Select Item Condition
Click on Next Entry (F8)
Condition type : 3602 LST
Access Sequence : MWST
Condition Class : D Taxes
Calculation Type : A Percentage
Condition Category : D Tax
Select Item Condition
2. Check and change settings for tax processing

Path: Same path
Execute
Process : LST
Description : Local Sales Tax
Tax type : 1 (Output Tax)
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Posting indicator : 2 (Separate Line item)

Process : SER
Description : Service Tax
Tax type : 2 (Input Tax)
Posting indicator : 2 (Separate Line item)
3. Check Calculation Procedure

Sales/Purchases- Basic Settings- Check Calculation Procedure (Tcode: OBYZ)
Execute
Double click on Define Procedures
Procedure :
Description :
Enter
Select _____
Double click on Control data
Step CType Fro To AcctKey
100 BASB
110 MWVS 100 100 VST
120 MWAS 100 100 MWS
130 3601 100 100 SER
140 3602 100 100 LST
Save and enter
4. Assign Country to Calculation Procedure

Path: Same path (Tcode: OBBG)
Execute
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Country : IN
Enter
Proc. :
Save and enter
5. Define Tax Codes for Sales and Purchases

Definition: Tax Codes nothing but tax rates
Sales/Purchases- Calculation- Define Tax Codes for Sales and Purchases (Tcode: FTXP)
Execute
Country : IN
Enter
Tax Code :
Tax Code : 4% Input Tax
Tax Type : V (Input Tax)
Enter
Input Tax VST 4.000 110 100 MWVS
Save
Tax Code : M4
Tax Code : 4% Output Tax
Tax Type : A (Output Tax)
Enter
Output Tax MWS 4.000 120 100 MWAS
Save
6. Creation of G/L Master Records (Tcode: FS00)

a. Input Tax A/C
Company Code :
Click on Create
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Go to Type/Description Tab
Short Text : Input Tax A/C
G/L Acct Long Text : Input Tax Account
Sort Key : 001
Go to Create/bank/interest Tab
Field status group : G001
Save
b. Output Tax A/C
Company Code :
Click on Create
Account Group : LIAB Liabilities
Short Text : Output Tax A/C
G/L Acct Long Text : Output Tax Account
Sort Key : 001
Go to Create/bank/interest Tab
Save
7. Define Tax Accounts
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Sales/Purchases- Posting- Define Tax Accounts (Tcode: OB40)
Execute
Double click on Input Tax VST
Chart of accounts
Enter
Select Tax code
Save
Tax code
Account 290400
Save and enter
One time go back
Double click on Output Tax MWS
Select Tax code
Save
Tax Code
Account 190400
Save and enter
19. Configure Automatic Postings

Path: SPRO- SAP Reference IMG- Materials Management- Valuation and Account
Assignment- Account Determination- Account Determination Without Wizard- Configure
Automatic Postings (Tcode: OMWB)
Execute
Click on Cancel (F12)
Click on Account Assignment (Shift+F4)
Double click on Inventory posting BSX
Chart of Accounts
Enter
Select Valuation Modif.
Select Valuation
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Save
Valuation modif. 0001 (Valuation Grouping Code)
Valuation class 3000
Account 290500 (Raw Material Account)
Save and enter
One time go back
Double click on GR/IR clearing account WRX
Save
Account 190500
Save and enter
20. Create Material Master Record

Path: Logistics - Materials Management - Material Master - Material - Create (General)
- MM01 - Immediately (Tcode: MM01)
Material
Industry Sector C Chemical industry
Material type ROH Raw Material
Enter
Select Basic Data 1
Select purchasing
Select General Plant Data / Storage 1
Select Accounting 1
Plant
Stor.location
Enter
Material
Base Unit of measure
Material Group 0001
Enter
Purchasing Group
Enter and enter
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Valuation Class 3000

Price Control V
Moving price
Save
21. Vendor Master Record
Path: Accounting- Financial Accounting - Accounts Payable - Master Records - Maintain

Centrally - XK01 - Create (Tcode: XK01)
Vendor
Company Code
Purchasing organization
Account Group 0001
Enter
Title Company
Name
Search Term
Street
House number
Postal code
City
Country IN
Enter, enter and enter
Recon.account 190100
Sort key 012
Cash mgmnt group A1
Order currency INR
Terms of payments 0001
Incoterms EXW
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Select GR-based Inv.verif.

Purchasing group
Planned deliv.time
Save
Procure to process (P2P)

1. Create Purchase order
Path: Logistics - Materials Management - Purchasing - Purchase Order - Create - ME21N
- Vendor/Supplying Plant Known (Tcode: ME21N)
Vendor
Header
Go to Org.Data Tab
Purchasing Org
Purchasing Group
Company Code
Item Overview
Material
PO Quantity
Delivery Date
Net Price
Material Group
Plant
Storage Location
Enter
Items Details
Go to Invoice Tab
Tax Code
Click on check (Ctrl+Shift+F3)
System will update following message: ‘No Messages issued during Check’
Save (Ctrl+S)
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Purchase Order Number
2. Maintain number ranges 50 and 51 for Document types WE (Goods Receipt)

and RE (Invoice Verification) (Tcode: FBN1)
3. Goods Receipt
Path: Logistics - Materials Management - Inventory Management - Goods Movement -
MIGO - Goods Movement (MIGO) (Tcode: MIGO)
A01 Goods Receipt R01 purchase order
Enter
Select Item OK
Click on check (F7)
Click on post (Shift+F11)
A04 Display
Enter
Go to Header data
Go to Doc.Info Tab
Click on FI Documents
Number range for trans./event type WE in year 2011 does not exist
4. Invoice Verification
Path: Logistics - Materials Management - Logistics Invoice Verification - Document
Entry - MIRO - Enter Invoice (Tcode: MIRO)
Invoice date
Purchase order/Scheduling agreement 4500017174
Enter
Select calculate Tax
Copy Balance Field amount to amount field
Click on Simulate (Ctrl+Shift+F7)
Click on post or save
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5. Report (Tcode: FBL1N)

6. Outgoing payments (Tcode: F-53)
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SD Integration
1. Define sales organization
Definition: Sales organization nothing but sales department.
Legally, a sales organization is included in exactly one company code. You can assign
one or more plants to one sales organization. The sales organization has an address.
Path: SPRO- SAP Reference IMG- Enterprise Structure- Definition- Sales and
Distribution- Define copy, delete, check sales organization (Tcode: OVX5)
Execute
Double click on Copy, delete, check sales organization
Click on copy org.object (F6)
From sales org. : 1000
To sales org. :
Enter, enter, enter and enter
One time go back
Double click on Define Sales Organization
Sales org. :
Enter
Select
Sales organization : Hyderabad
Click on Address (Shift+F5)
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Name : Hyderabad
Street : Ameerpet
House number : 1-234
City : Hyderabad
Country : IN
Region : AP
Language : EN English
Save and enter
2. Define Shipping point

Definition: The shipping point is the top level in the organization for shipping. A
shipping point can be allocated to several plants. A shipping point can be divided into
several loading points.
Path: SPRO- SAP Reference IMG- Enterprise Structure- Definition- Logistics Execution-
Define, copy, delete, check shipping point (Tcode: OVXD)
Execute
Double click on Copy, delete, check shipping point
Click on Copy org.object (F6)
From shipping point : 1000
To Shipping point :
Enter, enter, enter and enter
One time go back
Double click on Define shipping point
Shipping point :
Enter
Select ______
Click on address (Shift+F5)
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Name : Shipping point for

Street : Ameerpet
House number : 234
City : Hyderabad
Country : IN
Transportation zone : 0000000001
Enter
Save and enter
3. Assign sales organization to company code

Path: SPRO- SAP Reference IMG- Enterprise Structure- Assignment- Sales and
Distribution- Assign sales organization to company code (Tcode: OVX3)
Execute
Sales org. :
Enter
CoCd :
Save and enter
4. Assign Shipping Points

Path: SPRO- SAP Reference IMG- Logistics Execution- Shipping- Basic Shipping
Functions- Shipping Point and Goods Receiving Point Determination- Assign Shipping
Points (Tcode: OVL2)
Execute
Shift+F7
Shipping cond. : 01
Loading group : 0001
Plant :
Enter
PrShP :
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Save and enter
5. Creation of G/L Master Records (Tcode: FS00)

a. Change in Stock A/C
Company Code :
Click on Create
Account Group : EXPN Expense
Select P&L statement Acct
Short Text : Change in Stock A/C
G/L Acct Long Text : Change in Stock A/C
Sort Key : 001
Go to create/Bank/Interest Tab
Save
b. Finished Goods A/C
Company Code :
Click on create
Short Text : Finished Goods A/C
G/L Acct Long Text : Finished Goods Account
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Sort Key : 001

Select post automatically only
Save
5.3. Sales Account
Company Code :
Click on Create
Account Group : INCO Incomes
Select P&L statement Acct
Short Text : Sales A/C
G/L Acct Long Text : Sales Account
Tax Category :*
Select posting without tax allowed
Sort Key : 001
Go to create/Bank/Interest Tab
Save
6. Integration of Change in Stock A/C and Finished goods Account (Tcode:

OMWB)
Click on Cancel (F12)
Click on Account Assignment (Shift+F4)
Double click on Offsetting entry for inventory posting GBB
Chart of Accounts :
Enter
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Select General modification

Select valuation modif.
Select valuation class
Save
valuation modif. : 0001
General modification : VAX
Valuation class : 7920
Account : 400070
valuation modif. : 0001
General modification : BSA
Account : 400070
Save and enter
One time go back
Double click on Inventory posting BSX
Valuation modif. : 0001
Account : 290600
Save and enter
7. Assign Sales G/L Account

Path: SPRO- SAP Reference IMG- Sales and Distribution- Basic Functions- Account
Assignment/Costing- Revenue Account Determination- Assign G/L Accounts
(Tcode: VKOA)
Execute
Double click on Cust.Grp/MaterialGrp/AcctKey
App :V
CndTy. : KOFI
ChAc. :
SOrg. :
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AAG : 01
AAG : 03
ActKy : ERL
Account : 300100
Save and enter
8. Maintain Condition Records

Path: Logistics- Sales and Distribution- Master Data- Conditions- Select Using
Condition Type- VK11 – Create (Tcode: VK11)
Condition type : MWST (Output Tax)
Enter
Select Domestic Taxes
Enter
Country : IN
T : 1 (This is maintained in Customer Master)
T : 1 (This is maintained in Material master)
Tax code :
Save
9. Maintain number ranges for 49 (Tcode: FBN1)

Company code :
Click on change interval
Click on Insert Interval (Shift+F1)
No : 49
Year : 2009
From Number : 4900000000
To Number : 4999999999
Enter
Save and enter
10. Create Material master record (Tcode: MM01)
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Material :
Industry Sector : C Chemical Industry
Material type : FERT Finished Goods
Enter
Select
Basic Data 1
Sales: Sales Org. Data 1
Sales: Sales Org. Data 2
Sales: General/Plant Data
General Plant Data / Storage 1
Accounting 1
Enter
Plant :
Stor.Location :
Sales org. :
Distr.Channel :10
Enter
Material :
Base Unit of measure : TO
Material Group : 0001
Division : 00
Gross Weight : 10000
Net Weight : 10000
Enter
Delivering Plant :
T :1
Click on conditions
Scal Quantity Amount
1 100000
10 95000
100 90000
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One time go back

Enter
Acct assignment grp : 03
Enter
Trans.Grp : 0001
Loading Grp : 0001
Enter and enter
Valuation Class : 7920
Price Control : S (Standard price)
Standard price : 100000
Save
11. Create Customer Master Records

Path: Accounting - Financial Accounting - Accounts Receivable - Master Records -
Maintain Centrally - XD01 - Create (Tcode: XD01)
Account Group : 0001
Customer :
Company Code :
Sales organization :
Distribution channel : 10
Division : 00
Enter
Title : Company
Name :
Search Term :
Street :
House Number :
Postal code :
City :
Country : IN
Region : 01
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Transportation Zone : 0000000001

Click on Company Code Data (Ctrl+F2)
Recon.Account : 290300
Sort Key : 031
Click on Sales area data (Ctrl+F3)
Go to Shipping Tab
Delivery priority : 01
Shipping conditions : 01
Delivering plant :
Go to Billing documents tab
Incoterms : EXW
Terms of payments : 0001
Acct assgmt group : 01
Tax classification :1
Save
12. Initial Stock posting

Path: Logistics - Materials Management - Inventory Management - Goods Movement -
Goods Receipt - MB1C - Other (Tcode: MB1C)
Movement type : 561
Plant :
Storage Location :
Enter
Material :
Quantity :
Enter
Save
Go to Menu bar
Other Goods Reciepts- Display
Enter
Click on Accounting Document (F7)
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13. Creation of Sales order

Path: Logistics - Sales and Distribution - Sales - Order - VA01 - Create (Tcode: VA01)
Order type : OR
Distribution Chennel : 10
Division : 00
Enter
Sold to party :_________ (Customer Number)
PO Number : 10
Go to Sales Tab
Material :
Order Quantity : 10
Enter
Double click on Material
Go to Conditions Tab
Observe conditions (Sales Revenue, Taxes and Profit)
Go to Shipping Tab
Stor.Location :
Save
Sales order No:
14. Goods Issue to customer

Path: Logistics - Sales and Distribution - Shipping and Transportation - Outbound
Delivery - Create - Single Document - VL01N - With Reference to Sales Order
(Tcode: VL01N)
Shipping point :
Selection Date :
Order :
Enter
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Go to Picking Tab
SLoc :
Picked Qty : 10
Enter
Click on post goods issue (Shift+F8)
Go to Menu bar
Outbound delivery - Display
Outbound Delivery :
Enter
Go to Menu bar
Environment - Document Flow
Select GD Goods Issue: Delivy
Click on Display Document (F8)
Click on Accounting Documents (F7)
Delivery Document No: 80015175
15. Customer invoice

Path: Logistics - Sales and Distribution - Billing - Billing Document - VF01 - Create
(Tcode: VF01)
Document :
Enter
Save
Go to Menu bar
Billing Document - Display
Billing Document number :
Click on Accounting (F6)
16. Customer Line Item (Tcode: FBL5N)
17. Customer Incoming Payment (Tcode: F-28)
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Profitability analysis
Profitability Analysis (CO-PA) enables you to evaluate market segments, which can be
classified according to products, customers, orders or any combination of these, or
strategic business units, such as sales organizations or business areas, with respect to your
company's profit or contribution margin.
The aim of the system is to provide your sales, marketing, product management and
corporate planning departments with information to support internal accounting and
decision-making.
Two forms of Profitability Analysis are supported: costing-based and account-based.
 Costing-based Profitability Analysis is the form of profitability analysis that
groups costs and revenues according to value fields and costing-based valuation
approaches, both of which you can define yourself. It guarantees you access at all
times to a complete, short-term profitability report. System will transfer goods
issue and billing documents to profitability analysis at same time. System will
wait until billing document is created
 Account-based Profitability Analysis is a form of profitability analysis organized
in accounts and using an account-based valuation approach. The distinguishing
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characteristic of this form is its use of cost and revenue elements. It provides you
with a profitability report that is permanently reconciled with financial
accounting.
Profitability Analysis (CO-PA) calculates profits according to cost-of-sales method of

accounting
Characteristics:
Characteristics are the criteria in Profitability Analysis (CO-PA) according to which you
can analyze your operating results and perform differentiated sales and profit planning.
The combination of the values for the characteristics in an operating concern is called a
Profitability Segment.
Characteristics can be categorized according to how and when they are defined.
1. Characteristics Delivered by SAP: SAP delivered two types of characteristics,
a. Fixed Characteristics: A number of fundamental characteristics are
automatically predefined in every operating concern. These include the
product, company code, billing type, business area, sales order, customer,
and the controlling area, to name but a few.
b. Predefined Characteristics: In addition to the fixed characteristics, a
number of other predefined characteristics are available in the field
catalog. Such characteristics include customer group, customer district,
and country, and they can be added to your operating concern if desired
2. Customer Defined Characteristics: In addition to these predefined characteristics,
you can also define your own additional ones. You define these in the field
catalog— independent of any client or operating concern —and can later add
them to your operating concerns.
a. Adopting characteristics from SAP tables: You can define your operating
concerns by using characteristics that already exist in other applications.
For example, you can select fields from the tables for customer master
records, material master records, and sales documents. You can also select
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the partner roles defined in the structure PAPARTNER in the Sales and
Distribution (SD) application and use them as characteristics in
Profitability Analysis.
b. Custom Characteristics: If the characteristic categories are insufficient for
your needs, you can define completely new characteristics from scratch
for exclusive use in Profitability Analysis. To derive values for these
newly defined characteristics, you need to create your own derivation
rules.
To define such a characteristic, you need to specify the technical name, a
description, a short text, a title, and the data type and length of its values.
The texts you enter for this characteristic are used to identify the
characteristic on transaction screens and in lists.
If you only want a characteristic to have a fixed number of values (which
should generally be the case), you need to create this characteristic by
maintaining corresponding values. When you do, the system automatically
creates a check table and a text table for this characteristic. You maintain
the permitted values and their texts in Customizing under Master Data ®
Characteristic Values ® Maintain Characteristic Values.
If you do not want to limit the values permitted, you can create the
characteristic without maintaining any corresponding values. Values
entered later for these characteristics will only be checked by the system to
see that they use the correct data type. No texts exist for these values.
Another way of defining characteristics is to use the option that references
existing values. This lets you create a characteristic by referencing a data
element that already exists in the system. The characteristic inherits all the
attributes of the data element.
Note that it is not possible to use two characteristics with the same data
element in the same operating concern.
Value Fields
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Value fields are only required in costing-based Profitability Analysis. These are the fields
that contain the currency amounts and quantities that you want to analyze in CO-PA.
They represent the structure of your costs and revenues.
Use
All the value fields that exist are stored in a field catalog. You can add these fields to
your operating concerns by choosing Structures ® Operating Concern ® Maintain
Operating Concern in Customizing.
Structure
The semantic meaning of a value field is determined by the data element to which it is
assigned. The data element contains the texts that appear on the screen and in reports for
the value field.
There are two types of value fields:
 Value fields that contain amounts in currencies are also referred to as "amount
fields". All amount fields in a single line item use the same currency.
 Value fields that contain quantities are referred to as "quantity fields".
Each quantity field is assigned a field containing a unit of measure. Consequently,
each quantity field in a line item can use a different unit.
Value fields can be categorized according to how and when they are defined:
 Predefined value fields
Value fields that are used frequently are predefined in the standard R/3 System.
These include fields such as revenue, sales quantity, incoming freight, outgoing
freight, and others. You can select those predefined value fields that you wish to
transfer into your own operating concern.
 User-defined value fields
In addition to the predefined value fields, you can also define your own value
fields. You define these in the field catalog— independent of any client or
operating concern — and can later add them to your operating concerns. You
create value fields in Customizing under Structures ® Operating Concern ®
Maintain value fields.
The definition of a value field consists of its name, texts, a rule defining how it is
aggregated over characteristics of time, and whether it is an amount field or a
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quantity field. There are two texts for each value field —a "description" and a
"short text". These texts are displayed on the screen to label the value field.
The aggregation rule determines how the values in a value field are to be handled
when data is aggregated over multiple periods in planning and in reports. This
does not affect the posting logic. You can choose from three aggregation rules:
Addition, Average, and Last value. In most cases, you will want to add the values.
Only noncumulative values, such as the number of employees, require the other
options.
Profitability analysis is a reporting tool; we can develop reports in this tool
1. Maintain Operating Concern

Definition: An operating concern represents an organizational unit in your company for
which the sales market has a uniform structure. It is the valuation level for Profitability
Analysis (CO-PA).
Path: SPRO- SAP Reference IMG- Controlling- Profitability Analysis- Structures- Define
Operating Concern- Maintain Operating Concern
(Tcode: KEA0)
Execute
Operating concern :
Click on Create (F5)
Description : Operating concern for _____
Select Costing-Based
Go to Attributes Tab
Operating concern currency : INR
Select Company Code Currency
Fiscal year variant :
Go to Data Structure Tab
Save
Click on Create data structure
Select LAND1Country
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Click on Transfer fields

Go to value fields tab
Select VV010 Revenue
Select VV140 Cost of Goods sold
Click on Transfer fields
Click on Activate (Ctrl+F3)
One time go back
Generate environment dialog box will come
Click on Yes
Enter
Note: Status should be Green Color
2. Assign controlling area to operating concern

Definition: Under operating concern we can maintain N number of controlling areas
which are having same financial years
Operating
Concern
Controlling Controlling Controlling

Area Area Area
Company
Company Code Company
Code Code
Path: SPRO - SAP Reference IMG- Enterprise Structure- Assignment- Controlling-

Assign controlling area to operating concern (Tcode: KEKK)
Execute
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CO Area :
Enter
OpCo :
Save and enter
3. Activate Profitability Analysis

Path: SPRO- SAP Reference IMG- Controlling- Profitability Analysis- Flows of Actual
Values- Activate Profitability Analysis (Tcode: KEKE)
Execute
CO Area :
Enter
Active Status :2
Save and enter and enter
4. Assign Value Fields

Path: SPRO- SAP Reference IMG- Controlling- Profitability Analysis- Flows of Actual
Values- Transfer of Billing Documents- Assign Value Fields
(Tcode: KE41)
Execute
Double click on Maintain Assignment of SD Conditions to CO-PA Value Fields
Operating Concern :
Enter
CTyp Val.fld
PR00 VV010
VPRS VV140
Save and enter
5. Assign G/L Accounts (Tcode: OBYC)

Double click on Offsetting entry for inventory posting GBB
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Chart of accounts :
Enter
Valuation modif. : 0001
General modification : VAY
Account : 400070
Save and enter
6. Create Cost elements For COGS A/C and Revenue Account (Tcode: KA01)
Cost Element : 400070
Valid from : 01.04.2011
Enter
CElem Category : 1 (Primary costs/Cost Reducing Revenues)
Go to Default Acct Assignment Tab
Cost Center : 111111
Save (Ctrl+S)
Cost Element : 300100
Valid from : 01.04.2011
Enter
CElem Category : 11 (Revenues)
Save (Ctrl+S)
7. Assign profit center in material master record (Tcode: MM02)

Material :
Enter
Select Sales: General/Plant Data
Enter
Plant :
Sales org. :
Distr.Chennel : 10
Enter
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Profit Center :
Save
8. Creation of Sales order (Tcode: VA01)

Order type : OR
Distribution Channel : 10
Division : 00
Enter
Sold to party :_________ (Customer Number)
PO Number : 10
Go to Sales Tab
Material :
Order Quantity : 10
Enter
Double click on Material
Go to Conditions Tab
Observe conditions (Sales Revenue, Taxes and Profit)
Go to Shipping Tab
Stor.Location :
Save
Sales order number: 12061
9. Goods Issue (Tcode: VL01N)

Shipping point :
Selection Date :
Order :
Enter
Go to Picking Tab
Picked Qty : 10
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Enter
Click on post goods issue (Shift+F8)
Go to Menu bar
Outbound delivery - Display
Outbound Delivery :
Enter
Go to Menu bar
Environment - Document Flow
Select GD Goods Issue: Delivy
Click on Display Document (F8)
Click on Accounting Documents (F7)
Delivery Document No: 80015175
10. Customer invoice

Path: Logistics - Sales and Distribution - Billing - Billing Document - VF01 - Create
(Tcode: VF01)
Document :
Enter
Save
Go to Menu bar
Billing Document - Display
Billing Document number :
Click on Accounting (F6)
11. Define key figure schemes

Definition: Key figure schemes are defined for information system
Path: SPRO- SAP Reference IMG- Controlling- Profitability Analysis- Information
System- Report Components- Define Key Figure Schemes (Tcode: KER1)
Execute
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Key Figure scheme :

Medium-length text : Key figure Schemes
Double click on Elements of key figure schemes
Click on New entries (F5)
Element number : 1000
Quantity/Value : VV Value field
Short Text : Revenue
Medium-Length text : Revenue
Long Text : Revenue
Click on Basic Formula
+- :+
Element : 9001
Enter
Quantity/Value : VV Value field
Short Text : COGS
Medium-Length text : Cost of Goods Sold
Long Text : Cost of Goods Sold
+- :+
Element : 9002
Enter
Short Text : Profit
Medium-Length text : Profit
Long Text : Profit
+- Element
+ 9001
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- 9002
Enter
One time go back
Save and enter
Report Painter
12. Define Report
Path: Accounting - Controlling - Profitability Analysis - Information System - Define
Report - KE31 - Create Profitability Report (Tcode: KE31)
Report :
Enter and enter
Go to Characteristics Tab
Select Country, Customer, Distribution channels, Division, Plant, Product, and Profit
Center etc.
Click on Add Char.
Go to Key Figures Tab
Key figure scheme :
Select Revenue, Cost of Goods sold and profit
Click on Add Key Figure
Save and enter
13. Execute Report
Path: Accounting - Controlling - Profitability Analysis - Information System - KE30 -

Execute Report (Tcode: KE30)
Select Report
Execute (F8)
Period From :
Period to :
Plan/Act.Indicator :0
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Execute (F8)
Enter and enter
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Comparison of Financial and Management Accounting

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Comparison of Financial and Management Accounting

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Controlling Area (Management Accounting)

Comparison of Financial and Management Accounting

Flow of values with in Management Accounting

The following components we discuss in controlling area

Features of controlling area:

Master data and transaction data:

H1100 H1200 H1300

1) Maintain Controlling Area

2) Maintain Number Ranges for Controlling Documents

 Planning Number Ranges

4) Maintain Standard Hierarchy

Path: Accounting - Controlling - Cost Center Accounting - Master Data - Standard

Choose Group at Same Level

5) Create Cost Center

Cost Center 2220

Cost Center 2230

Note: Create following cost centers

6) Define Cost Center Categories

7) Define Time-Based Fields for Cost Centers

1. Manual Creation of Cost Elements

Click on Edit Cost Element (F8)

2. Automatic Creation of Cost Elements

b. Make Default Settings

c.Create Batch Input Session

d. Execute Batch Input Session

Click on Process (F8)

G/L Account 400100 (Service A/C)

Postings to Cost centers

G/L Acct D/C Amount in doc. Curr Cost Center

2. Cost Centers: Actual/Plan/Variance

Cost Element Groups

 By cost element(s)/cost element group

Cost element Total costs Fixed costs

430000 $600,000 $200,000

Operating rate = (Actual activity / Plan activity) X 100

Fixed target costs = Fixed target quantity X Fixed price

Select Cost ctrs: Cost element/activity inputs

b. Set planner profile

c. Planning of cost elements and revenue elements

1. Create Internal Activity Allocation Cost Element

Cost Element 500200

Cost Element 500300

2. Define Activity Type

Activity type 500200

Allocation Cost elem 500200 (Machine Activity)

Activity type 500300

3. Activity type group

6. Cost Centers: Actual/Plan/Variance (Tcode: S_ALR_87013611)

Statistical Key Figures

You can define statistical key figures as either:

1. Create Statistical Key Figures

2. Statistical Key Figure Group

3. Planning Statistical Key Figures

4. Actual Statistical Key Figures Posting

5. Plan/Actual Comparision Report for statistical key figures

1. Reposting of line items

Periodic Processing in Cost Center Accounting

Path: Accounting- Controlling- Cost Center Accounting- Period-End Closing- Single

Save (Ctrl+S) and enter

1. Create Distribution Cycle and Run Distribution Cycle

1. Create Assessment Cost Element

2. Create Assessment Cycle and Run Assessment Cycle