Table of Contents

Enterprise structure Settings ........................................................................................................... 2

Enterprise structure ......................................................................................................................... 3
Company ID .................................................................................................................................... 4
What is the business process, .......................................................................................................... 4
What are the other modules to which ‘Financial Accounting’ is integrated? ................................. 4
What are the Important ‘Organizational Units/Elements’ in FI?/ ................................................... 4
Company ......................................................................................................................................... 5
How do you create TR? .................................................................................................................. 5
Company Code OX02. Database Table: T880 ............................................................................. 5
What are the various organizational assignments to a company code? .......................................... 6
How do you define a new company code? ..................................................................................... 6
What is the difference between ‘company code’ and ‘company ID’ when in the FI global settings
in the IMG? ..................................................................................................................................... 6
How many currencies can be configured for a company code? ..................................................... 6
Global company code ..................................................................................................................... 6
Is it possible to default certain values for particular fields? For e.g. company code. ..................... 6
What is a Cross company code? Please explain in brief. ................................................................ 7
Business Area.................................................................................................................................. 7
Consolidation business area ............................................................................................................ 7
Can You Attach a ‘Business Area’ to a Transaction?..................................................................... 8
How do you Post Cross-company Code Business Area postings? ................................................. 8
Can you assign business area to a company? / Is Business area at company code Level? ............. 8
What is the main difference between business area and cost center? ............................................. 8
What are the disadvantages of Business Area?............................................................................... 8
When we are creating cost center we will give business area, after posting to that business area,
can we change the business area? ................................................................................................... 8
What are the steps I have to do to maintain a Business Area. How many areas where I have to
check? ............................................................................................................................................. 8
Business Area prerequisites ............................................................................................................ 8
Functional area ................................................................................................................................ 9
How to make Functional Area mandatory field in the Cost Center Master data? ........................ 10
Is it possible to use functional area without activating CO module? ............................................ 10
What are the different places from where FI postings or CO postings can pick up the functional
area from? ..................................................................................................................................... 10
Please explain the purpose of Functional area assignment with cost center with a practical
example. ........................................................................................................................................ 10
What is the different between functional area and fm area and segment and profit center? ....... 10
Profit and loss account business area wise ................................................................................... 10
Credit Control Area: ..................................................................................................................... 11
Maintain FM Area......................................................................................................................... 11
Define Segment:............................................................................................................................ 11
Profit center ................................................................................................................................... 12
Difference between cost center and profit center ......................................................................... 12

Enterprise structure Settings

1. Company OX15
2. Company Code OX02
3. Assign Company code to Company OX16
4. Business area OX03
5. Consolidation Business Area OCC1
6. Assign Business areas to Consolidation Business Area OBB6
7. Functional Area OKBD
8. Credit Controlling area OB45
9. Assign Credit controlling area to company code OB38
10. Maintain FM Area
11. Segment
12. Profit Center KE51

Organizational Definition Organizational Definition Organizational Definition

unit unit unit

Client Compulsory Company code Compulsory COA Compulsory

Company Optional Business area Optional Currencies Compulsory

All global settings compulsory Business Area (Old version) Segments (New version)

Client: It self contained unit within SAP System. It means all business data within client protect
from another clients. Each client has its own business data.
 SD-Sales
Area

MM-
Purchase PP-Plant
Organization

Client
CO-
HR-Personal
Controlling
Area
Area

FI-Company
Code

Enterprise structure
It is also called organization structure. It is the relation among the organizational units of a
company. The enterprise structure is different for every module. The enterprise structure for each
module is created by respective consultant. An enterprise structure is mapped to SAP
applications using organizational units. The ‘Organizational Units’ in SAP are the elements or
business functions, and are used in reporting.

Company COD
PO Code

COA

Plant SO
Controlling Area
Distribution
Channel
Business Sales Area
Area
Division
Shipping
Point
Credit Control
Sales Office Area

Sales Group

Sales District

Group (Enterprise) called company in SAP

Company called company code in SAP
Branch called Business area in SAP
Factory/Manufacturing called Plant in SAP
Sales Department called Sales Organizing in SAP
Warehouse called Storage Location in SAP
 Organizational Structure - FICO

Client
GE

Company ID
Company ID
Consumer
Aviation
Products

Company Code Company Code Company Code Company Code

Lighting Appliances Aircraft Engines Aviation Service

Company ID
 Grouping company codes that can be consolidated using FI-LC (Legal Consolidation)
module
 LC is process of reconciling and combining financial statements of two or more
individual company codes

What is the business process,

Business process is a collection of related activities

What are the other modules to which ‘Financial Accounting’ is integrated?

The other modules to which ‘Financial Accounting’ is integrated are
a) Sales and Distribution
b) Material Management
c) Human Resource
d) Production Planning
e) Controlling

What are the Important ‘Organizational Units/Elements’ in FI?/

1. Company
2. Company Code
3. Business area
Company
It represents group. We can prepare consolidated financial statements for the company. It can
have any number of company codes. The definition (Creation) of company is optional.
Identification of company can contain up to 6 characters (alphanumeric). Company is the parent
company and the subsidiaries are the Company Codes. Example: HP as a whole company, HP
India is company code.
All of the company codes within a company must use the same chart of accounts and fiscal year.
However, each company code can have a different local currency.

PATH: SPRO->Enterprise Structure->Definition->financial Accounting->Define Company.

Transaction Code: OX15. Database Table: T880

For country select drop down button  236 Countries

Language key: select drop down button  41 languages
Currency: select the drop down button – 183 Currencies.

How do you create TR?

By default it gives the latest request, we have to create our own request and afterwards to
transport to production client
For Basic settings :1st request
For General ledger :2nd request
For Account payable :3rd request
For Accounts receivable :4th request
For Asset accounting :5th request
For Controlling :6th request
Data was saved in two places: 1.Development client 800 2. In Transport request

Company Code OX02. Database Table: T880

It is legal entity used for external reporting (Financial Statements). The company code is the
central organizational unit in FI. The definition of company code is compulsory. It contain upto 4
characters (alphanumeric). Company code must be entered when posting business transactions
Generally every separate legal entity such as ltd, Pvt ltd Company is created as company codes.
If the boundaries of a particular country crossed we have to create company code.

The business transactions relevant for Financial Accounting are entered, saved, and evaluated at
company code level. The consultant does customization at company code level.
To create a company code using copy an existing company code using the organization copy.
This is required when roll out project. After copying, you can edit data in new company code.
 The definition
 Global parameters
 Customizing tables (approx. 315 tables)
 General ledger accounts (if desired)
 Account determination
Country
The country entered in this field is called home country. Every other country considered by
system as foreign country. The financial statements are prepared according to the legal
requirements of home country

Currency: Local reporting currency of the country.

Language: The language entered in this field determined language in which books of accounts
are maintained the respective document and check are printed

Assignment: Providing links between two objects in the software is called assignment

Path is SPRO  Enterprise structure  Assignment  Financial Accounting  Assign

company code to company. OX16

What are the various organizational assignments to a company code?

Plants, Purchasing organization, Sales organization are assigned to the company code.

How do you define a new company code?

A: Using transaction code EC01, the most straightforward way of creating a new company code
is to copy an existing value. Transactional data of course is not copied.

What is the difference between ‘company code’ and ‘company ID’ when in the FI global
settings in the IMG?
The company code is the legal entity organization unit at which external financial statements are
prepared.
A single company id can have many company codes assigned

How many currencies can be configured for a company code?

A company code can have 3 currencies in total. One which is called the local currency ( ie
company code currency) and 2 parallel currencies can be configured. This gives the company
the flexibility to report in the different currencies.

Global company code

Global company is nothing but the "Company" what we define is also called as "trading partner".
You can create Global Company Code in Trans OB72
Global Company Code configuration is needed for Company Codes which uses ALE distribution
Scenarios for Data transfers through Non-SAP External Systems with SAP System.

Is it possible to default certain values for particular fields? For e.g. company code.
Yes it is possible to default for certain fields where a parameter id is present.
What is a Cross company code? Please explain in brief.
Cross-Company code Transaction involves when two or more company codes in one business
transaction. I have done the customization in OBYA for cross company code.
1. One Company code makes purchases for other company codes(central procurement)
2. One Company code pays invoices for other company code (central payment)
3. One company code sells goods to other company codes

Business Area
It is organization unit in financial account which dividing to enterprise according to
geographically area or line of activity. It is internal purpose. Generally the branches of
organization are taken as business areas. The definition of the business area organizational unit
is optional. Alphanumeric– Max 4
Ex: Geographically- Hyd, Mumbai, Chennai
Line - textile manufacturing, chemical manufacturing, Paper manufacturing
If both are available, Geographically is business area and Line is profit center

We can prepare financial statements for each business area which used by management for
internal analysis purpose.

When you are posting transactions you should select company code and business area. However,
the business area can also be derived from other account assignments, such as the cost center.

The business area cannot be assigned any company code. They are created at the client level
(Group Level). So that they can be used across all company codes. You can restrict a business
area for a company code through validation.

BPL1 BPL2 BPL1 BPL2

Hyd Chennai Hyd Chennai Hyd Chennai

Consolidation business area

These are used to find the profit according to regions or product groups etc. It is optional. The
individual business areas assign to consolidation areas
Ex: Southern Region, Northern Region, Eastern Region, Western Region

PATH: SPRO->Enterprise Structure->Definition->financial Accounting->Define consolidation

Business Area. Transaction Code: OCC1 Database Table: TGSB, TGSBT

Assign Business Areas to Consolidation Business Areas

PATH: SPRO->Enterprise Structure->Assignments->financial Accounting->Assign business

areas to consolidation Business Area. OBB6
Can You Attach a ‘Business Area’ to a Transaction?
Yes. The Business Area can also be derived from other account assignments; for example, cost
center. But to do this, you need to define the Business Area in the master record of that particular
cost center.

How do you Post Cross-company Code Business Area postings?

By using a cross-Company Code transaction, you should be able to post to different ‘Business
Areas’ and cut across various Company Codes

Can you assign business area to a company? / Is Business area at company code Level?
The business area will not be assigned to any company code. It is available at the client level. All
company codes under the same client can use the same business areas. You can restrict a
business area for a company code through validation.

What is the main difference between business area and cost center?
Business area organizational unit Whereas Cost centre is master record

What are the disadvantages of Business Area?

1. While doing Automatic posting (E.g.) Input or Output Tax it will not update in business area.
(Not only tax whatever automatic posting will not update in business area).
2. In Assets - Deprecation also difficult.
3. In Equity Capital & Share Capital - is difficult to Update in Business Area.

When we are creating cost center we will give business area, after posting to that business
area, can we change the business area?
No once posted u cannot change the business area assignment of a cost center

What are the steps I have to do to maintain a Business Area. How many areas where I have
to check?

- Business area assignment by plant and item division.

- Business area assignment by sales area.

- Business area assignment by sales organization, distribution channel, and item division

Business Area prerequisites

First, in your field status groups you define business area as required entry,
Also check whether you have maintain business area financial statements in OBY6
Try to split your document settings based on business area if you are using new gl.
Functional area
The profit and loss statement of an organization can be created according to two different
procedures:
1 Period accounting 2 Cost of sales accounting
SAP suggests use cost of sales accounting
Cost of sales accounting (Cost of goods sold) is used to calculate operating profit product wise.
You can get profit accurately
Period accounting is used to calculate operating profit monthly wise. You can get profit not
accurately

Cost of sales accounting compares the sales revenue for a given accounting period.
Before you can run cost of sales accounting, you have to Activating Cost of Sales Accounting
Financial Accounting Financial Accounting Global Settings Company Code Cost of
Sales Accounting.

Functional area divides enterprise according to functions such as finance, marketing, production
etc. we can also draw financial statements for each functional area. The concept of functional
area is used when cost of sales account is used.

A functional area sorts operating expenses according to functions. Definition of functional areas
also optional. Derives the functional area for the following postings:

· Primary postings (postings in Financial Accounting) to a profit and loss account

· Secondary postings (allocations in Controlling)

No functional area is derived in the following cases:

• Postings to balance sheet accounts
• When creating statistical key figures in controlling

You can add the functional area to the master data of various objects:

· G/L account

· Cost element

· Cost center

· Orders (Order type, Internal order, Sales order, Maintenance, service, and QM order,
Production order)

PATH: SPRO->Enterprise Structure->Definition->financial Accounting-> Define Functional

Area
How to make Functional Area mandatory field in the Cost Center Master data?

The best way is to assign a default Functional Area to the CC Category.

Is it possible to use functional area without activating CO module?

The functional area can be determined based on cost elements or GL accounts also,

What are the different places from where FI postings or CO postings can pick up the
functional area from?

FI : FS00

CO: KA01

CO: cost center categories

CO: Internal Order type

Please explain the purpose of Functional area assignment with cost center with a practical
example.

Admin department having multiple plants. Suppose you created plants as cost centers. If you
want to know the Administration expense across plants, then you need to include both the cost
centers and arrive at the expenses in admin functional area.

What is the different between functional area and fm area and segment and profit center?

Functional area is used in cost of sales accounting. It is used to register expenses through
different functional areas.

FM area is used in fund management module. Mainly used for cash flow statement

Profit centre is used for analyze profit of company. You can create self-sufficient balance sheets
and income statements for a profit centre. It is a company inside a company concept.

Segment is a region or division of a company's business which deals with a responsibility such as
a product group or a business division. This can enable you for segment reporting under the
statutory law. Under segment reporting, you will be required to report if revenue 10% or more
of the total revenue or asset investment of 10% or more.

Profit and loss account business area wise

Don’t use business area concept and use functional area concept
Credit Control Area:
The credit control area is an organizational entity which grants and monitors a credit limits.
This organizational unit is used both in SD and FI-AR modules.
Credit limits are normally specified by credit management staff in the individual customer
master records. The credit limits are checked during sales order processing.
It may centralized, decentralized, or somewhere in between.

Credit control is performed across several company codes. By definition, you can have more
than one credit control area in a Client, but each Company Code is assigned to one credit control
area.

You have ways of deriving a credit control area:

Company code

Sales area (sales organization, distribution channel, division) OVFL

Customer master (payer’s sales area segment) XD02/VD02

PATH: SPRO->Enterprise Structure->Definition->financial Accounting-> Define Credit Control

Area. Transaction Code: OB45. Database Table: T014, T014T

Assign Company Code to Credit Controlling Area

Menu Path: IMG – Enterprise Structure – Assignment – Financial Accounting – Assign
Company code to Credit Control Area OB38

Maintain FM Area
Financial Management Area helps to work on Cash Flow & Funds Flow Management. Without
this customization these features will not be activated.

In Cash Budget Management, you will be working with financial management areas (FM areas)
not company codes. You assign FM areas to the company codes where you want to carry out
cash budget management. One or more company codes can be assigned to an FM area.

You can also choose an FM area currency which is different from those in any of the company
codes.

Define Segment:

Division of a company for which you can create financial statements for external reporting.
This is opposed to a business area, which is for internal purposes. You can assign business area
to segment by validation
The accounting principles US GAAP and IFRS require companies to perform segment reporting.
You can enter a segment in the master record of a profit center. A segment may be a department,
product, or geographic location.

Segment --> Business area --> PCA.

Ex:
1. Television and video systems as SEG-A
2. Refrigerators and coolers as SEG-B

PATH: SPRO->Enterprise Structure->Definition->financial Accounting-> Define Segment

Database Table: FAGL_SEGM, FAGL_SEGMT

Profit center

It is small organizational unit of company. It is used for calculating operating profit in company
(Accurate). Profit center is used to determine profits for internal areas of responsibilities

Difference between cost center and profit center

Cost center is used to identify different costs but profit center can determine both cost and
revenue

Set up your profit centers according to

Product (product lines, product group, divisions),

Geographical factors (regions, offices or production sites, country, business area)
Function (production, sales).
Import and export

What is the basic purpose of creating a Profit Center?

The basic purpose of creating a Profit Center is to analyze the revenues and costs for a particular
product line, or a plant or a business unit. It is basically be used as a tool only for internal
reporting purposes.