CHAPTER 26 PROFIT CENTER ACCOUNTING

Contents
1. Profit Center Accounting – Overview .................................................................. 2
2. Configuration ...................................................................................................... 5
3. Master Data ...................................................................................................... 10
4. Transaction Data in Profit Center Accounting ................................................... 15
4.1 Post a transaction in FB60 ................................................................................ 15
4.2 Profit center wise Profit & Loss Items ............................................................... 16
4.3 Profit center wise Balance Sheet Items ............................................................ 17
4.4 Profit center Line Items Report ......................................................................... 18
5. New GL Transactions ....................................................................................... 19
5.1 Document Splitting overview............................................................................. 19
5.2 Document posting with multiple Cost Centers ................................................... 20
5.3 Ledger Postings in New GL Overview .............................................................. 21
5.4 Postings to a specific Ledger ............................................................................ 22
5.5 Reports for a specific Ledger ............................................................................ 23

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1. Profit Center Accounting – Overview

This module is used to view profitability division wise /product wise /location wise if business
area is not use in FI
EC-PCA lets you analyze internal profit and loss for profit centers. This makes it possible for you
to evaluate different areas or units within your company. You can structure profit centers
according to region (branch offices, plants), function (production, sales), or product (product
ranges, divisions).

Profit Center Accounting (EC-PCA) is a statistical accounting component. This means that it
takes transaction data posted in other components and represents it from a profit-center-
oriented point of view. The postings in EC-PCA are statistical postings, since the profit center
is not itself an account assignment object in Controlling.

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Profit Centers Assignment Logic

Assign all account assignment objects which incur costs and revenues to profit centers.
These assignments also determine the transfer of balance sheet items to the individual profit
centers.
As a result of the assignment logic, the profit center is normally not posted to explicitly.
Instead, data is derived from primary account assignment objects (cost centers, internal
orders).
Generally, postings of costs and revenues to Profit Center Accounting are based on the
assignment of sales orders/production orders and cost objects. Overhead costs are
based on the assignment of the account assignment objects in Overhead Management
(cost centers, internal orders, and so on) to profit centers.
When you post data directly in Financial Accounting, all primary cost elements require
an additional assignment to a CO object. The assignment of this CO object (cost center,
order, and so on) to a profit center ensures that the data is passed on to Profit Center
Accounting.
The system determines the profit center to which balance sheet accounts are assigned
as follows:
Receivables are divided according to the corresponding revenue line items and assigned
to the profit centers. Payables are posted to the profit center of the material ordered for
purchases orders to stock, and to that of the account assignment for purchase orders to
account assignment objects.
The assignment of material stocks and assets is based on the assignment made in the
master record.
Changes to work in process are assigned to profit centers via the corresponding order or
project.

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Posting Logic to Profit Centers

When you post actual costs to a true order, the true costs are collected there. You can also
repost or settle the costs to other receivers as required. If the order is assigned to a profit center
in the master record, the actual costs are posted statistically to the profit center for analysis
purposes.
You can specify a cost center when you post actual costs to a true order. In this case,
the cost center receives a statistical posting of the actual costs. You still manage the
costs at order level, but the cost information is immediately available at cost center level
for analysis.
When you post actual costs to a statistical order, the true costs are collected on a true
cost collector, such as a cost center. The costs are managed at cost center level, but
may be analyzed in more detail at order level. Therefore, both the cost center and
statistical order must be identified on the business transaction.
To facilitate entry, you can specify an Actual posted cost center to a statistical order on
the order master record. You can select one of the following:
- The system always uses the assigned cost center. If you manually enter a cost center, the
system replaces it with the cost center in the order master record.
- The system uses the assigned cost center only if no cost center has been manually entered.

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2. Configuration

2.1 Maintain Controlling Area Settings

Via Menus IMG  Controlling  Profit center accounting  Basic settings

Controlling Area Settings  Maintain Controlling Area settings
T Code 0KE5

Note: this step was already created in Chapter 2 Enterprise structure

2.2 Create Dummy Profit Center

Via Menus
IMG Controlling  Profit Center Accounting  Master Data 
Profit Center Create Dummy Profit Center
Via Transaction Code KE59

This function lets you create the dummy profit center for the current controlling area.

The dummy profit center is updated in data transfers whenever the object to which the
data was originally posted (cost center, order, and so on) is not assigned to a profit
center. This ensures that the data in Profit Center Accounting is complete. You can later
send the data on the dummy profit center to the other profit centers using assessment or
distribution.

You create the master record for the dummy profit center using this special transaction.
To change or display it, use the normal profit center maintenance functions.
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The name of the dummy profit center is displayed in the controlling area settings for
Profit Center Accounting.

Click

Select Indicators tab

Select

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2.3 Set Control parameters for online data transfer

Via Menus IMG  Controlling  PCA  Control area settings  Activate direct
postings Set control parameters for Actual data
Via Transaction Code 1KEF

Click on

Click on

2.4 Maintain Plan Version

Via Menus IMG  Controlling  PCA  Control area settings  Activate direct
postings Plan VersionMaintain Plan Version
Via Transaction Code OKEQ

Select Version 0 and click on Settings for each Fiscal year

Select

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2.5 Define Number ranges for Local Documents

Via Menus IMGControllingProfit center AccountingActual postingsBasic
settings: Actual Define number ranges for local documents
T Code GB02

Click on

Click on and click on

Similarly, create number range for planned documents and save

Click on

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2.6 Maintain Automatic Account Assignment of revenue Elements

Via Menus IMGControllingProfit center AccountingActual postingsMaintain
Automatic Account Assignment of revenue elements
T Code OKB9
Click on

Select

2.7 Choose additional Balance Sheet and P&L accounts

Via Menus IMGControllingProfit center AccountingActual postingsChoose
Additional B/S and P&L accountsChoose Accounts
T Code 3KEH
Click on

Click on

2.8 Assign Default Profit Center to Accounts

Via Menus IMG Financial Accounting (New) General Ledger Accounting (New)
Master Data Profit Center  Assign Default Profit Center to Accounts
T Code FAGL3KEH
Click on

Click on

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3. Master Data
3.1 Change Standard Hierarchy

Via Menus Accounting  Controlling  Profit center Accounting  Master data

standard hierarchy  Change
T Code KCH5N

Create the above nodes and create above profit centers.

3.2 Create Profit Center

Via Menus Accounting Controlling Profit Center Accounting  Master
data  Profit center  Individual processing  Create
T Code KE51
Give Profit Center number

Press enter

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Click on and check the status is “Active”

Similarly, create another profit center as below

Click on and check the status is “Active”

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3.3 Assign Profit center in cost center

Via Menus Accounting  Controlling  Cost Center Accounting  Master

Data  Cost center Individual Processing  Change
Via Transaction Code KS02

Give Cost Center number 1000

Similarly, give Cost Center number 1500

Click on

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3.4 Profit center Assignment Monitor

Via Menus IMG ControllingProfit Center Accounting Assignment of object
to profit center  Check assignment
Via Transaction Code 1KE4

Execute without giving any CC category.

Double click on each cost center to assign profit Center

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3.5 Create Account Groups

Via Menus Accounting Controlling Profit center  Master data Account
Group Create
T Code KDH1

Press Enter

Click on

Click on and click on

Press Enter

Click on

Click on

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4. Transaction Data in Profit Center Accounting

4.1 Post a transaction in FB60

Document SimulateSave
Document Display

Observe how profit center and segments derived. Profit center derived from Cost center master
data and segments are derived from Profit Center master data.

Similarly, post a sales transaction FB70 and give only profit center in the transaction.

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4.2 Profit center wise Profit & Loss Items

Via Menus Accounting  Controlling  Profit Center Accounting Information
system Reports for Profit Center Accounting Interactive reporting
Profit Center Group: Plan/Actual/Variance
Via Transaction Code S_ALR_87013326
Provide below parameters

Click on

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4.3 Profit center wise Balance Sheet Items

Via Menus Accounting  Controlling  Profit Center Accounting Information
system Reports for Profit Center Accounting Interactive reporting
Profit Center Group: Balance Sheet Accounts Plan/Actual/Variance
Via Transaction Code S_ALR_87013336

Provide below parameters

Click on

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4.4 Profit center Line Items Report

Via Menus Accounting  Controlling  Profit Center Accounting Information
system Reports for Profit Center Accounting Line Item Reports Profit
Center: Actual Line Items
Via Transaction Code KE5Z
Provide below parameters

Click on

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5. New GL Transactions

5.1 Document Splitting overview

Financial postings in SAP automatically generate values for certain characteristics (like profit
centre, segment etc) on the document. This generation of characteristic value is derived from
characteristics already input by users and triggered either by a code inherent in SAP or due to
user-defined derivation rules.
Example for Active Split (Based on Splitting rules configuration)
Active split occurs when the amounts on the line items that do not have Profit Centre are split by
the system based on preconfigured splitting rules.

Example for Passive Split (Based on preceding transactions)

Passive split occurs when the amounts on the line items that do not have Profit Centre are split
by the system based on preceding processes. This is defined within SAP code and cannot be
configured. An example is when Vendor Invoice is paid, the Vendor line items on the payment
document are split in the ratio of the original split in the preceding Vendor Invoice document.

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5.2 Document posting with multiple Cost Centers

Go to FB60 and provide the below details:
Here, we are purchasing Office supplies for 2 cost centers but from the same Vendor.

Select Document Simulate Save

Select Documents  Display and observe that Profit Center and Segment fields are derived by
the system automatically.
This is called Entry View

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Click on
Observe here that the vendor amounts and tax amounts have been split between in the Profit
Centers as well.
This is Called General Ledger View.

5.3 Ledger Postings in New GL Overview

New GL allows customers to maintain multiple (or parallel) ledgers. Before the SAP ECC
version, users had to create multiple Special Purpose Ledgers (FI-SL) to report the same
financial information for different business requirements. For example, if a SAP customer
wanted to report the same information with different fiscal periods (one for tax and one for
shareholders) or with different accounting standards (GAAP and IAS), they could use the main
ledger (i.e. Ledger 0L) for one requirement and create a Special Purpose Ledger for the other
requirement.
With new GL, users can maintain within new GL (and without need to create a Special Purpose
Ledger)
One leading ledger that reflects the same accounting principles as which is used to
generate consolidated financial statements; this ledger is integrated with all sub-
ledgers
Multiple non-leading ledgers could be used to manage business requirements that
cannot be managed in the leading ledger. Some examples are requirement to
maintain parallel accounting (accounting for tax, GAAP) or maintaining books in a
different fiscal period compared to leading ledger.

If ledger is not manually entered on the financial document, then the document will post to
leading ledger and to all non-leading ledgers. If ledger is manually entered on the financial
document, then the document will only post to that ledger.

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5.4 Postings to a specific Ledger

Via Menus
Accounting Financial Accounting  General Ledger  Posting  Enter
G/L Account Document for Ledger Group
Via Transaction Code FB50L
To post a document to a specific ledger, you need to provide the ledger group here.

Select Document Simulate Save

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Select Documents  Display

Note: If a Ledger not specified in any posting, system will post in all the ledgers i.e. leading and
Non-Leading Ledgers.

5.5 Reports for a specific Ledger

Via Menus
Accounting Financial Accounting  General Ledger  Account 
Display Balances(New)
Via Transaction Code FAGLB03 or FAGLL03
Provide below details:

Click on to select required Ledger

Press Enter

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Click on
Here we can the posting only specific to Ledger L9

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