Profit Center Accounting in SAP S/4HANA, S4F28 Col11

S4F28
Proﬁt Center Accounting in SAP
S/4HANA
.
.
PARTICIPANT HANDBOOK
INSTRUCTOR-LED TRAINING
.
Course Version: 11
Course Duration: 2 Day(s)
e-book Duration: 3 Hours 50 Minutes
Material Number: 50148321
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Contents
vi Course Overview
1 Unit 1: Profitability Management
2 Lesson: Outlining Profitability and Sales Accounting Options
8 Lesson: Outlining Global Settings for Profit Center Accounting
25 Unit 2: Profit Center Master Data
26 Lesson: Creating Profit Center Master Data
37 Lesson: Assigning Profit Centers to Account Assignment Objects
53 Unit 3: Profit Center Accounting (PCA) Actual Postings
54 Lesson: Explaining Profit Center Updates
60 Lesson: Explaining the Data Flow in Financial Accounting
65 Lesson: Integrating Profit Centers and Materials Management (MM)
68 Lesson: Integrating Cost Object Controlling (COC) and PCA
70 Lesson: Integrating Sales and Distribution (SD) and PCA
72 Lesson: Processing Allocations in PCA
81 Unit 4: Profit Center Planning
82 Lesson: Planning Values for Profit Centers
88 Unit 5: Transfer Pricing
89 Lesson: Understanding Transfer Pricing
© Copyright. All rights reserved. v

Course Overview
TARGET AUDIENCE
This course is intended for the following audiences:
● Application Consultant
● Business Process Owner/Team Lead/Power User
● Help Desk/CoE Support
● Program/Project Manager
© Copyright. All rights reserved. vi

UNIT 1 Profitability
Management
Lesson 1
Outlining Profitability and Sales Accounting Options 2
Lesson 2
Outlining Global Settings for Profit Center Accounting 8
UNIT OBJECTIVES
● Outline the options available within SAP S/4HANA for profitability and sales accounting
● Outline organizational units
● Explain ledgers in SAP General Ledger
● Explain document splitting and segment reporting
© Copyright. All rights reserved. 1

Unit 1
Lesson 1
Outlining Profitability and Sales Accounting
Options
LESSON OVERVIEW
This lesson gives a general overview of the various methods used to analyze profits in SAP S/
4HANA. The emphasis is on comparing Profitability Analysis (CO-PA) and Profit Center
Accounting (PCA).
Business Example
You want to support your management decision making with revenue and profitability
analysis reports. You want to understand the options provided with SAP S/4HANA to support
this requirement.
LESSON OBJECTIVES
After completing this lesson, you will be able to:
Profitability and Sales Accounting
Figure 1: Components and Value Flows in Management Accounting

Components and Value Flows in Management Accounting
Management Accounting provides information that management can use to make decisions.
It facilitates the coordination, supervision, and optimization of all processes within a
company. This involves recording both the consumption of production factors and the
services provided by an organization. In S/4HANA, all relevant cost information from financial
accounting and management accounting is available in real-time, on line item level in the
central table ACDOCA. Costs and revenues are assigned to different Controlling (CO) account
assignment objects such as cost centers, projects, or orders. These financial accounting
accounts are managed in management accounting as cost or revenue elements.
Cost Center Accounting is used for controlling purposes in your organization. Cost center
accounting takes the costs incurred in a company and allocates them to the actual subareas
that caused them.
Product Cost Controlling calculates the costs incurred when a service is provided or a product
is manufactured. It enables you to calculate the minimum price at which a product can be
profitably marketed.
Overhead costs are costs that cannot be directly assigned to the manufacture of a product, or
the provision of a particular service. The purpose of overhead cost controlling is the planning,
allocation, control, and monitoring of overhead costs. You assign all overhead costs to the
locations at which they were incurred, or to the activities from which they arose.
Cost centers are separate areas within a controlling area at which costs are incurred. You can
create cost centers according to various criteria including functional considerations,
allocation criteria, activities provided, or according to their physical location and/or
management area.
An activity type defines the type of activity that can be provided by a cost center. Activity
outputs supplied by one cost center (the sending cost center) to other cost centers, orders,
or processes, represent the utilization of resources for this sending cost center. You valuate
activities using a price calculated on the basis of certain business or management
information.
Internal orders are used to plan, collect, and analyze the costs arising from internal activities.
There are different methods for allocating values and quantities, depending on the type of
management accounting object. In an enterprise scenario in which only costs are allocated,
you can use plan/actual comparisons to analyze costs at period end. When allocating
quantities, you can use extended analysis tools at period end, which take operating rate into
account.
Accounting Tools for Analyzing Profit and Success
The following accounting tools are available for analyzing profit and success:
Profitability Analysis (CO-PA)
Use this tool to provide the decision-making groups in your organization (such as the
board of management, sales and distribution, marketing, and planning) with market-
oriented information. Define market segments by characteristic (such as product,
product group, customer, customer group, or geographical area) and internal
organizational unit (such as company code or business area) to analyze the profitability
of segments in your external market.
Profit Center Accounting (PCA)
Use this tool to evaluate specific areas or units in your organization. Structure profit
centers by region (such as branches or plants), function (such as production or sales), or
Lesson: Outlining Profitability and Sales Accounting Options

product (such as product groups or divisions) to analyze internal profit and loss for profit
centers. The online document splitting function in financial accounting provides a
balance sheet reporting on profit center level. To meet legal segment accounting
requirements (based on International Financial Reporting Standards (IFRS) or United
States (US) Generally Accepted Accounting Principles (GAAP), for example), assign the
segment accounting object to profit centers in SAP S/4HANA.
Typical Questions in Profitability Analysis
This figure shows the type of questions that are pertinent to profitability analysis.
Figure 2: Typical Questions in Profitability Analysis
Unit 1: Profitability Management

Profitability Analysis per Market Segment
Figure 3: Profitability Analysis per Market Segment
The external, market-oriented perspective of CO-PA supports sales and distribution, product
management, and company-wide planning and decision making. You can configure CO-PA to
use characteristics to define market segments that are relevant to your organization. Each
combination of characteristic values (such as the sale of a particular product group to a
particular customer group) defines a profitability segment and enables you to analyze the
profitability of that segment.
When defining a profitability segment, you are required to specify which of the values that
affect profitability (such as the revenue type, or cost category used to determine a value for
the trade margin) are to be analyzed. These values are key figures.
As different types of users may define the trade margin differently (such as profitability and
sales accounting versus product management), you can specify different key figures for the
different types of users within your organization. A multidimensional reporting tool within CO-
PA enables you to create reports to analyze data for any market segment and any key figure.

Typical Questions in Profit Center Accounting
Figure 4: Typical Questions in Profit Center Accounting
A profit center is a management-oriented organizational unit used for internal control
purposes. Dividing your organization into profit centers enables you to analyze the areas of
responsibility and assign responsibility to each profit center. Profit centers essentially
become companies within the company.
Profit centers are unique in that they can be assigned to balance sheet transactions as well as
to transactions affecting the profit and loss.

Profit Center Accounting
Figure 5: Profit Center Accounting (PCA)
PCA enables you to draw conclusions on the internal aspects of profitability. This internal view
reflects the success of a given profit center in meeting the profitability goal for which it was
assigned responsibility.
LESSON SUMMARY
You should now be able to:

Unit 1
Lesson 2
Outlining Global Settings for Profit Center
Accounting
LESSON OVERVIEW
This lesson explains the organizational embedding of the profit center accounting in S/
4HANA and its basic settings needed in SAP General Ledger. The settings apply not only to
profit centers, but also to all additional account assignments in Financial Accounting (FI) for
which you want to map complete financial statements.
Business Example
Your company uses SAP S/4HANA to capture the benefits of a single and uniform data
structure, document splitting, and Controlling (CO) with Financial Accounting (FI) as a single-
circuit-system. You want to use profit centers to report complete financial statements. You
are a member of the project team that has been asked to verify whether the necessary
settings have been made in the test system. For this reason, you require the following
knowledge:
● An understanding of organizational structures in SAP S/4HANA
● An understanding of the settings for defining ledgers
● An understanding of the settings for document splitting
LESSON OBJECTIVES

Organizational Units
Figure 6: Organizational Units
Operating Concern is the highest reporting level for profitability, sales and marketing
controlling, and the central organizational unit in Profitability Analysis (CO-PA) used to
segment and structure the market.
Controlling areas structure the internal accounting operations of an organization within
management accounting. They represent closed units that are used to calculate costs. All
internal allocations relate solely to objects that belong to the same controlling area.
Company codes are independent accounting units within financial accounting. They represent
the smallest organizational units for which an account group can be set up for the purposes of
external reporting. The process of external reporting involves recording all relevant
transactions and generating all supporting documents for financial reports (such as balance
sheets and profit and loss statements).
Profit Centers are organizational units in accounting that reflect a management-oriented
structure of the organization for the purpose of internal control. You can analyze operating
results for profit centers using either the cost-of-sales or the period accounting approach. By
calculating the fixed capital as well, you can use your profit centers as investment centers.
Plant is an organizational unit within Logistics. It is used to break an organization down
according to production, procurement, plant maintenance, and material planning
considerations. Plants are used in materials management, logistics, production planning and
control. In a plant, either materials or goods are manufactured, or services are provided.
In SAP S/4HANA activate the profit center accounting in customizing: Financial
Accounting→ General Ledger Accounting→ Master Data→ Profit Center→ Activate Profit
Center Accounting in Controlling Area .
Lesson: Outlining Global Settings for Profit Center Accounting

Activating profit center accounting has got the effect, that additional checks will be executed
to ensure a consistent derivation of the profit center during postings. For example, when you
define a new cost center master record, the message “Profit Center Accounting active but no
profit center specified” appears, when no profit center is entered.
Ledgers in SAP General Ledger
Figure 7: Ledger Approach
Many companies not only have to create reports according to one specific accounting
principle, they also need to meet different information requirements (country-specific
requirements, corporate group standards, and so on). This means that financial statements
have to be created, for example, local accounting standards like the U.S. Generally Accepted
Accounting Principles (GAAP), the German Commercial Code (HGB) and the International
Financial Reporting Standards (IFRS).
The accounts approach is widely used in this context. Different valuation approaches post to
different accounts (only in cases of differences between the principles for topics like
valuation, depreciation, or accruals). When financial statements are created, the financial
statement version is used to evaluate the relevant accounts. For example, financial
statements according to U.S. GAAP only take into account those accounts that follow this
accounting principle.
The ledger approach in SAP S/4HANA allows you (within SAP General Ledger) to manage
multiple “general ledgers” in parallel and in this way create different financial statements
(ledger approach). These ledgers are all called standard ledgers. A standard ledger contains a
full set of journal entries for all business transactions. You can also manage accounts in
parallel using additional accounts (accounts approach). In this case, there is exactly one
standard ledger in SAP General Ledger the leading ledger.

Extension Ledger
Figure 8: Standard Ledger and Extension Ledger
As an additional option, other extension ledgers can be added. Extension ledgers are based on
an underlying ledger. An extension ledger is assigned to a standard ledger and inherits all
journal entries of the standard ledger for reporting. Postings made explicitly to an extension
ledger are visible in that extension ledger but not in the underlying standard ledger.
An extension ledger stores delta values and points to another ledger, thus providing a ﬂexible
mechanism for adjustments and reporting. An important use case is management views on
top of legal data (IFRS or local GAAP). Besides creating a master record, extension ledgers do
not need additional conﬁguration.

Figure 9: Extension Ledger
Reporting on the extension ledger from type Extension Ledger always includes the data of the
underlying ledger. Multiple extension ledgers can point to the same underlying ledger. The
benefit of reduced data footprint and zero reconciliation effort is that only delta values are
kept. Extension ledgers are stored in the universal journal which is the same as standard
ledgers. Extension ledgers can be assigned their own booking period variants. This means the
standard ledger can be closed and the assigned extension ledger can be open.
Currencies in SAP General Ledger
Figure 10: Multi Currency
In SAP S/4HANA, the universal journal supports additional parallel currencies. These include
the following:
● You can configure by company code and ledger to fix currencies, and configure up to eight
freely defined currencies.
● You can configure new currency types in customer name-space.
● Freely defined currencies for parallel G/L ledgers are independent of the leading ledger.
● Real-time currency conversion in accounting interface with zero balance per document for
all currencies.

The freely defined currencies are integrated in several business processes (for example, open
item management), for some specific business processes differences might occur (clearing
effects).
Currency Fields of ACDOCA
The following is a list of the currency fields of ACDOCA:
● Local currency: Currency type 10, ACDOCA field-name HSL
● Global currency: Currency type of controlling area, ACDOCA field-name KSL
● Freely defined currencies 1-8: You can configure your own currency type, as there is no
dependency on currency types of the leading ledger. ACDOCA field-names include:
- OSL
- VSL
- BSL
- CSL
- DSL
- ESL
- FSL
- GSL
Figure 11: Currency Conversion Settings
The list of currency types is now extensible by customer defined currency types, SAP name-
space 0* - 9*, and customer name-space Y* Z*.
The settings definition level defines whether currency conversion settings are maintained
either once globally or specifically by a company code.
You can define your own descriptions of the currency types in customer name-space, which is
displayed in UIs as field label.

Usage of Corresponding Views: Conversion Settings
You can use the corresponding views for the conversion settings depending on the definition
level (global/per company code) as follows:
● Currency - Only for customer defined currency type
● Source currency type (any other currency type can be used as source)
● Exchange rate type
● Translation date type
● Real-time conversion - Operation postings in the period are converted if real-time
conversion is set. Otherwise, the currency can be filled with foreign currency valuation in
period end close.
Note:
SAP S/4HANA provides two options to build up transfer prices in the system:
1. The parallel single-valuation ledgers
2. The multi-valuation ledger
For more details concerning the business requirements of transfer prices and its
impact on the ledger and currency settings, please refer to the Transfer Pricing
unit in this training.
Document Splitting
Figure 12: Document Splitting - Reasons
The primary task of document splitting is to ensure the assignment of General Ledger (G/L)
characteristics to all lines of the document, even in the one-to-one case of having a single
expense line. Only with active and properly configured document splitting can a complete
balance statement per defined characteristic be produced.
The figure shows a vendor invoice with two different profit centers assigned to the expense
lines. With document splitting, the system can distribute the amounts of the other lines onto
the profit centers automatically (based on customizable rules). This process is seamless for

the person entering the data and does not complicate the document posting process. In the
example, only the profit center is shown, however, document splitting can be configured to
update any characteristic information to the vendor and tax lines.
Document Splitting Characteristics
Figure 13: Document Splitting Characteristics
In Customizing, specify the characteristics for which you want to carry out document splitting.
You define the document splitting characteristics in Customizing for Financial Accounting
under General Ledger Accounting → Business Transactions → Document Splitting→ Define
Document Splitting Characteristics for General Ledger Accounting .
If you want to create a balance sheet for the characteristic, select the Zero balance checkbox.
This ensures that the balance of these entities is set to 0 in each posting, which makes a per
characteristic balance sheet possible.

Activation of Document Splitting
Figure 14: Activating Document Splitting
You activate document splitting in Customizing for Financial Accounting under General Ledger
Accounting → Business Transactions → Document Splitting→ Activate Document Splitting.
In a further step (in the dialog structure), you can activate or deactivate splitting in each
company code in the same transaction.
Inheritance means that you create a customer invoice from one revenue line. An example is
the (unique) characteristics that are projected (inherited) to the customer and the tax lines in
the general ledger view, even if no splitting rule can be found.
If you want to use a standard account assignment in document splitting, you must ﬁrst create
a new constant in Customizing for Financial Accounting under General Ledger
Accounting→ Business Transactions → Document Splitting→ Edit Constants for Non
Assigned Processes.

Document Splitting Process Steps
Figure 15: Document Splitting Process Steps

Active (Rule-Based) Document Splitting
Figure 16: Document Splitting― Active Split
The entities that you deﬁned as document splitting characteristics are inherited to the posting
lines without account assignment. As you can see in the ﬁgure, the selected characteristics
balance to zero. In this rule-based split, the vendor and tax lines (items 1 and 4) are split in the
same way as the expense lines, the expense basic item category (items 2 and 3), and expense
account 65003000 in the general ledger view.

Document Splitting Zero Balance Formation
Figure 17: Document Splitting Zero Balance Formation
In the figure, the following characteristics apply:
● Displayed business transaction:
- G/L accounting posting Transfer posting within an account.
● System configuration:
- Document splitting is activated. Document splitting characteristics Profit Center and
Segment are defined.

Document Splitting Method
Figure 18: Logic for Active Document Splitting
A document splitting method is the sum of all the document splitting rules of all business
transactions. It defines the way in which a document split should be carried out. This means
that each method contains a definition that describes how the individual item categories are
to be treated in the individual business transactions. For example, whether or not the system
should copy the account assignment of a customer item from a revenue item to a customer
invoice.
A business transaction is a general subgroup of actual business processes, which is delivered
by SAP and to which extensive item categories are assigned. The business transaction variant
is a specific version of the business transaction provided by SAP, and is a (technical)
representation of a real business process for document splitting.
An item category is a (technical) representation of the posted document lines. It describes
the items that you can find within a document (a business transaction). Some of the item
categories are derived by the system from the account type of the G/L account, others have
to be defined in Customizing. In other words, an item category is the semantic description of a
posting line for document splitting. The individual splitting rules define which item categories
can or should be split (item categories to be edited), and at the same time, determine the
basis on which the split can take place (base item categories).

Simulating the General Ledger View
Figure 19: Simulating the General Ledger View
In the SAP S/4HANA application, you can simulate the general ledger view as well as the entry
view before posting. This allows you to analyze errors that would cause a termination during
posting earlier and more eﬀectively. You can display the detailed data of the document split
using the expert mode.
Document Simulation Expert Mode
Figure 20: Document Simulation Expert Mode
The features of the expert mode are as follows:

● The expert mode provides information about the configuration of document splitting, such
as the splitting method, business transactions, and business transaction variant.
● The expert mode provides more details and useful information on what configuration rules
were used, and how the amount is split for the new lines that are created.
Expert Mode Document Splitting Configuration
Figure 21: Expert Mode Document Splitting Configuration
From the document display, you can branch to expert mode, which shows more details
pertaining to the configuration of document splitting.
LESSON SUMMARY

Unit 1
Learning Assessment
1. Profitability analysis is ideal when you want to analyze which of the following kinds of
data?
Choose the correct answers.
X A The profit margin of a product launched last year.
X B The revenue brought in by the local sales department last month.
X C The contribution margin of the local sales department year to date.
X D The planned fixed asset costs of a new retail store location.
2. The universal journal table in SAP General Ledger Accounting is __________________.
Choose the correct answer.
X A FAGL_SPLINFO
X B ACDOCA
X C FAGLFLEXA
X D FAGLFLEXP

Unit 1
Learning Assessment - Answers
1. Profitability analysis is ideal when you want to analyze which of the following kinds of
data?
X A The profit margin of a product launched last year.
X B The revenue brought in by the local sales department last month.
X C The contribution margin of the local sales department year to date.
X D The planned fixed asset costs of a new retail store location.
2. The universal journal table in SAP General Ledger Accounting is __________________.
X A FAGL_SPLINFO
X B ACDOCA
X C FAGLFLEXA
X D FAGLFLEXP

UNIT 2 Profit Center Master
Data
Lesson 1
Creating Profit Center Master Data 26
Lesson 2
Assigning Profit Centers to Account Assignment Objects 37
UNIT OBJECTIVES
● Create profit center master data in the standard hierarchy and profit center groups
● Assign profit centers to account assignment objects

Unit 2
Lesson 1
Creating Profit Center Master Data
LESSON OVERVIEW
This lesson explains how to define profit center master data.
Business Example
Your project team wants to find out about the master data definition of profit centers in SAP
General Ledger Accounting. You want to find out about the technical settings to present them
at a project meeting. For this reason, you require the following knowledge:
● An understanding of how to create a profit center standard hierarchy.
● An understanding of how to maintain profit center master data.
LESSON OBJECTIVES
Profit Center Standard Hierarchy
Figure 22: Profit Center Standard Hierarchy

This structure, called the standard hierarchy, is a tree structure that contains all the profit
centers in a Controlling (CO) area. When you create a profit center, you have to assign it to a
hierarchy area (hierarchy node) in the standard hierarchy. This ensures that all the profit
centers in the CO area end at the same node.
The first step is to establish the name of the standard hierarchy for the profit centers. The
system creates the top node or group of the standard hierarchy automatically when you save
your settings. You can then maintain it to create the lower level nodes required to complete
your hierarchy.
You can maintain the standard hierarchy in Customizing or from the application menu.
In addition to the standard hierarchy, you can also define profit center groups (alternative
hierarchies), which you can use in allocation for example.
Defining a Hierarchical Profit Center Structure
To create a profit center, you first have to define a hierarchical profit center structure using
the following menu paths:
● First, you define the profit center standard hierarchy top node in the Controlling area in
Customizing for Financial Accounting under General Ledger Accounting → Master Data
→ Profit Center → Define Profit Center Standard Hierarchy in Controlling Area .
● Build up the profit center standard hierarchy structure in Customizing under Financial
Accounting → General Ledger Accounting → Master Data→ Profit Center→ Define
Standard Hierarchy .
● Alternatively, on the SAP Easy Access screen, choose Financial Accounting→ General
Ledger→ Master Records→ Profit Center→ Standard Hierarchy → Create to create the
standard hierarchy structure.
● The standard Fiori app, Profit Center Groups also allows you to create a standard
hierarchy.
Profit Center Structure
Profit Center Accounting (PCA) supports a division of an enterprise into areas of
responsibility for profits.
You can divide your enterprise based on the following aspects:
● Geographical structure of profit centers (for example, locations and regions).
● Product-related structure of profit centers (for example, divisions and product lines).
● Functional structure of profit centers (for example, production, sales, and research).
Mixed forms of these structures are also possible. For example, you can opt for a regional
structure based on business locations and then subdivide each location by the products made
there.
You create the profit center master data to define the organizational structure. For
evaluations at a higher level of aggregation, you can combine profit center groups.
Lesson: Creating Profit Center Master Data

Profit Center Master Data
Figure 23: Profit Center Master Data
A profit center is defined at CO area level. When creating a profit center, you enter the name
of the profit center and the period of validity. Profit center master data is time dependent,
which means that you can create different data for different periods. You can copy master
data information from an existing profit center.
You maintain the important master data, such as the profit center name and description,
person in charge, and department on the Basic screen area. The Profit Center Group field
defines the assignment to a node in the standard hierarchy.
By selecting the Lock Indicator, you can lock the profit center against postings for the
specified time interval. If an account assignment object is assigned to a locked profit center
and you attempt to post to it, the system displays an error message and does not post the
data.
You can enter more information for the profit center, such as the address and communication
data and a long text on additional screens.
By default, a profit center is assigned to all the company codes within the CO area. You can
manage the assignment between a profit center and specific company codes in the profit
center master record. If you attempt to post data to profit centers in company codes that are
not assigned to the profit center, the system will not carry out such postings.
To create a profit center, use one of the following menu paths:
● On the Fiori Launchpad you can choose the Fiori tile Manage Profit Centers .
● On the SAP Easy Access screen, choose Accounting→ Financial Accounting→ General
Ledger→ Master Records→ Profit Centers→ Individual Processing→ Create.
Unit 2: Profit Center Master Data

● You define profit centers in Customizing for Enterprise Structure under Definition→
Financial Accounting → Define Profit Centers.
Profit Center The Dummy Profit Center
Figure 24: Profit Center The Dummy Profit Center
The dummy profit center was the primary default value for postings to an account assignment
object in an accounting area, if no other profit center was assigned.
In SAP General Ledger, in contrast to classic Profit Center Accounting (EC-PCA), you do not
need to define and use a dummy profit center. Postings to account assignment objects that
do not have assigned profit centers are simply made without profit centers (if it is not set as
mandatory in document splitting), that is, the profit center field remains blank in the
corresponding document items. Postings without profit centers can be assessed or
distributed to the desired profit centers (similar to postings to a dummy profit center).
Path for Creating the Dummy Profit Center
A special customizing transaction is available to create the dummy profit center. You create
the dummy profit center in Customizing for Financial Accounting under General Ledger
Accounting → Master Data→ Profit Center→ Create Dummy Profit Center .
This procedure is almost the same as that for creating normal profit centers.
The differences between a dummy profit center and a normal profit center are as follows:
● You do not specify a validity period for the dummy profit center. The dummy profit center
is automatically valid for the maximum validity period.
● You cannot copy the dummy profit center from an existing profit center.
● A flag identifying the profit center as the dummy profit center is set automatically (in the
indicator folder).

You change and display the dummy profit center using the normal maintenance transactions
for profit centers.
Collective Master Data Processing
Figure 25: Collective Master Data Processing
Collective processing is particularly useful when you adapt existing data to a change in
circumstances, for example, if certain master data fields (such as the department and person
responsible) or company code assignments have to be changed.
You can call collective processing in the following areas:
Ledger→ Master Records→ Profit Center→ Collective Processing→ Master Records.
Ledger→ Master Records→ Profit Center→ Collective Processing→ Company Code
Assignment.
● With the Fiori apps, choose Edit Master Data Profit Centers ― Collective and Edit Company
Code Assignments.

Accounts in Profit Center Accounting
Figure 26: G/L Account Types
Profit center accounting in S/4HANA is based on the accounts of the operational chart of
accounts that is assigned to the company code in Financial Accounting (FI). Each General
Ledger (G/L) account is assigned to an account type. The G/L account type determines how
the G/L account can be used in Financial Accounting (FI) and Controlling (CO).
The following account types are available:
Balance Sheet Account:
● Account that is posted from business transactions. The balance of a balance sheet
account is carried forward at the fiscal year-end.
Non-operating Expense or Income:
● Income statement account that records expenses or gains from activities that are not part
of the main purpose of the company, such as gains realized from financial investments by
a manufacturing company.
Primary Costs or Revenue:
● Income statement account that functions as a cost element for primary costs or revenue.
Primary costs reflect operating expenses such as payroll, selling expenses, or
administration costs.
Secondary Costs:
● Income statement account that functions as a cost element for secondary costs.
Secondary costs result from value flows within the organization, such as internal activity
cost allocations, overhead allocations, and settlement transactions.

Profit Center Groups
Figure 27: Alternative Profit Center Groups
Alternative Profit center groups are alternative hierarchies to the standard hierarchy. You can
use them in reporting, distribution, and assessment, or planning functions. In contrast to the
standard hierarchy, these profit center groups do not have to contain all the profit centers in
the CO area. Profit center groups allow you to select only certain profit centers and structure
them hierarchically for more flexibility.
Create profit center groups under the following menu paths:
Ledger→ Master Records→ Profit Center→ Profit Center Group → Create.
● You can also define profit center groups using the Fiori tile Manage Profit Center Groups or
Manage Global Accounting Hierarchies .
● You define profit center groups in Customizing for Financial Accounting under General
Ledger Accounting → Master Data→ Profit Center→ Define Profit Center Groups .

Flexible Hierarchy
Figure 28: Flexible Hierarchy: Process Flow
Changes in the Profit Center Structure are complex and however frequent. It takes effort for
companies to set-up and build new hierarchies as all organizational units need to be included
in new hierarchy.
Flexible Hierarchies enables you to generate hierarchies for reporting, based on Profit Center
master data attributes. With the Fiori tile Manage Flexible Hierarchies , you set up a new
flexible hierarchy based on a sequence definition of the selected attributes. This also provides
a fast and efficient way to setup different hierarchies in parallel just by using a different
sequence of attributes.
The app Manage Flexible Hierarchies supports a master data attribute mass change, too.

Statistical Key Figures
Figure 29: Statistical Key Figures
Statistical key figures are values or quantities (for example, number of phone calls, sq. m.
area, and number of employees) that give further details on the setup, the consumption or
performance output of cost centers, internal orders, processes or profit centers. You can post
statistical key figures both in the plan and in the actual. You can use statistical key figures
both as an allocation base for periodic distributions or assessments and to create key figures
(ratios such as personnel costs per employee). You define a statistical key figure as a fixed
value or a totals value as follows:
● The fixed value is carried over from the period in which it is posted to all subsequent
periods of the same fiscal year. You need to enter a new posting only when the value
changes. Fixed values are defined when key figures remain constant over a significant
period of time (for example, number of employees in a cost center).
● The totals value is not transferred to the following period but must be entered for each
individual period and is preferable for statistical key figures whose values fluctuate in
individual periods (for example, kilowatt hours of electricity consumption).
Statistical key figures can be transferred from the Logistics Information System (LIS) by
linking a key figure from LIS (for example, order receipts) to a statistical key figure (for
example, in cost center accounting).
Segments
Derivation of a Segment
Segments can be used to fulfill the requirements of international accounting regulations
(International Financial Reporting Standards (IFRS) or United States Generally Accepted
Accounting Principles (US-GAAP)) regarding segment reporting.
Excerpt from IFRS 8: Operating Segments

● An operating segment is a component of an entity that engages in business activities from
which it may earn revenues and incur expenses (including revenues and expenses relating
to transactions with other components of the same entity).
● An operating segment is a component of an entity whose operating results are reviewed
regularly by the entity’s chief operating decision-maker to decide which resources to
allocate to the segment and assess its performance.
● An operating segment is a component of an entity for which discrete financial information
is available.
Figure 30: Derivation of a Segment
Defining Segments in the SAP System
You can define segments in the SAP system in Customizing for Enterprise Structure under
Definition → Financial Accounting → Define Segment. You can enter a segment in the master
record of a profit center. If no segment is entered manually during posting (only possible in FI
transactions), the segment is determined from the master record of the profit center. If you
want to use different rules to derive the segment during posting, you can define your own.
You can find the relevant settings in Customizing for Financial Accounting under Financial
Accounting Global Settings → Tools→ Customer Enhancements→ Business Add-Ins
(BAdIs)→ Segment Derivation.
Document splitting is needed for creating financial and Profit and Loss (P&L) statements for
the segment dimension at any time. US-GAAP requires near complete financial statements at
segment level for reporting (everything but equity capital). In this approach, the segment is
defined as an area of a company whose activities result in expenses and revenues. Its
operating result is reviewed regularly by the company and group management to assess its
success and allocate resources. The IFRS segmentation requirements are nearly identical.
When you make a posting to the profit center, the posting is also made to the segment.

Extended Derivation of a Segment
Figure 31: Extended Derivation of a Segment
Use of Segments
For more information, see SAP Note 1035140. SAP only authorizes the use of segments if
profit centers are used at the same time.
The automatic derivation of segments is possible only with profit centers. Many business
transactions, particularly in logistics, do not have an option for entering the segment
manually.
Furthermore, several standard interfaces do not support segments. For these reasons, the
use of segments is approved only if you also use profit centers. If it is not possible to derive
the segment characteristic from a profit center master record, you have to find a different
way to assign the segment accounts.
Options include manual entry, BAdI implementation (BAdI: FAGL_DERIVE_SEGMENT),
defining substitution rules, and a standard account assignment (which involves document
splitting).
In addition to BAdI FAGL_DERIVE_SEGMENT, BAdI FAGL_DERIVE_PSEGMENT is also
available for deriving the partner segment.
LESSON SUMMARY

Unit 2
Lesson 2
Assigning Profit Centers to Account
Assignment Objects
LESSON OVERVIEW
This lesson explains how to assign profit centers to account assignment objects in the SAP
system to ensure that all the data is transferred.
Business Example
Your project team wants to understand how profit center account assignments are derived
for various account assignment objects in SAP S/4HANA. You need this information to
prepare for the project meeting. For this reason, you require the following knowledge:
● An understanding of how to assign profit centers to different SAP objects.
LESSON OBJECTIVES
Profit Center Assignments
Figure 32: Profit Center Assignments

You assign profit centers to all account assignment objects to which costs and revenues have
been posted. 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 usually not entered directly by the user,
but derived from primary account assignment objects, such as cost centers and internal
orders.
Postings of costs and revenues to Profit Center Accounting (PCA) are based on the
assignment of sales or production orders and cost objects. Overhead costs are based on the
assignment of the account assignment objects in Overhead Cost Controlling (CO-OM) (cost
centers, internal orders, and so on) to profit centers.
You can maintain profit center assignments under the following menu paths:
Ledger→ Master Records→ Profit Center→ Current Settings.
● You assign account assignment objects to profit centers in Customizing for Financial
Accounting, under General Ledger Accounting → Master Data→ Profit Center→
Assignments of Account Assignment Objects to Profit Centers .
Assignment of Controlling Objects
Figure 33: Assignment of Controlling Objects
You can assign CO-OM objects (cost centers, internal orders, projects, and business
processes) to profit centers to observe the value flow between Financial Accounting and CO-
OM from a profit center point of view.
When you assign a Controlling (CO) object to a profit center, the system makes sure that the
CO area is the same for both the object and the profit center. Cost centers and business
processes are assigned to a profit center on the Master Record Basic Data screen.

The validity period defined for the profit center must be within the validity period defined for
the cost center or business process. Additionally, the assignment of a cost center or internal
order to a profit center also implicitly assigns all assets assigned to the cost center or internal
order to the profit center. Please refer to the topic, Segment Reporting in Asset Accounting in
this lesson where the Business Function FIN_AA_SEGMENT_REPORTING is discussed.
You link the internal orders to a profit center on the Order Master Data Assignments screen.
Maintenance orders from the plant maintenance component are assigned to a profit center in
the same way as internal orders.
Cost objects are used in product cost controlling to collect and store costs that cannot be
assigned to objects at a lower level (orders, projects, or cost centers). However, in certain
circumstances, you may need to assign a cost object to a profit center. The assignment logic
used here is the same as the one used for assigning cost centers.
Unlike other assignment objects, profitability segments do not have master records. A
profitability segment is a combination of characteristics, such as a customer, product, plant,
distribution channel, and so on. The profit center is always one of the characteristics.
Segment Reporting in Asset Accounting
In a business scenario, the aim of many companies is to map characteristic balance sheets
(for example, balance sheets for profit centers, segment or business area) while also taking
asset transactions into account.
Basically, the system derives the segment and profit center characteristics, for example, from
a cost center or an internal order. These Controlling (CO) objects are assigned directly in the
asset master data.
Figure 34: No Unique Profit Center Derivation in FI-AA
If more than one CO object with different profit centers is assigned to the asset master
record, SAP defines a complex, internal logic, which controls the derivation of the profit
center while posting to the asset.
Lesson: Assigning Profit Centers to Account Assignment Objects

Activation of Segment Reporting
Figure 35: Activate Segment Reporting
With SAP S/4HANA 1610, the business function FIN_AA_SEGMENT_REPORTING is delivered.
This contains the segment reporting for assets with which you are now familiar from the
business function FIN_GL_REORG_1 already known in SAP ERP.
Activate the segment reporting in Customizing for Financial Accounting under Asset
Accounting→ Integration with General Ledger Accounting → Segment Reporting→ Activate
Segment Reporting.
Note:
The new Segment Reporting Active checkbox is also responsible for the availability
of the profit center characteristic.
Display or maintain the account assignment objects for asset accounting in Customizing by
following Financial Accounting → Asset Accounting→ Integration with General Ledger
Accounting→ Additional Account Assignment Objects→ Activate Account Assignment
Objects.
Activate Segment Reporting with Account Assignment Objects
The account assignment object is the same in asset master and posting. Select the
Agreement checkbox (technical field name XIDENT) if you want to prevent the account
assignment object from being changed when account assignments are made. This ensures
that only account assignment to the account assignment object entered in the asset master
record is possible. If this checkbox is not selected, there is no guarantee during posting that
the segment and profit center values will be the same as in the asset master data.

After the activation of the profit center and segment account assignment objects, these
characteristics are also available in the screen layout for asset master data in Customizing for
Financial Accounting under Asset Accounting→ Master Data→ Screen Layout→ Define
Screen Layout for Asset Master Data . Choose the time-dependent logical field group.
Create Asset Master - Derivation of Profit Center and Segment
Figure 36: Create Asset Master - Derivation of Profit Center and Segment
If you maintain two CO objects in the asset and the profit center, and the segments in these
two CO objects are not the same, then the message AIST009, The Profit Center is
not unique appears.
The account assignment objects, cost center and internal order, refer to the following
different profit centers:
● Profit center from cost center: 0001
● Profit center from internal order: 0003
If, for example, the segment characteristic is not needed, it can be suppressed. Use the
screen layout in Customizing for Financial Accounting under Asset Accounting→ Master
Data→ Screen Layout→ Define Screen Layout for Asset Master Data if the segment
characteristic is not needed. Choose the time-dependent logical field group.
Account Assignment Objects
If you miss the maintenance of the Acquisition and Production Cost (APC) values posting
account assignment type for the new profit center and segment account assignment objects,
the SAP system is not able to derive these characteristics from the asset master record when
posting.

Former deﬁnitions, for example, for account assignment object cost center or internal order
are no longer successful. You have to maintain all depreciation areas that post APC values.
Figure 37: Settings for the APC Value Posting
Settings for the Depreciation Posting Run
Figure 38: Settings for the Depreciation Posting Run
If asset transactions are to be provided with Financial Accounting (FI) characteristics for the
purposes of a characteristic balance sheet, this must also be the case for FI-AA depreciation
documents. To derive entities while executing the depreciation posting run, specify the

correct account assignment type. The different types of account assignments in our training
system are as follows:
● Depreciation area 20 records cost-accounting depreciation.
Depreciation area 20 must have the depreciation run account assignment type if area 20 is
the area for posting the cost-accounting values (depreciation or interest) to Controlling. In
this case, the (cost-accounting) depreciation account is defined as a cost element, and
requires a CO-relevant account assignment object, when posting depreciation. However,
this account assignment object (such as cost center, order, or WBS element) can only be
posted if the depreciation run account assignment type is specified for those CO entities.
● Depreciation area 01 and 32 records accounting-specific depreciation.
Without activated segment reporting in FI-AA, the system requires the depreciation run
account assignment type for account assignment objects of Controlling even if the
depreciation expense account is not defined as a cost element. This is the only way for the
system to derive the profit center and then (possibly) the segment from the CO object for
the book depreciation document. With activated segment reporting in FI-AA, the system
does not require the depreciation run account assignment type for account assignment
objects of Controlling. However, you still have to explicitly define the depreciation run
account assignment type for the profit center and the segment account assignment
objects.
Derive Profit Center and Segment for Already Activated Assets
Figure 39: Derive Profit Center and Segment for Already Activated Assets
You can notice the following characteristics with activated assets:
● After segment reporting has been activated, the profit center and segment fields have the
initial value in all asset master records.
● Depending on customizing, the system prevents posting to these assets until the data is
updated. In any case, the profit center or segment is not derived.
Note:
If the program is not able to derive a unique profit center or segment, manually
change the master data in the CO objects or the CO object in the asset master
record.

The technical name of the program to derive a profit center and segment for activated assets
is FAGL_ASSET_MASTERDATA_UPD.
You can find the FAGL_ASSET_MASTERDATA_UPD program in Customizing for Financial
Accounting under Asset Accounting→ Integration with General Ledger Accounting →
Segment Reporting→ Fill Master Data for Segment Reporting.
Assignment of Projects
Figure 40: Assigning Projects
You can use projects to carry out complex and long-term tasks. This makes it possible for
several profit centers to be involved in a single project. For example, if the project is to
construct a ship, one profit center might be responsible for producing the engine, while
another would be responsible for the internal fittings. Therefore, profit centers are assigned to
the various data-bearing structures in the project rather than the project definition itself.
Data-bearing structures include:
● Work Breakdown Structure (WBS) element
● Network header
● Network operation
In the project definition or the project profile, you can enter a profit center that you have to
use as the default for the individual WBS elements. You can overwrite this value in the
individual structures. If a WBS element is not assigned to a profit center, the system posts it
to the dummy profit center.
If a network header is not assigned to a profit center, the profit center is derived from the
corresponding WBS element.
If a network activity is not assigned to a profit center, the profit center is derived from the
corresponding WBS element if the activity is linked to a WBS element. Otherwise, the profit
center is taken from the network header.

The assignment of these structures to a profit center makes it possible for you to transfer
Work in Process (WIP) from projects to PCA, as well as see all costs and revenues in the
derived profit centers.
Assignment of Materials
Figure 41: Assigning Materials
The assignment of the material masters to profit centers is the basis for the assignment of
sales and production orders. Furthermore, it forms the foundation for internal goods
movement transactions and the transfer of material stock to PCA.
Materials are always assigned to a profit center at plant level. The example illustrates the
following options this approach provides:
● A profit center that represents a material in all plants (Profit center I).
● A profit center that represents a plant, including all materials for the plant (Profit center II).
● A profit center that represents a specific material for a specific plant (Profit center III).
The plant is assigned to a company code, which is in turn assigned to a CO area. This CO area
must be the same as the CO area to which the profit center belongs.
You can assign materials directly in the material master or use the fast assignment function.
Material maintenance is divided into several views. If you select the Sales: General/Plant Data
view, you enter the profit center in general plant parameters. If the view is not relevant to this
material (for example, with raw materials), you maintain the profit center in the Storage 2
view, also in general plant parameters. However, the same profit center is always shown in
different views.

Assignment of Production and Sales Orders
Figure 42: Assigning Production and Sales Orders
A production order contains an assignment to a profit center in the order master record. For
production planning and control (PP) production orders or process orders, you can find the
Profit Center field under Header Assignment. For CO production orders, it is located on the
initial screen.
When you create a production order, the default profit center is taken from the master record
(general plant parameters) of the material being produced. For process orders, the system
proposes the profit center for the main product in the order. Therefore, you do not have to
enter the profit center manually.
All the primary and secondary costs posted to the production order are passed on to the
assigned profit center, along with the credit posted when the production order is delivered or
settled. This assignment is also used to transfer WIP to PCA.
Production orders are carried out in a plant. The company code assigned to the plant and the
profit center assigned to the production order, must be assigned to the same controlling area.
This CO area and the CO area of the profit center must be the same.
Every order item in a sales order is assigned to a profit center. The profit center for the
material to be sold is proposed by default. Therefore, you do not have to enter the profit
center manually.

Assignment by Means of Substitution
Figure 43: Assignment by Means of Substitution
In the sales order, the profit center from the material master for the item to be sold is
proposed by default. This default proposal allows a product-oriented division by profit centers
(through the material), a location-oriented division (through the plant), or a combination of
both.
If you want to structure your company from a sales-oriented rather than a production-
oriented view, you can also determine a profit center from the available fields in the sales
order header or item with the help of substitution rules.
The following is a partial list of the fields from the sales order and related information that can
be used to derive the profit center assignment:
● Business area
● Customer
● Customer group
● Customer groups 1 5
● Distribution channel
● Category
● Material
● Material group
● Material groups 1 5
● Material price group

● Order reason
● Plant
● Product hierarchy
● Sales district
● Sales group
● Sales office
● Sales organization
● Storage location
If the system finds a valid substitution for a sales order, it uses this instead of the default
defined in the material master record.
Assignment Monitor Overview
Figure 44: Assignments check
The assignment monitor provides an overview of all the assignments you have made to profit
centers and provides support when you make or change assignments. For example, you can
call up a list of all the cost centers that are not assigned to a profit center or profit center
group, or a list of cost centers that are assigned to a particular profit center or profit center
group. From here, you can move directly to the transaction to change the object.
Display and Check Assignments
You can display and check assignments as follows:

Ledger→ Master Records→ Profit Center→ Current Settings→ Assignment Overview
(Transaction 1KE4).
● Using the Fiori app Profit Center Assignment Monitor.
● You check assignments in Customizing for Financial Accounting under General Ledger
Accounting → Master Data→ Profit Center→ Assignments of Account Assignment
Objects to Profit Centers→ Check Assignments.
The fast entry screen in the Material menu enables you to assign several material numbers to
a profit center quickly.
You can use the Orders menu to analyze the following types of orders:
● Internal orders (CO)
● Imputed cost orders (CO)
● CO production orders
● PP production orders
● Process orders
● Network headers
● Maintenance orders
The Cost Objects menu contains the general cost objects as well as the cost objects for
process manufacturing.
Caution:
Incorrect assignments lead to incorrect transaction data. Therefore, you should
check your assignments carefully.
LESSON SUMMARY

Unit 2
Learning Assessment
1. Based on which of the following aspects can you divide your enterprise?
X A The geographical structure of profit centers
X B The product-related structure of profit centers
X C The functional structure of profit centers
2. Profit center master data is time independent, which means you cannot create different
data for different time periods.
Determine whether this statement is true or false.
X True
X False
3. You can assign profit centers to all account assignment objects to which you can
post__________________.
X A production orders
X B cost objects
X C costs and revenues
X D sales orders
4. The profit center can be assigned to the sales order item in which of the following ways?
X A The profit center is derived from the material.
X B The profit center is entered manually.
X C The profit center is set with a substitution.
X D The profit center is taken from the customer master record.

Unit 2
1. Based on which of the following aspects can you divide your enterprise?
X A The geographical structure of profit centers
X B The product-related structure of profit centers
X C The functional structure of profit centers
2. Profit center master data is time independent, which means you cannot create different
data for different time periods.
X True
X False
3. You can assign profit centers to all account assignment objects to which you can
post__________________.
X A production orders
X B cost objects
X C costs and revenues
X D sales orders

4. The profit center can be assigned to the sales order item in which of the following ways?
X A The profit center is derived from the material.
X B The profit center is entered manually.
X C The profit center is set with a substitution.
X D The profit center is taken from the customer master record.
Unit 2: Learning Assessment - Answers

UNIT 3 Profit Center
Accounting (PCA)
Actual Postings
Lesson 1
Explaining Profit Center Updates 54
Lesson 2
Explaining the Data Flow in Financial Accounting 60
Lesson 3
Integrating Profit Centers and Materials Management (MM) 65
Lesson 4
Integrating Cost Object Controlling (COC) and PCA 68
Lesson 5
Integrating Sales and Distribution (SD) and PCA 70
Lesson 6
Processing Allocations in PCA 72
UNIT OBJECTIVES
● Explain the basics of profit center updates
● Integrate profit centers and financial accounting
● Integrate profit centers and materials management
● Integrate COC and PCA
● Integrate SD and PCA
● Process a profit center allocation in PCA

Unit 3
Lesson 1
Explaining Profit Center Updates
LESSON OVERVIEW
This lesson provides a basic overview of profit center updates in SAP General Ledger
Accounting.
Business Example
You want to understand the basics of profit center updates to prepare yourself for analyzing
and setting up the integrative processes. For this reason, you require the following knowledge:
● An understanding of how to analyze profit center updates.
LESSON OBJECTIVES
Profit Center Updates
Figure 45: Profit Center Reporting by Area of Responsibility

Dividing a company into profit centers enables you to delegate entrepreneurial responsibility
to these decentralized organizational units to steer and control them. In other words, a profit
center is a company within a company. The profit center differs from a cost center because
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.
PCA enables you to calculate the internal operating result for a profit center according to
period accounting and/or cost-of-sales accounting.
Advantages of Using Profit Center Accounting in SAP General Ledger Accounting
The main benefits of using Profit Center Accounting in SAP General Ledger are as follows:
● You can use document splitting to identify payables and receivables according to their
origin at profit center level. If required, you can also create financial statements at profit
center level.
● Profit Center Accounting is integrated in the universal journal (table ACDOCA). As single
source of truth, no reconciliation is required between the Financial Accounting/Controlling
and Profit Center Accounting.
Data from feeder applications (such as logistics) already contains the assignment of the
object (such as a material or sales order) to a profit center or partner profit center. In some
business transactions, the profit center or the partner profit center is determined through
document splitting for selected document items (such as receivables or payables).
You can use period accounting and/or cost-of-sales accounting in PCA. This means that PCA
can be used by companies in any industry sector (for example, mechanical engineering,
chemicals, or service industries) and with any form of production (for example, repetitive
manufacturing, make-to-order manufacturing, or process manufacturing).
Lesson: Explaining Profit Center Updates

Organizational Units and Master Data
Figure 46: Organizational_Units_and_Master_Data_Image.ppt
The assignments of all profit-relevant objects to profit centers play an important role. The
assignments determine how your business is divided into areas of responsibility. You make
these assignments in the master data of the original objects (materials, cost centers, orders,
projects, sales orders, assets, cost objects, and profitability segments). Every profit center is
assigned to the Controlling (CO) area organizational unit. All profit centers of a CO area are
assigned to a profit center standard hierarchy that reflects the organizational structure in
PCA at your company.
When you make manual general ledger account postings in the general ledger, you can
specify the profit center or the partner profit center. For primary cost elements, the profit
center or the partner profit center is derived automatically from the cost-relevant account
assignment. You cannot enter the profit center manually for receivables, payables, or
automatically generated line items. If you use document splitting, the system can supply
these items with a profit center.
If an allocation in CO results in a change of the profit centers, it also leads to a change of the
affected items in the profit and loss statement.
Unit 3: Profit Center Accounting (PCA) Actual Postings

Figure 47: Document-Dependent Profit Center Determination ― Step 1
To begin with, the system determines a profit center on the basis of the origin of the
document and any special conditions. It does so by one of the following methods:
● The system assigns the profit center dynamically on the basis of certain characteristics in
the document itself. When this method is used, the currently assigned profit center is
always determined.
● The system assigns the profit center indirectly on the basis of certain characteristics in a
preceding document. When this method is used, the system does not take into account
any assignment changes occurring after the date of the preceding document.

Figure 48: Characteristic-Dependent Profit Center Determination ― Step 2
For all types of documents, the system checks whether one of the following cases applies:
The profit center assignment which may arise from this step always has priority over the
assignment determined in step 1 on the basis of document type.
Cost- or Revenue Type: This is defined in the general ledger account master data. The so
called general ledger account type determines how the general ledger account can be used in
financial accounting and controlling (= primary costs or revenue) or in controlling (=
secondary costs).
Substitution: The specific input values are checked against one or more user-defined
conditions where the check takes place when the entry is made in the SAP System. If the
condition is met, the entered values are replaced with other values defined by the user. You
will find the definitions of substitution in Financial Accounting (FI) and Controlling (CO) in
customizing centrally under IMG: Financial Accounting → Special Purpose Ledger→
Tools→ Maintain Validation/Substitution/Rules → Maintain Substitution.
Default Profit Center (Transaction FAGL3KEH): Default profit centers do not reflect an
organizational area of responsibility. They are used to collect costs, revenues, and postings to
balance sheet accounts within a posting period. At the end of the period, you can assess or
distribute the posted data from the default profit center to the desired profit centers.
The procedure for creating master data for default profit centers is similar to the one you use
to create master data for your normal profit centers.
You can define default profit centers for each company code and account interval in
Customizing for Financial Accounting under General Ledger Accounting → Master Data→
Profit Center→ Assign Default Profit Center to Accounts .
You can enter a default profit center for each company code and account interval. This profit
center is derived under the following conditions:

● A profit center cannot be derived from the cost element (such as on the basis of the cost
center or the order).
● No profit center is specified in the posting.
The default profit center will be derived in the document, before document splitting will be
processed. This means that derivation is only useful for Profit and Loss (P&L) and balance
sheet accounts in cases where the profit center cannot be derived or specified (for example
manually).
Document Splitting: In general, document splitting process the account assignments which
have been provided in the document entry screen of the accounting document and do not
overwrite any assignments.
For exceptions and further information please refer to SAP Note 1085921.
Similar to the default profit center (FAGL3KEH), the document splitting offers you to assign a
default account assignment (such as a profit center or segment) as a constant that is used
whenever this object is missing in the item.
LESSON SUMMARY

Unit 3
Lesson 2
Explaining the Data Flow in Financial
Accounting
LESSON OVERVIEW
This lesson explains how to modify financial accounting documents in Profit Center
Accounting (PCA).
Business Example
You want to model asset balances and their changes in the profit center financial statements
as well as depreciation in the profit center profit and loss (P&L) statement. For this reason,
you require the following knowledge:
● An understanding of how to transfer and analyze accounts payable transactions (as an
example in financial accounting ) and asset movements to PCA.
LESSON OBJECTIVES

Postings in Accounts Payable
Figure 49: Accounts Payable - Posting with Primary Cost Element
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 available in profit center accounting.
However, you can also directly enter the profit center in the FI posting.
The figure shows a vendor invoice with two different profit centers assigned to the expense
lines. With document splitting you can also provide the profit center (and segment)
information to the vendor and tax lines. The first task involved in document splitting is to
ensure the assignment of general ledger (G/L) characteristics to all lines of the document in
cases where there is only one expense line (associated with one profit center). It is only then
that a complete characteristic balance statement can be created.
Lesson: Explaining the Data Flow in Financial Accounting

Figure 50: Passive Document Splitting Follow Up Process
This example in the ﬁgure illustrates the passive document splitting by posting an outgoing
payment.
Figure 51: Passive Document Splitting General Ledger View

In the vendor line item display, the payment document and original invoice document appear
(after the payment) as cleared items, as in previous releases. The document splitting rule for
the payment of a vendor invoice is provided in the standard SAP system.
Note:
If you assume that the invoice is not paid in full and, for example, a residual item of
EUR 2,000 remains, this creates a new vendor line item. In the general ledger view
of this document, the vendor amount is split passively in accordance with the
original account assignment relationship of the invoice.
Asset Movements
Figure 52: Asset Accounting and Profit Centers
The profit center and segment can be assigned directly in the asset master record
(prerequisite = Activated Segment Reporting in FI-AA). If you do not directly maintain these,
the system derives these two objects from a cost center or an order, based on the information
that is saved in the asset master data. You define account assignment types in Customizing
for Financial Accounting under Asset Accounting → Integration with the General Ledger →
Additional Account Assignment Objects→ Specify Account Assignment Types for Account
Assignment Objects. You can only maintain the account assignment types for activated
account assignment objects.
Lesson: Explaining the Data Flow in Financial Accounting

Asset Movements and Profit Centers
Figure 53: Asset Movements and Profit Centers
Document splitting also works for acquisition postings with multiple assets (and different
account assignments). The asset reconciliation accounts (balance sheet and value
adjustment accounts) are already classified internally as asset item categories. For example,
you can use the analytical Fiori apps or analysis for office, to create financial statements for
profit center or segment immediately.
LESSON SUMMARY

Unit 3
Lesson 3
Integrating Profit Centers and Materials
Management (MM)
LESSON OVERVIEW
This lesson explains how to transfer postings from Materials Management (MM) to Profit
Center Accounting (PCA).
Business Example
You want to outline the effects of MM or logistics-related processes on PCA. For this reason,
you require the following knowledge:
● An understanding of integration with MM.
LESSON OBJECTIVES
Materials Management
Figure 54: Purchase Order
The profit center to which data should be posted depends on which materials and Controlling
(CO) objects are involved. In a purchase order to the warehouse, the profit center is taken

from the material master per purchase order item. The profit center is forwarded to the goods
receipt for the purchase order.
Goods Receipt for Purchase Order
Figure 55: Goods Receipt for Purchase Order
When you post a purchase order, the system posts the goods usage immediately upon goods
receipt if the purchase order has an account assignment. The goods receipt/invoice receipt
(GR/IR) account is the clearing account for the goods and invoices received. This gives you
the costs of the material consumption in the corresponding profit centers.
The segments are derived from the profit center in the material master for logistics processes
also. The profit center characteristic is saved in the material master on the Costing 1 and
(General) Plant Data or Storage 2 tabs. To achieve a zero balance setting, the system creates
various clearing lines because of document splitting. These clearing lines also contain the
partner objects of the accounting characteristics. When a financial accounting (FI) document
that originated in materials management is split, the partner information is also included in
the expense and material stocks line.

Invoice Receipt for Purchase Order
Figure 56: Invoice Receipt for Purchase Order
When a goods receipt posting is made, the profit center is always determined indirectly
through the preceding document.
If the amount on the invoice is different to the standard price of the material purchased, price
differences arise when you post the invoice receipt. These price differences are assigned to
the profit center of the material purchased, provided it is a non-assigned purchase order.
If your price difference account is defined as a cost element, the amount is posted to the
profit center of the corresponding CO object.
LESSON SUMMARY
Lesson: Integrating Profit Centers and Materials Management (MM)

Unit 3
Lesson 4
Integrating Cost Object Controlling (COC) and
PCA
LESSON OVERVIEW
This lesson explains the integration of cost object controlling with Proﬁt Center Accounting
(PCA).
Business Example
You want to transfer primary and secondary cost postings from cost object controlling to
PCA. For this reason, you require the following knowledge:
● An understanding of the integration of cost object controlling with PCA
LESSON OBJECTIVES
Cost Object Controlling
Figure 57: Secondary Costs

The profit center of the sender account assignment object is credited, and the corresponding
profit center of the receiver account assignment object is specified as the partner profit
center.
In addition, the receiver’s profit center is charged and the sender’s profit center is recorded as
the partner profit center.
All secondary allocations between CO objects are mapped to the assigned profit centers (for
example, utilization of cost center activities for a production order).
Cost Object Controlling Goods Issue
Figure 58: Cost Object Controlling Goods Issue
This example shows the withdrawal of a material from the warehouse for a production order.
The profit center of the production order is determined by the materials produced.
In this example, the material master record for the raw materials belongs to the same profit
center as the production order from the perspective of PCA.
The raw material account stores the withdrawal of the production order, and maps the stock
and consumption postings to the same profit center. The profit center and partner profit
center are identical in this case.
LESSON SUMMARY
Lesson: Integrating Cost Object Controlling (COC) and PCA

Unit 3
Lesson 5
Integrating Sales and Distribution (SD) and
PCA
LESSON OVERVIEW
This lesson explains the integration of Sales and Distribution (SD) and Profit Center
Accounting (PCA).
Business Example
You post the goods issue and billing document in PCA and need to explain the value flow from
SD to the profit centers. For this reason, you require the following knowledge:
● An understanding of the profit center postings within the sales from stock process.
LESSON OBJECTIVES
Sales and Distribution
Figure 59: Transfer from Sales and Distribution

The assignment of a profit center for a sales order is passed from the sales order to the
delivery note, and then on to the billing document. The change in stock is posted to the profit
center upon goods issue.
If account-based profitability analysis (CO-PA) is active in your system, the general ledger
account for changes in stock must be defined as a cost element. If CO-PA is not active, you
must define this account as a profit and loss (P&L) account.
The profit center is assigned at the item level of the sales order.
The following data is transferred from billing documents and debit and credit memos to PCA:
● Revenues
● Sales deductions (shipping, rebates, and so on)
● Accruals (for example, from rebate agreements)
Note:
The figure shows a simplified example of a logistical SD process with the
generated profit center postings.
LESSON SUMMARY
Lesson: Integrating Sales and Distribution (SD) and PCA

Unit 3
Lesson 6
Processing Allocations in PCA
LESSON OVERVIEW
This lesson explains the use of allocations in Profit Center Accounting (PCA).
Business Example
You need to prepare for a project meeting concerning allocations for profit centers. For this
reason, you require the following knowledge:
● An understanding of how to process profit center allocations.
LESSON OBJECTIVES
Profit Center Allocation in SAP General Ledger Accounting
Figure 60: Statistical Key Figures
Statistical key figures are values or quantities (for example, the number of phone calls, m 3
area, or number of employees) that provide further details about the setup, consumption, or
performance output of cost centers, internal orders, processes, or profit centers.
You can post both plan and actual values to statistical key figures.
You use statistical key figures as an allocation base for periodic distributions or assessments
and to calculate reporting key figures (such as personnel costs per employee).

Statistical Key Figure Categories
The following are the statistical key figure categories:
● Fixed value
This is carried over from the period in which it is posted to all subsequent periods of the
same fiscal year. You only have to enter a new posting when the value changes. Fixed
values are defined when key figures remain constant over a significant period of time (such
as the number of employees in a cost center).
● Totals value
This is not transferred to the following period but must be entered for each individual
period, and is preferable for statistical key figures whose values fluctuate in individual
periods (such as the power consumption in kWh).
You can use transaction FAGLSKF to enter actual values for statistical key figures directly in
Profit Center Accounting.
To access the relevant transactions, on the SAP Easy Access screen, choose Accounting→
Financial Accounting→ General Ledger→ Statistical Key Figures .
Statistical Key Figures in SAP General Ledger Accounting
Figure 61: Statistical Key Figures in SAP General Ledger Accounting
You can maintain statistical key figures within SAP General Ledger Accounting directly. These
figures can be transferred from Overhead Cost Controlling (CO-OM) or posted directly in the
General Ledger.
Lesson: Processing Allocations in PCA

Allocation
Figure 62: Distribution and Assessment
Allocation (assessment and distribution) of overhead costs is performed at period closing.
Allocation is usually performed directly at cost center level. The postings are automatically
posted on the profit centers in SAP General Ledger Accounting.
If postings were made to a default profit centers, you allocate them to the production profit
centers as assessments during period-end closing. The system uses an assessment account
to consolidate the individual accounts in the sender profit center for assessment. This means
the head of the receiver profit center now only sees the assessment account and no longer
the individual accounts that were posted to the default profit center.
In many cases, you allocate certain balance sheet items (raw materials, real estate, and so
on), which you initially posted to a single profit center, to several receiver profit centers. We
recommend that you use distribution because it allocates items specifically to the cost
element. This means a material stock account remains with the receiver.
Assessing or distributing data in PCA is only beneficial after you have completed all the period
closing activities in all the feeder applications (FI, CO, SD, MM, and so on).
Caution:
Profit center distribution and assessment in SAP General Ledger Accounting
work the same way as in overhead management.

Creation of Distribution and Assessment
Figure 63: Create Distribution and Assessment
The cycle segment method described here defines both distributions and assessments. To
display the allocation relationships between the senders and receivers in the system, you
make entries for each (allocation) segment.
Each segment has the following entries:
● Sender values
Which costs do you want to assess and from which objects will the costs be assessed?
Sender values can be posted values, fixed amounts, or fixed prices. If you use posted
amounts, you can work with plan and actual values. You can specify a percentage under
100%, which leaves a corresponding amount on the sender profit center.
● Receiver values
Costs are allocated to which objects? On the receiver side, you can store fixed amounts,
fixed percentages, fixed portions, and variable portions as rules.
● Tracing factor
On what basis are the costs split among the receivers? The tracing factor of the variable
portion identifies a posted value on the profit center as an allocation base (for example,
statistical key figures).
In an allocation segment, sender profit centers are combined with receiver profit centers
according to the allocation relationships as described in the allocation segment. Multiple
segments are combined in a cycle and a cycle must always be assigned to a version.

Distribution
Figure 64: Distribution
Distribution is used to distribute values from one profit center to another. An allocation
between profit centers in FI does not change the debit on the energy cost center. The values
arrive in the receiving profit centers with the same account in which they were originally
posted on the sender profit center where processing uses the original account. In the figure,
the accounts are 416100 and 416110.
The FI document number is displayed in the basic list of the allocation. You can reverse
distributions as often as required.
You use the cycle segment method to define sender-receiver relationships.
Practical example: Distribution is used to distribute material stocks to different profit centers.
This is necessary when several profit centers at a plant are responsible for a material.
Because only one profit center can be defined in the material master, you allocate the stock
values (using the stock account) from the defined profit center to the others.

Assessment
Figure 65: Assessment
You use the assessment when the original accounts cannot, or must not, be posted on the
receiver side. In practice, assessment is often used to clear a standard profit center. In the
assessment cycle, a temporary assessment cost element is used to distribute the costs from
the source to the target. You want an individual assessment account to be defined in each
case for the assessment in G/L. This is account 499900 in the example shown in the figure.
The assessment account must not correspond to any secondary cost element in CO. This
means that you cannot simply use the assessment cost elements (cost element type 42)
from CO.
The receiving objects do not display the account with which the original invoices were
entered. You use the assessment when the original accounts cannot, or must not, be
identified on the receiver side. You can reverse and repeat assessments as often as required.
You use the cycle segment method to define sender-receiver relationships.
LESSON SUMMARY

Unit 3
Learning Assessment
1. If an allocation in CO results in a change of characteristics relevant for profit center (or a
functional area), ____________________________. Which of the following options completes
this sentence correctly?
X A it means that there is no change of the relevant items in the profit and loss
statement.
X B it necessitates a manual change of the relevant items in the profit and loss
statement.
X C it also leads to change of the affected items in the profit and loss statement.
2. The segment and profit center can be defined directly in the asset master record.
X True
X False
3. Put the following actions into the logical sequence in relation to invoice receipts for
purchase orders:
Arrange these steps into the correct sequence.
0 Invoice receipt created
0 Profit center determined
0 Goods receipt created
0 Any price differences assigned to the profit center
4. Allocation (assessment and distribution) can be performed directly in Profit Center
Accounting.
X True
X False

Unit 3
1. If an allocation in CO results in a change of characteristics relevant for profit center (or a
functional area), ____________________________. Which of the following options completes
this sentence correctly?
X A it means that there is no change of the relevant items in the profit and loss
statement.
X B it necessitates a manual change of the relevant items in the profit and loss
statement.
X C it also leads to change of the affected items in the profit and loss statement.
2. The segment and profit center can be defined directly in the asset master record.
X True
X False
3. Put the following actions into the logical sequence in relation to invoice receipts for
purchase orders:
Arrange these steps into the correct sequence.
3 Invoice receipt created
2 Profit center determined
1 Goods receipt created
4 Any price differences assigned to the profit center

4. Allocation (assessment and distribution) can be performed directly in Proﬁt Center
Accounting.
X True
X False
Unit 3: Learning Assessment - Answers

UNIT 4 Profit Center Planning
Lesson 1
Planning Values for Profit Centers 82
UNIT OBJECTIVES
● Understand planning in SAP S/4HANA
● Plan values for profit centers

Unit 4
Lesson 1
Planning Values for Proﬁt Centers
LESSON OBJECTIVES
SAP BPC Optimized for SAP S/4HANA
Figure 66: SAP BPC Optimized for SAP S/4HANA in SAP S/4HANA
SAP BPC Optimized for SAP S/4HANA is part of the SAP S/4HANA business suite. It is
shipped with content concerning the relevant BW and planning structures, as well as analysis
oﬃce planning workbooks.
Key Capabilities of SAP BPC
The key capabilities of SAP BPC Optimized for SAP S/4HANA are as follows:
● Single planning solution with the strengths of current solutions.
● Real-time access to master and transactional data, for modeling and variance analysis.

● Flexible drill-down on drivers of profitability, including customer, product, geography, and
channel.
● Identification of trends and forecasts, using predictive analysis.
● Seamless integration of planning screens into SAP S/4HANA workflows.
● End-to-end simulation capabilities.
● Pre-built planning models for accelerated adoption.
Examples of areas where SAP BPC optimized for SAP S/4HANA can be used are as follows:
Accounting and Financial Close
Harmonizes financial and managerial accounting, by using a single data source of truth
for all financial and managerial processes. This significantly reduces reconciliation efforts
and allows analysis without system limitations from pre-built aggregates. It comes with
built-in data migration to seamlessly transform your current data into the new
accounting world.
Financial Planning and Analysis
Builds on a common financial planning model. It leverages SAP HANA in-memory
planning capabilities, and allows faster planning cycles and better decisions through end-
to-end simulation capabilities.
Cash Management
Enables the analysis of global bank balances and cash positions, based on data from SAP
and non-SAP systems. It comes with integrated liquidity forecasting, central bank
account management, and equips cash managers with a smart business cockpit.
Advantages of Working with SAP BPC Optimized for SAP S/4HANA
SAP HANA driven line items offer fast plan data reporting, plan/actual comparisons and fast
plan data processing with the delivered planning functions. This is because FI and CO have
planning capabilities that are fully integrated bottom-up and top-down, and integrate data
from high level expense group level down to the most detailed market segmentations. The
plan data are available at any level without the need of replication between applications.
There is enhanced reconciliation capabilities at the same granularity as in the general ledger.
Every plan data record (even if it has been recorded at a higher level) is stored on company
and account level. There is no longer a distinction between G/L accounts and cost elements,
meaning the data is reconciled by design.
The advantages of working with SAP BPC Optimized for SAP S/4HANA are as follows:
● Overcoming limitations when planning in SAP S/4HANA through the SAP GUI.
● Elimination of data replication.
● Retraction of plan data developed in SAP Business Planning and Consolidation to SAP S/
4HANA for variance analysis.
● SAP Business Planning and Consolidation provides access to real-time master data and
actual data maintained in SAP S/4HANA.
● It provides end-to-end simulation capabilities.
Lesson: Planning Values for Profit Centers

Main Planning Features of SAP BPC Optimized for SAP S/4HANA
Figure 67: Functional Content: Analysis - Office Workbooks and Reports
The figure, Functional Content: Analysis - Office Workbooks and Reports, shows workbooks
delivered with SAP S/4HANA 1709.
Figure 68: Adopted Excel Workbooks Similar to SAP Fiori
The content analysis workbooks are SAP FIORI compliant.
Unit 4: Profit Center Planning

Figure 69: Comparison: Where to Capture Which Plan Data?
From the ﬁgure, Comparison: Where to Capture Which Plan Data?, you can see that only the
retraction of cost center data, internal order data, and project data back to SAP CO is
possible. Proﬁt center planning is no longer supported in FI, so the old planning tables are no
longer updated.
Note:
Plan data recorded prior to the upgrade in GL (BS/P&L/PrCtr/BusArea) cannot
be accessed after the upgrade, as the planning transactions are deactivated
during the upgrade.

Figure 70: Create Personal Business Plans
As SAP BPC for SAP S/4HANA uses SAP BW objects, it is possible to enrich the delivered
content and to create simulation models, like business plans, which help to find the plan data
that fit next year´s expectations best.
A commonly used scenario would be to change plan revenues to see how plan receivables will
change and how the cash flow statement will change as a further consequence.
Figure 71: Help - Access to How-to-Guides
Unit 4: Profit Center Planning

The ﬁgure, Help - Access to How-to-Guides, provides an overview of the most important how-
to-guides for SAP BPC Optimized for SAP S/4HANA.
Hint:
The detailed course S4F80 is the speciﬁc course for SAP BPC Optimized for SAP
S/4HANA.
LESSON SUMMARY

UNIT 5 Transfer Pricing
Lesson 1
Understanding Transfer Pricing 89
UNIT OBJECTIVES
● Understand transfer pricing

Unit 5
Lesson 1
Understanding Transfer Pricing
LESSON OBJECTIVES
Transfer Pricing
Figure 72: Transfer Prices - Parallel Valuations Based on Different Views
Many organizations are required to report financial results based on multiple accounting
regulations.
European-listed companies must report their consolidated financial results according to
International Financial Reporting Standards (IFRS).
Canadian, Indian, and Korean listed companies will also be required to report consolidated
financial results based on IFRS (conversion dates of 2011) with the United States not
far behind (2014).
Companies also listed in the United States or belonging to a US group of companies are
required to report according to US Generally Accepted Accounting Principles (US GAAP).
The result is quite different depending on your view and your company.
If you analyze the entire concern, you do not focus on single companies in your concern but
on the concern in total.
If you analyze single companies, the focus on the result of a legal entity.

If you are responsible for a profit center, you focus on the result of your profit center like it
would be a separate company.
Figure 73: Parallel Valuation Views
The view of the individual company and the valuation of business transactions according to
legal reporting requirements only represent one of several possible perspectives. Commercial
and tax considerations play a dominant role in the legal reporting requirements of the
individual companies.
In addition to this legal view, successful corporate and group management also needs
accounting information that shows business activities from the point of view of the whole
group or of individual profit centers.
It is essential for a group controlling for the entire group that you valuate these business
transactions using group production costs (group view). Moreover, in many groups, the
management structures do not necessarily coincide with the independent accounting units.
An internal moving average price system guides the activities of the individual profit centers
according to market principles. Consequently, value flows represented from the point of view
of profit centers are vital for the purposes of profit center management and profitability.
The transfer price is a valuation approach used to valuate the transfer of goods and services
between independent organizational units.
The transfer price solution in S/4HANA offers the following:
● Multinational groups need to report profitability for the group in total and for the individual
units based on the operational flows.
● Up to three parallel valuation methods for legal, group, and profit center valuation provide
the following different perspectives on the value chain within a group:
Unit 5: Transfer Pricing

- Legal perspective looks at the business transactions from the point of view of the
affiliated companies including markups.
- Profit center valuation treats profit centers as if they were independent companies
using, for example, negotiated prices.
- Group valuation looks at the whole group eliminating markups.
Figure 74: Parallel Valuation Approach - Example
The example corporate structure shown above will demonstrate the use of parallel valuation
approaches for a multistage production process. From the viewpoint of the profit centers
involved, the goods transferred from profit center 1 to profit center 2 appear as an internal
sale valuated with a special price of 75, defined in PCA (75.00). The goods withdrawal from
profit center 2 for an order in profit center 3 is a sale from both the profit center viewpoint and
the legal viewpoint, and is valuated separately using the appropriate PCA price and legal price.
The same is true for the stock transfer from the finished goods warehouse to the outbound
delivery warehouse. For cross-company code transfers between profit centers, you currently
need to define the prices for both the legal and the profit center viewpoints in SD.
Lesson: Understanding Transfer Pricing

Figure 75: Flexible Transfer Pricing
If your organization decides to use transfer prices in the profit center viewpoint, you can
calculate special moving average prices for all goods movements between profit centers.
This transfer price is a negotiated price between profit centers. It may be based, for example,
on the external market price, or it may be determined as a markup on the cost of goods
manufactured as seen from the group view or legal view.
These markups can depend on a number of factors, such as the profit centers involved, the
product, plant, date, and so on.
Configuration Options - Overview
Figure 76: Architecture for Parallel Transfer Price Valuation
SAP provides the following two options:
● Parallel valuations updated in parallel single-valuation ledgers.
- Use separate ledger for each valuation.
- Transparent separation of postings and reporting of financial results based on the
various regulations.

● Parallel valuations updated in a multi-valuation ledger.
- Use separate amount columns in the same ledger.
- Reduce memory footprint.
- Reduce effort and time for closing activities.
Figure 77: Configuration of Universal Journal for Transfer Prices
For an SAP S/4HANA system with transfer pricing, you configure the following:
● Currency and valuation profile
● Activation of transfer pricing for the relevant controlling area.
Figure 78: Currency Types for Transfer Price Valuations
There are specific rules for the currency settings of the universal journal as follows:
● Each currency type is assigned to a valuation view.
● Currency types in group or PCTR valuation have an assignment to the corresponding legal
currency type.
Lesson: Understanding Transfer Pricing

● The last digit does not represent the valuation (especially not for currency types in the
customer name-space).
LESSON SUMMARY

Profit Center Accounting in SAP S/4HANA, S4F28 Col11

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