What is Profit Center accounting? and How to Maintain Controlling Area Settings?

Profit center accounting is generally is not the regular core component of controlling. It is a part of Enterprise Controlling. The main purpose of Profit center accounting is providing the opportunity to analyze and report to the management regarding internal profitability of sub units. Hence it is called a company code with in a company code. It can capture the financial statements as well as Return on investment also within a company code level. It is called as management tool to analyze the performance of particular organizational unit and compare the variances for taking a strategic decision.

Profit Center accounting

This part of application component is same as the cost center configurations. Here we can plan the profit centers, and compare the data with actual data. The difference between the cost center accounting and profit center accounting, the former one deals with the costs only and the later one deals costs as well as revenues as well. Profit center reporting can be considered as legal valuation also. The sum of all the profit centers reports can be construed as company code legal valuation.

The profit center accounting is a similar functionality of Special purpose ledger. It can be considered as predefined special purposed ledger tool. Before going into the details of Profit Center Accounting, we must set some basic setting requirements.

 Set controlling Area: path: controlling-profit center accounting-basic settings-set controlling area: TC: okks.

Give the controlling area: 2006

Save the data

Also See: What is the difference between SAP Financials and SAP Controlling?

Maintain Controlling area settings

Path: controlling-profit center accounting-basic settings-controlling area settings-maintain controlling area settings: TC: OKE5

1. Standard hierarchy: the name we have to give like in the cost center accounting. It is useful for reporting purpose.

2. Elimination of internal business volumes: select this check box to eliminate the business volumes assigned to one or more controlling objects. The transaction among the controlling objects will be eliminated for the purpose of profit center accounting.

3. Give the profit center currency type: as you require from the selection list. If the currency type is as controlling area currency uses the currency of controlling area currency as the profit center currency. Other wise select the group currency as the profit center currency or any other currency as profit center currency.

4. Selection of the check box store transaction currency the system stores the currency values in transaction currency also.

5. Valuation view: this setting will give an understanding that the usage of profit center accounting with in a company code level.

6. Activate the profit center accounting from the fiscal you want. Default year is the controlling area fiscal year.

Save the data.

Also See: To Explain Profit Center Accounting