This approach allows capturing salary postings by cost center or material expense postings by Work Breakdown Structure (WBS) element.Īll these changes with S/4HANA Finance, where the accounts and cost elements merge, and the master data settings for the cost elements become part of the general ledger (G/L) account master. It makes sure that the correct CO account assignment can be updated as each journal entry is posted. However, for the majority of P&L accounts, the implementation team creates a separate primary cost element for each account. There are typically a handful of P&L accounts that do not need to be reflected in CO-either because they have no impact on the operational business or are needed for a particular purpose, such as recording work in process (WIP). In S/4HANA Finance, accounts are created for every secondary cost element so that all value flows are visible in the universal journal and thus in reports such as the trial balance.Ī Controlling (CO) implementation typically starts with the decision regarding which profit-and-loss (P&L) accounts require primary cost elements and which don’t. Additional examples include the charging of consulting time to a Work Breakdown Structure (WBS) element or the settlement of research and development costs to CO-PA. The secondary cost elements record the value flows within CO, such as the charging of utility costs from a support cost center to an operational cost center or the charging of machine-hours to a production order.In S/4HANA Finance, the G/L account and the primary cost elements merge into one. If you use account-based profitability analysis (CO-PA) or if you have make-to-order processes requiring results analysis and settlement, you also use cost elements for revenues or sales deductions. In all accounting approaches, you use cost elements to represent wages and salaries, material expenses, depreciation, and many others. The primary cost elements represent the profit-and-loss accounts used to classify your journal entries.In S/4HANA Finance, as the accounts and cost elements are merged, the following changes result: The cost element design within the controlling area is a vital part of setting up your controlling (CO) system. Learn what changes come with S/4HANA Finance and what remains as before. However, this technical change does not mean that the idea of a cost element has disappeared with S/4HANA Finance. The transactions for the creation and maintenance of cost elements become obsolete, replaced by a single transaction for account maintenance. As companies migrate to S/4HANA Finance, the system merges their existing G/L accounts and cost elements. With S/4HANA Finance, the universal journal includes a single field account that covers both the general ledger (G/L) account and the cost element. This blog post about S4HANA Cost Elements is from our friends at SAPexpert - the source for trusted SAP tutorials, tips, and training content.
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