Difference between Business Area & Profit Center Accounting

Can anybody help me out by explaining the difference between Business area and profit center? Because both the concepts are used to define a product line / function in a business,so why they are different?
Also let me know why business area concept is replaced by profit center?
Regards
Sagar

hi
PCA:
Created per Controlling Area & Company Code [System validation at Company Code Level]
Data:Manual Entry
Derivation by referred cost object
Derivation from offsetting item based on the above mentioned rule
Periodic processing:Monthly period closing program to be executed
Distribution / Assessment possible [PCA Documents are created which can be verified by the auditor]
Report showing individual and all PCA totals to match Company Code Values GL Account wise can be created
other:Consolidation at PCA level
Multiple Valuation possible for PCA at
FI Level
Consolidation Level
Material Ledger concept for PCA for parallel valuation of materials
Business area:Independent Dimension
   [Can be used across company codes u2013 Manual validation required to ensure Company Code-Business Area parity]
Data: Manual Entry
Derivation from Organization structure
Derivation by referred cost object
Derivation from offsetting item based on the above mentioned rule
Periodic processing:Monthly period closing program to be executed
Distribution / Assessment NOT possible
Report showing individual and all PCA totals to match Company Code Values GL Account wise available
Others:Consolidation at BA level
Multiple Valuation not possible at BA level
Material ledger concept NOT extended to Business Area
Further development for Business Area discontinued [Note 321190]
thanks
Srilaskhmi

Similar Messages

  • Validation between Business area & Profit Center

    Dear All,
    How can we validate Business area & profit center?
    Regards,
    Mahendra

    hi
    PCA:
    Created per Controlling Area & Company Code [System validation at Company Code Level]
    Data:Manual Entry
    Derivation by referred cost object
    Derivation from offsetting item based on the above mentioned rule
    Periodic processing:Monthly period closing program to be executed
    Distribution / Assessment possible [PCA Documents are created which can be verified by the auditor]
    Report showing individual and all PCA totals to match Company Code Values GL Account wise can be created
    other:Consolidation at PCA level
    Multiple Valuation possible for PCA at
    FI Level
    Consolidation Level
    Material Ledger concept for PCA for parallel valuation of materials
    Business area:Independent Dimension
       [Can be used across company codes u2013 Manual validation required to ensure Company Code-Business Area parity]
    Data: Manual Entry
    Derivation from Organization structure
    Derivation by referred cost object
    Derivation from offsetting item based on the above mentioned rule
    Periodic processing:Monthly period closing program to be executed
    Distribution / Assessment NOT possible
    Report showing individual and all PCA totals to match Company Code Values GL Account wise available
    Others:Consolidation at BA level
    Multiple Valuation not possible at BA level
    Material ledger concept NOT extended to Business Area
    Further development for Business Area discontinued [Note 321190]
    thanks
    Srilaskhmi

  • Business Area/profit Center Accounting

    Dear All
    I need your sugesstion
    we neet to create the Financial statement at plant level.
    for that Business are is ok or Profit center Accounting.?
    what would be the benfit that you sugsest?

    PROFIT CENTER IS GOOD COMPARED TO BUSINESS AREA BECAUSE REPORTS ARE NOT UPDATED AUTOMATICALLY

  • Difference between Business area and profit center accounting

    Hi Frnds,
    Can any body explain about difference between business area and profit center accounting .

    Hi
    Business area will have many profit centers. For example Vehicle is a business area in a company. Vehicle can be cars and Bikes etc. Here Vehicle is business area and Cars and Bike are profit centers. In broad Vehicle is a profit center. But as it has sub areas those are profit centers. So profit centers cannot be replaced with business area and vice versa. We can replace business area by Profit centre, only condition is that it should be in same controlling area. The business area is more like a business unit of a company. You can have multiple profit centers within a business area.
    Main distinguish factor is that distribution and assessment in possible in profit center but not in business area.
    One more distinction is that Business area need not be attached to any organisation structure. But profit centres can be created only under the controlling area. Business area can be across controlling area.
    Business area concept is used for making stragic decisions by the management whereas the primary purpose of profit centre accounting is responsibility accounting.
    http://help.sap.com/saphelp_erp2005/helpdata/en/ff/277203deea11d3b5b4006094b9b0a5/frameset.htm

  • Difference between business area balance sheet and profit centre accounting

    Hi all,
    I want to know what are the differences between business area balance sheet and profit centre accounting.
    Please tell the merits and demerits of both.
    If, I want to get plant-wise profitability of a company then which method is more recommendable and why?
    Regards,
    Charu Mahawar

    hi,
    look to that interesting thread:
    Re: Business Area Vs Profit Center
    Andreas
    pls reward useful answers
    Thank you !

  • Difference between  business area and profit center

    hi all
    could you please tell me about difference between business area and
    profitcenter.
    thanks,
    regards,
    chennuri.

    HI
    Read below
    Profit Center - The profit center view shows the various
    internal areas of responsibilities. Objects such as cost
    centers, materials, etc can be used for profit center
    analysis. Profit center can be used to determine the
    revenues, costs, and profitability for specfic areas of
    responsibility.
    Business Area - Business area forms an important part of
    external reporting. Analysis of various segments, product
    divisions, regions etc is possible using business areas.
    Business Area: This is optional
    This can be used cross compane codes
    This is for Internal Purpose
    It is not Legal Entity like Co Code
    The transation entered in Business are, Debit total will
    not tally with credit total
    Since it is used for segment wise or area wise or line wise
    this is used for internal report purpose only .
    Balance Shhet and P & L stataments can be drawn on segment
    wise
    Profit Centre: Generally in terms of SAP or Finance the
    meaning of Profit centre is to know the profitabilty.
    In same manner , The managers  wants to know the ROI from
    their investments, obviously we nned to use the tool.
    This ROI may be geographically or area wise or division
    wise. P.C provided us profitablity of the particular area
    for internal purpose ( Only for Internal )
    Business Area is an optional entry.Whenever company wants
    financial statements businessarea wise we can maintain
    BAs.And also we can maintain BA as Segment Wise,Product
    Wise,Geographical Location wise.
    Profit center is used to know the profits of companies.PC
    is also used for to know the profits as aProduct
    wise,Segment wise,geographical location wise.If anything
    wrong inthis answer plz correct me..
    Hope this helps
    Good Luck
    Hari

  • Difference between business area and sales area

    Hi
    I am swetha i have one doubt
    1) what is the buisiness area and what purpose we use the business area
    2)  what is sales area and what purpose we use the sales area
    3)what is the main Difference between business area and sales area.
    Regards
    Swetha

    Hii..
    Business Areas in SAP are used to differentiate transactions originating from different points/lines/locations in business. Let me give some examples to elucidiate:-
    A company (say, ABC) is a huge company and has a variety of businesses under it. Let us say that it typically operates in 3 different domains like machinery manufacturing, trading and assembling of machine parts.
    There are 2 options here now -
    1. Either create different company codes for the 3 business operations (which would be the easiest and require no creativity)
    or
    2.) Create each of these business lines into business areas (the better option).
    The advantages of using the second option is:
    1. You can use these business areas if other company codes require the same areas
    2. The configuration is simpler as in case of company code, you would require to go through the entire configuration of creating Chart of Accounts, Fiscal Year variants, posting periods variants and so on. In the business area option, you just need to attach it to the company code and the rest of the details in Business area is attached by default from the company code you are using it in.
    3. Using the options in controlling (EC-PCA, Enterprise Controlling, Profit Centre Accounting), you can even draw up Balance Sheets and PL statements for your business areas and hence this is used for management accounting in some companies (like HP, Dell, etc) when it wants to know the operating profits for different business areas/lines.
    The above was an example when the company wanted to separate entries according to the lines it operates in... the other case could be when it wants to find out profitability during its operations in cities and differentiates these cities into Business
    Areas...
    Business Areas are not much relevant in FI but are much more relevant in CO.
    Hope this clears.
    What is mySAP SD?
    The SAP sales and distribution is part of the logistics module that support your customers, starting from quotations, sales order and all the way towards billing the customer.  It is tightly integrated with the MM and PP functional modules.  It allows companies to input their customer sales price, check for open orders and forecast etc.
    The most important basic functional features in the sd module are:
    - Pricing                                           - Availability Check
    - Credit Management                       - Material Determination
    - Output Determination                     - Text Processing
    - Tax Determination                          - Account Determination
    Regards,
    Aakash

  • Difference between business area and costcenter

    Hi All,
    Could u pls let me know the differences between Business Area and Cost Center.
    Awaiting ur valuable responses.
    Thanks & Regards
    Chennuri

    Hi,
    i am giving a realtime information on business areas and cost centers.
    For our company we have 25 branches. in sap we treat all of our branches as a seperate business area. the reason why we maintain business area. at the month end or year end financial statemensts are generated on company code basis and business area base. so we consider branches as a business area.
    Cost center is like a cost object.
    Hope this is clear,
    Regards,
    Sankar

  • Document splitting with two characteristics Business area & Profit Center

    Dear Experts,
    is it possible to split the document with two characteristics .
    Business area
    Profit center
    Can anyone suggest!!
    Regards,
    Naru

    Hi,
    Thanks for you immediate response...
    i tried with this it is splitting only profit center and not splitting for business area, Please correct if i am wrong.
    Amount
    Business area
    Profit center
    Vendor A
    4000
    Expense
    2000
    A
    A
    Expense
    2000
    B
    B
    Should split like below
    Vendor A
    2000
    A
    A
    Expense
    2000
    A
    A
    Vendor A
    2000
    B
    B
    Expense
    2000
    B
    B

  • Business area & profit center

    hi sap gurus,
    When it is useful to activate new Profitcenter & when it is useful to activate Business Area.
    Can any body narrate difference and benefts of each
    Thanks & Regards
    krishna.

    Hi,
    Profit center and business are org units and both are used for similar purposes.
    Business area is gared on external accounting where as profit centers are used for internal accounting purposes
    Business Area
    Based on the above we can prepare Balance sheet and profit
    centre for separate product segment, geographical segment
    etc.  In India for certain companies it is the external
    reporting.
    Profit Centre
    Based on the above responsble profit centre derive the
    profit (only profit) (revenue minus expenses).  Internal
    reporting
    Thanks
    Ram

  • Difference Between Business Area & Business Place

    Hi there
    What is the difference between <i>Business Area and Business Place</i>.
    I know that <b>Business place</b> is used in Tax. But again, how it is used. What is the purpose of <b>Business place</b> in tax
    KM Naidu (Kali)

    Hi
    please go throught the follwoing site
    http://help.sap.com/printdocu/core/Print46c/en/data/pdf/FIBUSI/FIBUSI.pdf
    Business place
    Definition with example
    Business Place
    Use
    In Taiwan, the business place is used for value-added tax (VAT) reporting and Government Uniform Invoice (GUI) document numbering.
    Structure
    In Taiwan, the tax authorities assign each sales office a GUI registration number and a tax registration number. In Country Version Taiwan, the business place corresponds to the company sales office and, in Customizing, it is the organizational unit to which you assign the two tax numbers. By making these settings, you establish the business place in the system as the entity registered with the authorities that is responsible for issuing GUIs and submitting VAT returns.
    You define the business place in Customizing for Cross-Application Components:
    General Application Functions ® Cross-Application Document Numbering ® Taiwan ® Define Business Place
    If your company has more than one business place located in Taiwan, you can choose to file your VAT returns centrally, whereby it is the main business place that files the VAT returns on behalf of all business places. If this is the case, you have to specify the main business place in Customizing. You do this in Customizing for Financial Accounting:
    Financial Accounting Global Settings ® Company Code ® Enter Global Parameters
    Select the relevant company code and choose Additional details. In the field Business place of head office, enter your main business place. After you have done this and you have created your VAT media file, the system displays the tax numbers of the main business place in the media file, and not those of the individual business places.
    Integration
    If you are working with Sales and Distribution (SD), you need to assign the business place to a sales office in Customizing for Cross-Application Components:
    General Application Functions ® Cross-Application Document Numbering ® Taiwan ® Assign Business Place to Sales Office
    This setting allows the system to derive the business place from the sales office when you post a document in SD.
    However, if you are working with Accounts Payable (FI-AP), Accounts Receivable (FI-AR) or Materials Management (MM), the business place is not associated with any other organizational unit beyond the company code and therefore you have to enter the business place yourself.
    We recommend that you maintain your user profile and default your business place to parameter ID_BUPLA (if you are using complex posting transactions, default your branch to parameter JEA). This allows the system to copy the relevant business place to the transactions with which you are working and so reduce the risk of error.
    If u feel it is useful award points by way of thanks.
    nagesh.

  • Business Area & Profit Center : Reports Issue

    Hi Experts,
    We are maintaining Business Area and Profit Centers. we have also activated document splitting. We posting transactions, which has CO Account Assignment Objects or Profit Centers or Business Area.
    We need to view Financial Statements (F.01) Business Area wise and Profit Center Financial Statements (S_PL0_86000028), I m not able to see any figures or amounts respective to that Business Area wise or Profit Center.
    Please help me in understanding, what config part is missing or is there any prgram to be executed to activate this ?
    Edited by: Hussein  Merchant on Jul 7, 2010 11:38 AM

    ok

  • Impact Analysis: Business Area, Profit Center changed for Sales Order type

    Hi All,
    Can you please let me know the impact of changing the Business Area and Profit Center for Sales Order Document types.
    Scenario:
    Let's say that sales document type ZOR has been used for sometime. On this document x number of sales orders have been raised, delivered and invoiced over the years.
    Now, if you change the Business Area and Profit Center what would be the business impact.
    thanks,

    Hi,
    First of all itu2019s not a good business practice to change the Business area and Profit Centre.
    However if at all l you change the Business area and Profit centre the following is the impact::
    Business Area: effects the sales order in accounts assignment at Header level.
    Profit centre: effects the accounting part at Item level
    Overall in MIS reporting w.r.t Profit and Business Analysis in Finance will be affected.
    Thanks and regards
    DSR

  • Business area & profit center adjustments

    Hi viewers,
    How to do the business area adjustments to generate Business area wise balance sheet .... pls let me guide and also profit center wise adjustments to generate balance sheets.
    Rgds,
    swathi

    Hi
    Maintain the settings in OBXM and execute the following transactions F.5D, F.5E and F.5F
    Thank You,

  • Business Area & Profit Centre

    < MODERATOR:  Message locked.  Please post this message in the [Controlling forum|SAP ERP Financials - Controlling;. >
    Hi,
    What is the difference between Business Area & Profit Centre.
    how alternative profit centre is from business are.
    any documentation available.
    Regards,
    Shekar.

    Business area:An organizational unit in external accounting, which corresponds to a separate operational or responsibility area in the organization, and value flows recorded in Financial Accounting can be assigned to it.
    The business area should be treated as a separate economic unit, for which you can create an internal balance sheet and a profit and loss statement. The business area is, however, only an internal organizational unit and does not have any external impact.
    You define business areas if you wish to create a balance sheet and a profit and loss statement for internal areas, in addition to company codes.
    Profit Center:
    A profit center is an organizational unit in accounting that reflects a management-oriented structure of the organization for the purpose of internal control.
    you can use your profit centers as investment centers.
    Profit center Accounting at the profit center level is based on costs and revenues.  These are assigned statistically by multiple parallel updating to all logistical activities and other allocations of relevance for a profit center.

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