Period accounting vs Cost of Sales accounting

Hello all,
Could someone explain to me the difference between Period accounting and Cost of Sales accounting? Where is period accounting configured in ECC 6.0?
I am trying configure PCA. The client wants the Profit centers to be setup product-wise. They have 3 products: a) a handheld GPS device, b) the accessories for the GPS device, c) and the subscription. I have setup 3 profit centers according to the 3 products.
Does either cost of sales accounting or period accounting come into the picture in my scenario? What I mean is, do either of the two methods have to be configured? And if so, why?
I have read in some places ("Configuring FICO" by Hurst & Nowak) that preparing PCA to accept actual postings can be very simple or complex. On the simple side, all that is required is to activate the fiscal year control parameters, create the proper document types, and define the necessary number ranges. For more complex solutions, additional account assignment may be maintained, and internal goods movement can be defined.
My client is just looking for a plain vanilla implementation of PCA at this time. Does that affect whether we use period or COS accounting?
Thanks in advance! Points available.

Hi,
Do check out the following documentation :
http://help.sap.com/bp_bblibrary/600/html/N74_EN_GCC.htm
Cost of Sales Accounting
http://help.sap.com/saphelp_erp2005vp/helpdata/en/b3/c3e040852f712ae10000000a155106/content.htm
Period Accounting
In period accounting, the performance of a particular business unit (profit center) - that is, its revenues, changes in inventory and capitalized services - is set off against the total costs of the period. This occurs at the G/L account level and adheres to the formal structure of Financial Accounting. This gives you a uniform structure of report data and lets you reconcile the data of cost and financial accounting on the basis of cost elements.
Hope this helps.
cheers,
Gimmo

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Cost of Sales & Period Account.......

Hi SAP guru's,
- What is the diff. between Cost of Sales Accounting and Period Accounting approach?
- What is reconciliation ledger? what is diff between Reconciliation ledger and Special purpose ledger?
sure we will assign good points
thanks
VK

If you right click on an Invoice and choose "Gross Profit" it will give you a setting on how you want to calculate the Gross Profit for that invoice.
In the accounting point of view the "Base Price" should be "Item Cost" so that the Gross Profit will be (Net Selling Price - Item Cost = Gross Profit). This will give you the same Gross Profit amount between P and L and Sales Analysis Report.
However, SAP B1 gives the user the ability to select a different base price other than the Item Cost.
This gives the user the flexibility for the Sales Report. Example (Net Sales Price - Vendor Sales Price = Gross Profit). People do this sometimes because the item's cost fluctuates if you use FIFO or average cost and they want a uniform cost to calculate their Gross Profit.
In summary if the Base Price is not set to "Item Cost" then there will be difference in the Gross Profit between the P and L and Sales Analysis Report.
See screenshot:
-Eric Alo-
B1 Financial Consultant

Cost of sales and period accounting approach

Hi friends,
i have little bit confusion about
1. What is Cost of Sales Accounting and
2. What is Period Accounting approach in Profit Center Accounting?
Regards,
Siva Reddy S.

Hello,
For concept, pl refer to below link:
http://help.sap.com/saphelp_47x200/helpdata/en/eb/13811243c411d1896f0000e8322d00/frameset.htm
For Cost of sales accounting, you have to activate functional area. Revenues are only compared for cost of goods sold in COS whereas in period based, you also compare revenue reserves, WIP etc.
Thanks,
Sourabh

Cost of sales accounting & period accounting

Hi folks,
I want to know the difference between cost of sales accounting & period accounting. where do we use them and which is preferable. thanks in advance.
Regards,
Vijay

Two accounting methods used for generating profitability statements are the cost-of-sales method and the period accounting method. Applying either method to a given set of business transactions under a given set of laws yields the same bottom-line result (profit) in concept. The difference is in how the overall profit and loss picture is presented.
 Companies must choose to use one of these methods for generating their legal financial statements. The choice is often determined by country-specific legal requirements.
 Cost-of-sales accounting
 With this method, the emphasis is on matching the revenues for goods and/or services provided (the value that a company gains as a result of sales) against the related expenses for those items (the value that is lost when products are transferred out of the company). Therefore, this accounting method displays profit and loss information in a manner optimized for conducting margin analyses, and as such it is optimal for the sales, marketing, and product management areas.
 Period accounting
 With this method, the emphasis is on summarizing the activity and situational change over a period of time, for a given organizational unit. Therefore, this accounting method presents the revenues and primary expenses that have been incurred during a given period of time and the changes in stock value levels, work-in-process, and capitalized activities. As such, it is optimal for the production and profit center areas.

Sales Analysis report does not match Cost of Sales Account

My client is running SAP B1 8.81 PL 6. He has set all items to standard costing method. He has discovered that the difference between the Sales Amount and the Gross Profit amount on the Sales Analysis report, which should equal the Cost of Sales for the Items, does not match the Cost of Sales G/L account on the P&L report. If you look at a sample of rows, the above difference divided by the quantity equals the standard cost of the item. There are no manual journal entries that affect the COS account for the posting period that is being analyzed. I cannot see any mathmatical difference or problem with the above analysis, nor can I find the problem. There is about an $85K difference between the reports. The Sales Amount on the Sales Analysis report matches the revenue account on the P&L to the penny. Has anyone ever compared these 2 reports? Thank you for your help.
Bill Turek

If you right click on an Invoice and choose "Gross Profit" it will give you a setting on how you want to calculate the Gross Profit for that invoice.
In the accounting point of view the "Base Price" should be "Item Cost" so that the Gross Profit will be (Net Selling Price - Item Cost = Gross Profit). This will give you the same Gross Profit amount between P and L and Sales Analysis Report.
However, SAP B1 gives the user the ability to select a different base price other than the Item Cost.
This gives the user the flexibility for the Sales Report. Example (Net Sales Price - Vendor Sales Price = Gross Profit). People do this sometimes because the item's cost fluctuates if you use FIFO or average cost and they want a uniform cost to calculate their Gross Profit.
In summary if the Base Price is not set to "Item Cost" then there will be difference in the Gross Profit between the P and L and Sales Analysis Report.
See screenshot:
-Eric Alo-
B1 Financial Consultant

Subsequent / re-activation of Cost of Sales Accounting

We are currently engaged at a new SAP customer (ECC6) that does not currently require COS Accounting to be activated /functional area functionality, but might require it at a later stage / subsequent to the initial go-live.
Based on the contents of SAP Note 740519, it appears that when COS Accounting is subsequently activated, the functional area cannot be repopulated for historic data when using ECC6.
QUESTION:
Should the customer decide to subsequently activate COS Accounting at the start of a new fiscal year (i.e. post go-live), all the P&L data will be populated with the functional area from the start of the new fiscal year. However, what about the carry forward balances for the Balance Sheet accounts? Is there a way to repopulate the "carried forward" balances in the Balance Sheet with a functional area, else the balance sheet will always contain incomplete functional area data for the carried forward balances.
Also, please advise if there is a program available to repopulate functional areas subsequently in the event of a subsequent activation of COS Accounting. If not, if the customer activate COS Accounting even though they don't require it at present, because it appears that you cannot change the functional area assignments once updated with transactional data?
As such, what is the recommended course of action:
1. Only activate COS Accounting when required, but resulting issues with updating historic data with functional area.... OR
2. Activate and configure pre go-live, but then cannot change functional area assignments once populated with transactional data.
I look forward to hearing from you.
Kind regards,
Dolf

Hi Dolf
   I have exactly the same requirement now with respect to cost of sales accounting. My client went live a couple of months back and now wants to activate Cost of Sales Accouting. I have the same question of how to populate the existing historic data with the functional areas.
   What did you do when you had this issue? Did you find out any way or work around to update the historic data with functional area? What approach did you take during your implementation?
    Your response would be highly appreciated and rewarded.
Vamsi

Functional area and cost of sales accounting (company code 2000) active

Hi There!
I hope someone can help.
In our sandbox system, whenever I try to convert a Purchase requistion into a Purchase Order I get the following error message : "Functional area and cost of sales accounting (company code 2000) active".
Anyone know how I can resolve this issue?
Kind regards,
Karl

Hi,
Double click on the error message & check the message Number..
Then go to
Spro>MM>Pur
Attributes of system messages & change the Message from Error to Warning..
Thx
Raju

Substitution for "Cost of sales Accounting" not working with cycle-trx KSC5

Hello togehter,
I have a problem that it seems that a created Substitution for "Cost of sales Accounting" is not executed in our System when running a cycle for Indirect Activity Allocation (Trx. KSC5).
Now I want to debug the Indirect Activity Allocation but I don't know how those Substitution Steps are generated as code that I can set a breakpoint when executing the cycle with Trx KSC5.
I want to try a trace when activating the substitution with transaction OBBZ but I'm not able to analyze in which Forms/Functions the Code is generated.
I also saw some OSS Notes that there are problems with "Cost of Sales Accounting" but I don't know concretely what to do to solve that special problem.
Kind regards
Udo

thanks for your answer.
I added the filed FKBER in table VWTYGB01.
Now I can select field "functional area" for CO Substitution.
nevertheless substitution does not work and set functional area on Dummy FB 9990 for CO postings to CO-object without Functional area.
Thats curious because I maintained exactly the same Substitution on an other SAP System (IDES Test System) and here it works.
Any ideas?
Are there further settigs required after maintenance of table VWTYGB01??
Thanks in advance

Cost of Sales Accounting

Functional Area "0100" assigned in one General ledger Which one the requirement of 2 company, But Functiona Area should be derived from respective object ( Cost center/ Order etc) for one company which is located in another country.
How it can be achived?

1) activate cost of sales accounting (FI/global settings/company codes/cost of sales accounting ...
-> interesting is you can choose between in preparation en production. The first one means the' functional area' field becomes active for master data assignments but is not posted yet in produciton. Ideally if you need some time to make all the master data assignments.
2) define functional area (under enterprise organisation / Structures ...
3) assign functional area's to CO objects (cost centers / production order types / internal orders , ... and optionally to P&L accounts
4) as of version 47, allow functional area as CO object when working with fixed assets (in fixed assets customizing).
5) define reports in report painter
that is.
-> most of the work is thinking about and setting up the master data assignments (of the functional area). Configuration part is very little.
regards
D

Cost of sales accounting inactive

hello Guru,
         My client implementing ECC 6.0 . we have activated the cost of sales accounting Global Parameters. we r trying to deactive the COS , system is not allowing to deactive throwing error message
When cost of sales accounting is active, the functional area characteristic is derived and saved in documents and totals records.
Deactivating cost of sales accounting has the following consequences:
     No functional areas are derived for costs posted after cost of accounting has been deactivated.
If you reactivate cost of sales accounting, these same costs remain without a functional area. It is not possible to derive functional areas for these costs at a later stage. Costs that are posted after cost of sales accounting has been reactivated have functional areas derived for them once again.
     The cost of sales accounting ledger, 0F, continues to be updated even after cost of sales accounting has been deactivated, but without the functional area characteristic.
To prevent this happening, SAP recommends that you also deactivate the cost of sales accounting ledger 0F.
Effects on Customizing
You can define when this system message is to be issued in accordance with your requirements.
You do this in Customizing as follows: Controlling -> Controlling: General -> Change Message Control.
The application area and message number can be taken from the technical documentation

Hello
Once Cost of Sales Accounting is active the Ledger 0F will be updated
for all costs posted with functional area.
When you deactivate "Cost of Sale Accounting", this Ledger will still be
updated but without functional area.
To prevent this data inconsistency, the message is set as "Error Message",
that is why you receive this error, and why it recommends that you
change the message to a warning message instead of an error.
Please check your settings in GCL2 to deactivate 0F.
It is recommended that you then set this message back to 'Error' after
deactivation to prevent any other ledger being deactivated by
accident.
Regards
Javier Reviriego

Cost-of-sales accounting / DUMMY-substitution for CO posting w/o func. area

Dear experts,
we activated Cost-of-sales accounting (special ledger - no use of NewGL functionalities).
We use the SAP "Standard substitition" in FI to make sure that all postings on P&L accounts go to special ledger. If no functional area can be derived, posting is assigend to Dummy functional area.
So far so good.
My question is: Is it possible to set up a "similar" substituition in case of CO postings with secondary cost element (e.g. Internal activity allocation, Overhead Rates) on other CO-object without functional area.
e.g. Internal activity allocation from Cost center to production order. No functional area assigned to production order.
I hope you unterstand my question for this issue.
Thanks in advance for your reply.
regards,
Butch

thanks for your answer.
I added the filed FKBER in table VWTYGB01.
Now I can select field "functional area" for CO Substitution.
nevertheless substitution does not work and set functional area on Dummy FB 9990 for CO postings to CO-object without Functional area.
Thats curious because I maintained exactly the same Substitution on an other SAP System (IDES Test System) and here it works.
Any ideas?
Are there further settigs required after maintenance of table VWTYGB01??
Thanks in advance

Cost of sales accounting implementation

Hi
Can we implement cost of sales accounting in the mid of the Fiscal year
if so ,
how to capture functional area in the transactions , changing in the master data will not allow as balances exist
what are all prequisities and configuration to be made for this to implement

It is not possible to transfer existing/old data to funactional area. Only new data from now on will flow.

Cost of sales goods accounting

Dear all,
We have different type of the sales order. At opm level we have accounting entries against sales order like this cost of goods "dr" and finish product stock "cr". Now I have
created one more order type and want dr account (expense ) that is not cost of goods ,Mean I want to dr the account on the base of sales order type for sales order entry.
Kindly let me know how can I do that. Although cost of sales goods(account) is given at organization level. Is this possible?
Thanks

Hi all
Is there any risk in doing the account determination through User exit in such a scenario. I have found a user exit EXIT_SAPMM07M_001 and include z_mm_exit_zxmbcm02_05 as useful instead of mapping the whole process for this transaction.
This user exit is working fine. Any risk people feel in bypassing OBYC through User exit.
Regards
MEHTA

OKB9 - Cost of sales accounts assigned to profitability segement

Hi All,
I am brand new in an SAP team and I want to understand how OKB9 works and how I could control it.
I want that all Cost of sales accounts ( included cycle count adjustment, difference when posting MIRO ) are posted to profitability segment.
At the moment account for cost difference between inventory price and invoice price is defined in OKB9 with a default cost center.Can I change that to PSG ?
Also if I define the accounts as PSG, how can I prevent people from booking manually to cost center for example on those accoutns where I only want profitability segment bookings ?
Hope this is clear enough to receive good help.
Thanks
Stéphane

If you dont want people to post to a cost center you can control this via the FSG (Field Status Group)
This is linked to the GL account, and defined at posting key level.

Item Interface error - "The Cost of Sales Account specified is not a valid"

A week back we migrated from 11.5.10 to 12.1.3
Since then, many items are failing in Item Interface with the error "The Cost of Sales Account specified is not a valid account or has expired in organization ITEM MASTER INV."
Item Master being the 'Inventory master organization'. I checked the cost of sales account & sales account. and they are Valid also their corresponding segments are valid in their respective value sets.
Log message for 'Item Import'
Import Items
Argument 1 (ORG_ID) = 167
Argument 2 (ALL_ORG) = 1
Argument 3 (VAL_ITEM_FLAG) = 1
Argument 4 (PRO_ITEM_FLAG) = 1
Argument 5 (DEL_REC_FLAG) = 1
Argument 6 (PROCESS_SET) = 77
Argument 7 (MODE) = 2
Argument 8 (Gather Stats) = 1
TRANSACTION ID : 42878726
ORGANIZATION ID : 174
TABLE NAME : MTL_SYSTEM_ITEMS_INTERFACE
COLUMN NAME : COST_OF_SALES_ACCOUNT
MESSAGE NAME : INV_IOI_ERR
ERROR MESSAGE : The Cost of Sales Account specified is not a valid account or has expired in organization ITEM MASTER INV.
TRANSACTION ID : 42878726
ORGANIZATION ID : 174
TABLE NAME : MTL_SYSTEM_ITEMS_INTERFACE
COLUMN NAME : SALES_ACCOUNT
MESSAGE NAME : INV_IOI_ERR
ERROR MESSAGE : The Sales Account specified is not valid or has expired for the organization ITEM MASTER INV.
Please help.

The Cost_of_sales_account & Sales_account as defined in the MTL_PARAMETERS are different from those in MTL_SYSTEM_ITEMS_B for the corresponding item. The values for these accounts in the interface tables are same as that in the MTL_SYSTEM_ITEMS_B table and hence not same as those defined in MTL_PARAMETERS.
Actually we have a Custom trigger on the MTL_SYSTEM_ITEMS_B table which updates these accounts, once the item is created in the Master Organization.
To verify this issue, I updated the accounts on the MTL_SYSTEM_ITEMS_INTERFACE table to match with that of MTL_PARAMETERS. Ran the 'Item Import', now those records are processed.
Does this means that, the Interface is validating the cost_of_sales_account & sales_account to match with that of the 'Organization' ??.
But we never had this issue in 11i. Is this a part of R12??

Period accounting vs Cost of Sales accounting

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