When not to create cost elements for P&L accounts? Implications?

I noticed some P&L gl accounts are not created as cost elements eg. R&D expense, COGS (posted during SD delivery), sales (posted during SD billing), freight charges, production variance (posted during prod.order settlement), etc.. I'm thinking if cost elements are not created, FI and CO will not reconcile.
Example of our SD delivery posting :
Debit COGS (sales order assignment)
Credit Stock
From above posting, there is amount posted to COGS gl account but no CO assignment except for sales order. Is there supposed to be a follow-up to this posting to reconcile FI with CO ? Or is our setup wrong?
Fyi we do not use CO-PA.
Thanks in advance.
Edited by: Pixel8 ation on Aug 3, 2010 5:16 PM

Hi,
Sorry, I probably confused things by mentioning Revenue. Your settings are correct, with Revenue defined as a revenue element (11) rather than a cost element (1).
With respect to WIP (P&L), I would create it as a cost element, since it represents the absorption of cost centre costs and materials into the production of goods, even though the goods are not yet complete. When the goods are completed they will be credited in CO-OM and debited to stock using a similar entry. The impact of these credits (to WIP or to Stock) is to move costs out of CO-OM into the goods produced (CoGS). In CO-OM, the net result of Costs less credits to WIP/Stock, indicates the efficiency of your cost centres or the accuracy of your standards.
I would also create the manufacturing variance accounts as Cost Elements and settle them back to your production costs centres (or possibly CO-PA if you used it), since they are also a reflection of the efficiency of your cost centres - i.e. if a Cost Centre manager is not achieving the standards, (s)he should be accountable for the variance, and if you are concerned about reconciling CO-OM and the costs in P&L, you won't reconcile if the variances aren't posted back to CO.
Regards,
Marc

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"System Response
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Hello
Please review the below information regarding cost elements category 90 : Financial Accounting Balance Sheet Accounts
Category 90 is automatically assigned when you create cost elements in CO whose   general ledger accounts in FI are asset reconciliation accounts
(special balance sheet accounts), not income statement accounts. You
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FI does not require CO account assignments to cost elements of
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http://www.copacustomhelp.state.pa.us/infopak/nav/finance/controlling/file1402/index.htm
http://www.copacustomhelp.state.pa.us/infopak/nav/finance/controlling/file2595/index.htm
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