1. Profit Center Accounting

2. Course Objectives
Understand the functions in Profit Center Accounting.
Explain Profitability management in SAP.
Understand and maintain CO-PCA master data.
Identify the source of actual values.
Execute planning.
Use the CO-PCA information system.

3. Table of contents Overview Profitability Management Master Data
Transfer Prices
Planning
Actual Data
Information System

4. PCA Overview
Profit center accounting, in conjunction with transfer pricing, enables:-
Structuring of the A Group according to Strategic Business Units (SBUs), leading to:Full Income Statements according to lines of business (Product Groups rolled up to SBU/Sectors)
Selected reporting of Balance Sheet items by Product Group/SBU and Sector (e.g. Payables/Receivables, Fixed Assets. Inventories).
The ability to reflect material movements between SBUs at commercial prices rather than cost

5. Terms used in Profitability Management
Accounting Methods
Period Accounting
Cost-of-Sales Accounting
Values
Gross Sales
Net Sales
Variances
Ratios
Return on Investment
Margins
Economic Profit
Cash Flow
Contribution Margin
The period accounting approach distinguishes between individual cost and revenue elements (such as material costs). The total costs for the period are compared with the total operating output for the period. The output of products manufactured within the period but not yet sold (stock increases), are added to the sales revenues, and the costs of the products produced in past periods but sold in this period (stock decreases), are taken away. Together with additional capitalized internal activities and other revenues, this yields the total operating output for the period.
In the cost-of-sales accounting approach there is no differentiation according to cost elements. Here the sales revenues are compared with the manufacturing costs for the products sold (cost of sale). The manufacturing costs may include material and personnel costs, which were incurred in previous periods. Costs which cannot be directly assigned to the sale, such as sales and administration costs, are displayed separately. The cost-of-sales procedure therefore also indicates whereabouts in the company costs were incurred.
Profit Center Accounting supports a representation of profits according to both cost-of-sales accounting and period accounting. The profitability approach takes place on a period for period basis in an account-based representation (using accounts).
By assigning balance sheet items, you also have the possibility of displaying additional success key figures (return on investment, profit-sales ratio, etc.).

6. Profitability Management

7. Aspects of Profitability Management
PCA PA
Profitability Analysis
Responsibility Accounting
(Company oriented)
By Market segment
(Market oriented)
Profitability
Segments
Revenue
Revenue
External Market
Discounts
Salaries
COGS
Materials
Contr. Margin
Profit
Advertising
Profit Centers
Profitability Reporting:  
Profitability Analysis (CO-PA) lets you analyze the profitability of segments of your external market. These segments can be defined according to products, customers, countries, and numerous other characteristics, as well as your internal organizational units such as company codes (i.e. 9100) or distribution channels (I.e. direct, wholesale, e-Commerce).
The aim is to provide your executive management, sales, marketing, planning, and other groups in your organization with decision-support from a market-oriented viewpoint.
Responsibility Reporting:  
EC-PCA lets you analyze internal profit and loss for profit centers. This makes it possible for you to evaluate different areas or units within your company. You can structure profit centers according to region (branch offices, plants), function (production, sales), or product (product groups, as in A Grp). Profit Center Accounting is a component of the "Enterprise Controlling" module.
Ethylene
Pharma
Power
Telecom

8. Aspects of Profitability Management
CO-PA
EC-PCA
Characteristics
costing-based
profit center
Aims of
Sales and
Enterprise
profitability
profitability
controlling
accounting
controlling
Calculation
period accounting
cost-of-sales
of profits
and cost-of sales
method
methods
profit-related
profit-rel. key fig.
key figures
balance sheet fig.
Key figures
Reconciliation
posted and
posted values
with FI
imputed values

9. Typical Questions in Profit Center Acctng.
Contribution of
What is the operating profit for a profit center?
organizational
unit
Return
What asset value is attributed to
A profit center? on
capital
Cost
Which responsibility areas
Exceeded their plan for last month?
management
A profit center is a management-oriented organizational unit used for internal controlling purposes. Dividing your company up into profit centers allows you to analyze areas of responsibility and to delegate responsibility to decentralized units, thus treating them as "companies within the company". EC-PCA lets you set up your profit centers according to product (product lines, divisions), geographical areas (regions, offices or production sites) or function (production, sales).
Management
What goods and services are exchanged within
The corporation?
of internal
sales & services

10. Responsibility Accounting
EC-PCA lets you calculate internal operating results for profit centers. A profit center represents an organizational subunit that operates independently on the market and bears responsibility for its own costs and revenues. You organize your organization into profit centers by assigning the master data of each profit-relevant objects (materials, cost centers, orders, projects, sales orders, assets and cost objects) to a profit center.
All the business transactions in the R/3 System which are relevant for cost and profits are updated in the profit centers at the same time they are processed in the original module, and organized according to cost and revenue elements. This transforms all the flows of goods and services within the company into exchanges of goods and services between profit centers. This profit center structure applies for both actual postings and profit center plan data.
It is also possible to treat a profit center as an investment center. In addition to the flows of goods and services, you can transfer selected balance sheet line items (fixed assets, payables and receivables, material stocks, and work in process) to profit centers on a periodic basis. This makes it possible to calculate such key figures as profit on sales, return on investments and cash flow.
The period accounting approach distinguishes between individual cost and revenue elements (such as material costs). The total costs for the period are compared with the total operating output for the period. The output of products manufactured within the period but not yet sold (stock increases), are added to the sales revenues, and the costs of the products produced in past periods but sold in this period (stock decreases), are taken away. Together with additional capitalized internal activities and other revenues, this yields the total operating output for the period.
In the cost-of-sales accounting approach there is no differentiation according to cost elements. Here the sales revenues are compared with the manufacturing costs for the products sold (cost of sale). The manufacturing costs may include material and personnel costs, which were incurred in previous periods. Costs which cannot be directly assigned to the sale, such as sales and administration costs, are displayed separately. The cost-of-sales procedure therefore also indicates whereabouts in the company costs were incurred.
Profit Center Accounting supports a representation of profits according to both cost-of-sales accounting and period accounting. The profitability approach takes place on a period for period basis in an account-based representation (using accounts).
By assigning balance sheet items, you also have the possibility of displaying additional success key figures (return on investment, profit-sales ratio, etc.).

11. Valuation Views A Group Legal Profit Center
Company 1
A Ltd
Company 2
A1 Ltd
Company 3
A2 Ltd
Profit Center 1
Profit Center 2
In Profit Center Accounting this field controls whether data is to be managed from a legal view, group view or profit center view.
In the legal view goods movements are posted between profit centers at the sales price which was agreed between internal trading partners who produce a balance sheet/profit and loss statement independently.
In the group view the goods movements are posted at the group production cost price which is used for clearing within a group without transfer price surcharges.
In the profit center view goods movements are posted between profit centers at negotiated transfer prices which are used for internal profit determination and corporate management.
You use valuation views to represent different ways of viewing business transactions in a company.
Legal view (Individual enterprise) – For transactions between company codes.
Group view – For a consolidated view of the corporation.
Profit center view – For business transactions between profit centers.

12. Parallel Currencies in Profit Center Acctn.
Profit Center Accounting EC -
PCA
Special
Company
Transaction EC
PCA
Code
Currency
Currency
Currency
Amount in transaction currency (coming from a posting document, i.e. USD)
Amount in company code currency (i.e. CCod A Ltd – INR)
Amount in profit center local currency (EUR – Profit Center Valuation View)
You can select the currency of the controlling area, the group currency or any special profit center currency as your report currency.
Note: In the standard reports for Profit Center Accounting, the values are displayed in the profit center report currency. -

13. Master Data

14. Organizational Units & Master Data
Operating Concern
A Grp Operating
Concern (9100)
Controlling Area
A Grp Controlling
Area (9100)
Profit Centers
Ethylene
Propylene
Pharma
Polyolefins
Power
Telecommunication
Information technology
Corporate
common
Company Codes
A Ltd 9100
A1 Ltd
9200
HQ 1000
Cost Centers
Purchasing
13…
Gen
Services
14…
Sales and
Marketing
15…
R & T
16…
Other Cost Objects
Orders
Cost Objects

15. Master Data in Profit Center Accounting
Profit Centers
Profit Center Groups
Accounts P&L, Balance Sheet Items
Statistical key figures
Data that is stored in the database for long periods of time is referred to as master data
This permanent (yet changeable) data is created for:
Profit centers, cost elements, accounts and statistical key figures
Accurate master data reduces:
Creation time for controlling documents
Amount of errors in the controlling process

16. Master Data - Profit Center (1)
Organizational unit in Accounting that reflects a
management-oriented structure of the organization
for the purpose of internal control. Profit Center groups
are collections of Profit centers with similar characteristics.
In the case of A Grp this structure is by Product Group.
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 analyze operating results for profit centers using the period accounting approach
By calculating the fixed capital as well, you can use your profit centers as investment centers.

17. Master Data – Profit Center (2)
Validity
Period
Company Code
Assignment
Profit
Center
Address /
Communications
Data
A profit center is assigned to a controlling area. When creating a profit center, you enter the name of the profit center and the period of validity. Profit center master data is time-based; therefore, you can create different data for different periods of time.You can copy the master data information from an existing profit center.
You maintain the important master data on the basic screen, such as the profit center name and description, the person in charge, and the department.
The Profit center group field defines the assignment to the standard hierarchy.
You can enter more information for the profit center on additional screens, such as address and communication data and long text about your profit center.
By default, a profit center is assigned to all company codes assigned to the controlling area. You can deselect certain company codes for a profit center by choosing Company codes. This setting is also used by functions in Consolidation (EC-CS) in order to create consolidation units.
Basic data

18. Master Data – Dummy Profit Center
Validity
Period
Indicators:
Dummy Profit Center
Dummy Profit
Center
Address /
Communications
Data
In practice you may inadvertently forget to assign a particular controlling object or material to a profit center. In such case if costs or sales are posted to this object, the corresponding data is posted to the dummy profit center in Profit Center Accounting. This ensures that reconciliation between EC-PCA and Financial Accounting is still possible in such instances. You can also discover missing assignments by analyzing the postings to the dummy profit center what should be done during end-period procedure.
Basic data

19. Profit Center Accounting Profit Center Accounting
Accounts in PCA
A Grp Chart of Accounts
Financial Accounting
Financial Accounting 1 2 3 4 8
Expense
Revenue
Assets
Liabilities
Equity
accounts 1 2 3 4 8 9
Current
Non -
Material
Primary
Revenue
Secondary
opera -
inventory
financial
cost
cost
ting
elements
assets
elements
elements
costs,
and
revenue
The transaction data in Profit Center Accounting is stored in the accounts contained in the controlling area chart of accounts. These accounts include:
Those from Financial Accounting which are used in Controlling (revenue and primary cost elements)
Accounts which occur only in Controlling (secondary cost elements)
Accounts from FI which are not used in Controlling (payables/receivables, material stocks, work in process, and so on)
You can maintain revenue and cost elements directly in Profit Center Accounting.
As with profit centers, you can define any number of hierarchical structures of accounts for use in the information system, allocations, and planning. These structures, called account groups, are maintained in the same way as profit center groups. Unlike profit centers, however, a standard hierarchy of accounts is not required.
Account groups are valid only in Profit Center Accounting. If you want to use the same balance sheet account groups used in Financial Accounting, you can copy these groups into Profit Center Accounting.
short -
term
Controlling
Controlling
capital
Profit Center Accounting
Profit Center Accounting

20. Master Data Groups Profit center Chemicals Ethylene Propylene Benzene
A profit center group is an alternative hierarchy to the standard hierarchy. These are useful in the information system, for allocations, and for planning. In addition to the standard hierarchy for your controlling area, you can also create alternative profit center hierarchies -- so-called "profit center groups" -- for use in the information system, allocations and planning. In contrast to the standard hierarchy, these profit center groups do not have to contain all the profit centers in the controlling area. On the contrary, profit center groups let you select only certain profit centers and reorganize them to allow you more flexibility.
You can define any number of hierarchical structures of accounts for use in the information system, allocations and planning. These structures are called "account groups". You can create new account groups as well as display or change existing ones.

21. Profit Center Assignments
Profitability
Profitability
Segment
Segment
Sales order
Cost center
Cost center
Profit
Profit
Center
Center
Asset
Internal order
Internal order
Production order
By assigning all the objects which incur costs or revenues in your system to profit centers, you determine how your company is to be divided into profit centers. These assignments also make it possible to display selected balance sheet items. All relevant account assignment objects are assigned to the respective profit centers using Customizing functions.
These assignments mean that it is not necessary to post data explicitly to profit centers each time. Instead, it is posted automatically in Profit Center Accounting when it is posted to the original object.
Generally, revenue and goods input are transferred to Profit Center Accounting based on the assignment of sales order items (derived from material master), direct costs based on the assignment of production orders and cost objects, and overhead costs based on the assignment of the account assignment objects in Overhead Management (cost centers, internal orders, and so on).
Materials are always assigned at the plant level. You can assign materials directly in the material master or using the fast assignment function. Material master maintenance is divided into several views. If you have already created the ‘Sales: plant data’ view, you can enter the profit center there. If this view is not created (for example, with raw materials), you can maintain the profit center in the ‘Costing 1 view’ and after that it will be copied to other views (advisable).
Assets are not assigned directly, but via appropriate cost center from their master data.
Material

22. Monitoring Assignments
Not
Check Assignments for:
assigned
Materials
Cost Centers
Orders
Objects per
profit center
Profit
Center
Profit centers
without
The assignment monitor (1KE4) provides you with an overview of all the assignments you have made to profit centers and supports you when you make or change assignments. For example, you can call up a list of cost centers which have not been assigned to a profit center or those cost centers which are assigned to a particular profit center or profit center group. When you display the list online, you can jump from there directly to the transaction for changing the object. That way you can make any missing assignments or correct any incorrect ones.
The menu Material also contains the option Fast assignment, which lets you assign a large number of materials to a profit center quickly.
Note: Incorrect assignments lead to incorrect transaction data in Profit Center Accounting. This is normally quite difficult to correct. Therefore check assignments to profit centers very carefully.
cost centers
Material fast
assignment

23. Transfer Price

24. Definition of a Transfer Price
A transfer price is a price used to valuate the transfer of goods and services between independent organizational units.
Transfer prices are maintained as conditions. You should take into consideration the price from material master stored in ‘Group currency, profit center valuation’ field in Accounting 1 view.
Currently transfer pricing has only been realized in R/3 for goods movements.
The transfer of goods and services between profit centers should be conducted at a set transfer price.
Transfer prices have to be maintained for materials of the pipeline material type (I.e. electricity). Prices are required for creation of cost estimates for Profit Center Valuation View .

25. Enterprise Controlling
Legal View – that of independent legal companies
Group View – that of the organization as a whole
Profit center view - that of the decentralized responsibility areas
The way profits are shown might look entirely different depending on your viewpoint on the organization.
When you analyze the organization as a whole, you do not see the individual companies within the group, but rather only the group itself as one company.
For the individual companies, on the other hand, only the results of the company are relevant.
Managers of profit centers, meanwhile, only want to look at their individual profit center as if it were an independent company.

26. Transfer Prices in SAP CO Transfer price from the group viewpoint =
Controlling area (Corporate Group)
Transfer price from the group viewpoint =
group production costs
Transfer price from the profit center viewpoint =
management price
Transfer price from the legal
viewpoint =
sales and purchase price
For the purpose of parallel valuation, the corporate group is represented by the controlling area. The transfer prices from the group view result from a group cost estimate.
In the profit center view, transfer prices are the prices negotiated by the managers for goods and services.
The legal view is the viewpoint of the individual company, represented by the company code. The transfer prices for this view are the sales and purchase prices.

27. Transfer Pricing Assumed Plan = Actual => No Variances A3 Ltd A Ltd
Company code 9100
A Ltd
A3 Ltd
Company code 9200
A1 Ltd
Company code 9300
PrCtr1
PrCtr2
PrCtr2
CCtr 10
PrCtr3
CCtr 20
L 80
L 120
PrCtr3
100 +5
G 80
G 100
P 85 85
P 120
L 70
L 80
L 120
220 L
L 70
L 100
G 70
G 100 G
G 80
G 70
P 70
G 100
P 120
220 P
P 85
P 70
P 85
From the viewpoint of the profit centers involved, the goods transfer from profit center 1 to profit center 2 appears as a sale valuated with a special price defined in PCA.
The goods withdrawal from profit center 2 for an order in profit center 3 is a sale from both the profit center viewpoint and the legal viewpoint, and is valuated separately using the appropriate PCA price and legal price. The same applies to the stock transfer to profit center 3 at the end.
If your organize decides to use transfer prices from the profit center viewpoint, you can calculate special managerial prices for all goods movements between profit centers.
This transfer price is a negotiated price between profit centers. It may be oriented on the market price, or it may be determined as a markup on the cost of goods manufactured as seen from the group view or legal view. These markups can depend on a number of factors, such as the profit centers involved, the product, plant, date, and so on.
Material flow: Ethylene -> Butene 1 -> Polyethylene -> Polyethylene
Assumed
Plan =
Actual
=>
No Variances
Ethylene
Butene-1
Butene-1
Polyethylene
Polyethylene

28. Transfer prices in PCA PCA Profit Center 1 Profit Center 2 120 FI/CO
Production
Material
order
120
FI/CO
You can define transfer prices (markup) for goods movements between profit centers. The markup will be added to the material price stored in Profit Center Valuation View.
Parallel
value flows
Logistics
Quantity flow

29. Planning

30. Profit Center Planning Objectives
Plan Integration
Planning Methods
Plan Data Transfer

31. Plan Integration MS Excel Profit Center Plan Profit Center Plan Sales
100,000
Discounts
5,000
Cost of Sales
50,000
Marketing Expenses
10,000
Admin. Expenses
15,000
Number of Sales Orders ,000 ….
Profit center planning is a part of short-term corporate planning and thus encompasses as span of one fiscal year. Short-term corporate planning generally consists of the following partial plans:
Sales plan
Master production schedule
Cost plan
Sales revenue plan
Sales Plan: The starting point for short-term planning is the sales plan, in which you determine the quantities you expect to sell during the planning period. The sales plan is usually created by the sales department. The planned sales quantities are then passed on to production planning so that the planned capacities and activities can be coordinated.
Cost Plan (Cost Center Plan) Once the activity units have been planned, it is necessary to plan the costs expected for these activities.
Sales and Profit Plan: The planned costs and sales quantities can then be used to derived planned contribution margins. The costs from cost center planning and the planned sales quantities (valuated based on the expected revenue) are used in sales revenue planning.
Internal
Cost
Production Order
Order
Center

32. Planning methods in PCA
Copy existing data
Excel -
Upload
Plan data transfer
Manual entry
New Plan
Plan
Allocations
The planning process is not a one-time activity, but rather an iterative process, which is usually performed in several steps. You need to pay special attention to the sequence in which the planning activities are carried out, and which planning areas need to be coordinated with one another.
The overall planning process therefore needs to be supported by a number of different planning methods. Profit center planning offers you the following methods of planning:
Copying existing plan or actual data to a plan
Posting plan data simultaneously (online) by transaction from other applications
Manual planning of profit centers
Assessment and distribution of data between profit centers (separate cycles per company code)
Execution of various plan reports for comparison of different plan versions.
Final Plan

33. line Plan Data Transfer
Plan Profit Center
Cost Center On -
line Plan Data Transfer
Revenue 100,000
AND/OR
Marketing 50,000
Internal /
Subsequent Postings
Admin ,000
CO Production Order …. ….
It is possible to transfer plan data real-time from cost centers and internal orders to Profit Center Accounting for each activity. The system reflects every planning activity in Profit Center Accounting. This lets you observe the progress of your profit center plan. If you do not transfer plan data for CO objects to Profit Center Accounting online, you can post this data en bloc, for single objects or for a single plan version and fiscal year .
Planned overhead (planned primary costs, results analysis, distribution, planned secondary costs, assessment, and so on) is posted to profit centers via the assignment of cost centers and internal orders.
Production costs are planned on CO production orders (order type CP03) on the product level of detail. If there is no average data per year you have to plan these costs on separate orders per period. This process was prepared for planning such costs not directly on Profit Centers to avoid manual data entry. Since CO production orders are not plan integrated you should post them to plan subsequently.

34. Actual Data

35. Actual Values Overview
Flow of Actual values in Profit Center Accounting
Overview
Flow from Profit and Loss accounts
Flow from materials management
Flow from sales and distribution
Flow from Balance Sheet items – Period end closing
Flow from Asset Management
Transfer of Material Stock
Transfer of Work In Process
Flow from Accounts payable and receivable
Flow from controlling – Period end closing
Flow from Overhead Cost Management
Profit Center Document Entry
Assessment & Distribution

36. Actual Values Overview
Flow of Actual Values in Profit Center Accounting
Overview

37. Overview of Value Flow in PCAEC -
PCA
Profit Center Accounting V V A A L L U U E E E FI CO - OM
Primary Costs CO - PA F F L L O O W W CO - PC
Which data is transferred to Profit Center Accounting?
All postings affecting revenue and cost elements
P&L postings directly coded to a profit center
P&L accounts maintained with automatic account assignment in PCA customizing
Balance Sheet accounts maintained with automatic account assignment in PCA customizing
P&L accounts related to transactions in Logistics
The data is posted to other objects and passed on from there to a profit center in Profit Center Accounting. This makes it possible to display your company’s results by profit center based on the original postings and with no additional work.
Actual data is reflected in Profit Center Accounting from the account assignment objects for both postings in Financial Accounting (revenues, primary costs) and allocations in cost accounting. In addition, you can reflect changes in stock from Materials Management (MM) and changes to work in process from production orders, as well as revenues directly from Sales and Distribution (SD) in Profit Center Accounting.
Goods
Procurement
Production
Movement
Sales/
Billing MM PP MM SD

38. Actual Values Overview
Flow of Actual Values in Profit Center Accounting
Flow from Profit and Loss accounts
Flow from materials management
Flow from sales and distribution

39. Determination of Profit Centers in P&L
Source Transaction
Billing Document
Billing Document
Material/Plant
of Sales
Order
Substitution
Invoice Receipt
Invoice Receipt
Material/Plant
of Purchase
Order
Goods Movement
Goods Movement
Material/Plant
When you post data directly in Financial Accounting, all primary cost elements require an additional assignment to a CO object. The assignment of this CO object (cost center, order, and so on) to a profit center ensures that the data is passed on to Profit Center Accounting.
It is necessary to assign SD sales orders (items) to profit centers in order to reflect sales revenues and sales deductions. The profit center is derived from material master and afterwards can be changed manually.
All the goods movements between profit centers are created in Materials Management and, where necessary, reflected from a profit center point of view via a special account determination.
When you post a purchase order, the system posts the goods usage immediately upon goods receipt if the purchase order has an account assignment.
At invoice receipt, if the amount on the invoice is different from the standard price of the material purchased, price differences arise when you post the invoice receipt. This difference is also reflected in Profit Center Accounting.
Direct Posting from
Direct Posting from FI FI
Indirect
/Manual
Assignment
Other
Other
P&L Accounts
P&L Accounts
Customized Automatic
Account
Assignment

40. Flow from materials management (1)
Material Expense
400000
EC-PCA
500
Material Expense
400000 FI
500
CO-PC
Raw Materials
Material Expense 500
500
The above example shows the processing of a production order, where materials are issued to a production order (consumption). The material document also results in a posting in Profit Center accounting for the material expense. The profit center will be determined based on the materials produced.

41. Flow from materials management (2)
Production Output
M. Expense
EC-PCA
450
500
Finished Products FI
450
CO-PC
Production Output
Production Output -
450
450
The above example shows the processing of a delivery from a production order to inventory. The transaction credits the product order expense, and debits factory output. Both transactions are reflected in Profit Center Accounting. Balance on hand for the material delivered to stock will be debited. Any resulting variances are typically charged to a price difference account, another posting which would then be reflected in profit center accounting during order settlement.

42. Flow from sales and distribution (1)
Inventory
- Finished Product (FG)
119430
EC-PCA
Stock 6,
Cost of Goods Sold
462002
Change Stock FI
6,028.50
The assignment of a sales order to a profit center is passed from the sales order to the delivery note and then on to the billing document.
The profit center is assigned at the item level of the sales order.
The Financial Accounting document and the profit center document are supplied from the original document in SD via the same interface.
The change in stock is posted to the profit center upon goods issue (cost of sales). The material price from Profit Center Valuation View in material master will be taken into consideration.

43. Flow from sales and distribution (2)
810000 EC -
PCA
10,000 FI
Receivables …
10,000
Sales
810000
10,000
The following data is transferred from bills and debit and credit memos to Profit Center Accounting.
Revenues
Sales deductions (shipping, discounts, and so on)
Accruals (e.g. from rebate agreements)

44. Actual Values Overview
Flow of Actual Values in Profit Center Accounting
Flow from Balance Sheet items – Period end closing
Flow from Asset Management
Transfer of Material Stock
Transfer of Work In Process
Flow from Accounts payable and receivable

45. Determination of Profit Center for B/Sheet
The system determines the profit center to which balance sheet accounts are assigned as follows :
Receivables are divided according to the corresponding revenue line items and assigned to the profit centers. Payables are posted to the profit center of the material ordered for purchases orders to stock, and to that of the account assignment for purchase orders to account assignment objects.
The assignment of material stocks and assets is based on the assignment made in the master record of a material.
Because postings for down payments do not reference an invoice, it is not possible to automatically assign the down payment to profit centers. However, you can assign them manually.

46. Flow from Asset management
Online Transfer: Assets are assigned to profit centers indirectly via their assignment to an internal order or cost center.

47. Flow of value in AP and AR
Before you can transfer payables and receivables, you first need to calculate the payables and receivables to be split in Financial Accounting. In this step, the payables and receivables are broken down according to profit center based on sales order line item assignments.
Within PCA you can transfer the data to Profit Center Accounting. Select the desired company codes and choose the periods you want to transfer. The payables and receivables are posted to Profit Center Accounting in the reconciliation accounts in the general ledger. No Financial Accounting documents are created in the process.
If you choose line items, the system creates a line item for each customer and vendor in Profit Center Accounting.

48. Actual Values Overview
Flow of Actual Values in Profit Center Accounting
Flow from controlling – Period end closing
Flow from Overhead Cost Management
Profit Center Document Entry
Assessment & Distribution

49. Transfer from Controlling (1)
All primary postings to account assignment objects in Controlling are posted to profit centers using the same cost element.
For allocations in cost accounting (distribution, assessment, cost allocation, transfers, order settlement, calculation of overhead), the following records are updated in Profit Center Accounting:
The profit center of the crediting account assignment object is “credited” using the same cost element, and the profit center of the object to be debited is used as the partner profit center.
In addition, the profit center of the “receiver” is debited using the same cost element, and the profit center of the sender is used as the partner profit center.

50. Transfer from Controlling (2)
All the secondary transfers between CO objects are selected and represented in the assigned profit centers.
You can represent the data in Profit Center Accounting by reflecting the original document directly.
The exchange of services between profit centers is represented as internal cost allocations in CO. If elimination of internal business volume is active, as in A Group, Profit Center Accounting only reflects those services which are provided by one profit center for another one or between different controlling object type (e.g. cost center and internal order)

51. Assessment
In case you cannot assign the final cost centers or materials to one profit center, you can collect the data in an allocation Profit center and then assess it in Profit Center Accounting.
We only assess postings to P&L accounts since for allocation of Balance Sheet accounts we use distribution.
When you define assessment (XXGA1A - Assess Other PC to Product PCs), you collect all the sender-receiver relationships in segments. You then store these segments in different cycles, which are stored with a time reference.
Note that for technical reasons, a cycle is always defined for one company code. You can create more than one cycle for a company code if allocation or performance aspects make this necessary. The cycles will be processed in sequence.

52. Information System

53. Information System Overview
Profit
Center
Report
List -
Interactive Reporting
oriented
Reports
Information System in the Profit Center Accounting can be classified into 3 groups:
Drilldown reports (Interactive Reports)
Report Painter reports (and Report Writer reports)
Line item report
Line Item
Reports

54. Report Output Types List – Oriented Reports Variable output areas
Navigation tree / drag & drop
Cumulative display functionality
Interactive Reporting
Interface Report-to-Report
Printing options
Integration with MS Office
List – Oriented Reports
The standard report tree delivered with the system encompass a number of Report Painter reports. These are provided in so-called report groups. A report group usually consists of two reports of one type (such as plan/actual comparison). One report displays the data with elimination of intercompany sales (IOC) between profit centers, the other without. When you display these reports, you can switch between the two versions.

55. Thank You