PROFIT CENTER ACCOUNTING (page1)

Table Of Contents:

 Introduction
 Profit Center Assignments
 Configurations
o Basic Settings
o Master Data
o Actual Posting Maintanence

Introduction(page2)

Profit Center Accounting

 Profit Center Accounting (PCA) is to determine profit for internal areas of responsibility
 The main purpose of PCA is providing the opportunity to analyze and report to the management regarding
internal profitability of sub units. Hence it is called a Company Code with in a Company Code.
 Profit Centers can be setup according to product(product lines, division), Geographical factors (region,
offices or production sites) or function (production, sales).
 Every Profit Center is assigned to the organizational unit in controlling area.

Profit Center Assignments (page3)

 Profit center accounting is called as a parasite. The Profit Center Accounting Derives the Information From
various components/ sources indirectly. To do that effectively the profit centers have to assign to various
application components as well as to other controlling objects.
 The assignment of profit center is key functionality within the profit center accounting.

Configuration (page4)
Basic Settings
o Maintain Controlling Area Settings
o Set Control Parameters for Actual Data
o Maintain Plan Version
Master Data
o Maintain Standard Hierarchy
o Create Profit Center Group
o Create Profit Center

Actual Postings
o Define Document Types
o Define Profit Center Document Number Range
o Assign Revenue Elements to Profit Centers
o Choose Additional Balance Sheet and P&L Accounts
o Allow Balances to Be Carried Forward

Basic Settings
Maintain Controlling Area Settings (page5)

o Menu Path:
IMG – Controlling – Profit Center Accounting – Basic Settings – Controlling Area Settings – Maintain
Controlling Area Settings

o T-Code: 0KE5

Define Dummy Profit Center (page 5)

o Dummy profit center is the default profit center for the entire controlling area. It will capture all
postings that do not have a profit center account assignment.

o T-Code: KE59
Set Control Parameters For Actual Data (page6)

o Menu Path:
IMG – Controlling – Profit Center Accounting – Basic Settings – Controlling Area Settings – Activate
Direct Postings – Set Control Parameters for Actual Data

o T-Code: 1KEF
Maintain Plan Versions (page6)

o Menu Path:
IMG – Controlling – Profit Center Accounting – Basic Settings – Controlling Area Settings – Activate
Direct Postings – Plan Versions – Maintain Plan Versions

o T-Code: OKEQ

Master Data
Master Data (page7)
o Master Data refers to those records based on which the various transactions take place.
o Master data contains various information, details and controls by which transaction has to behave.
o Master Data is stored in the database for long periods of time.
Maintain Standard Hierarchy (page8)
o Standard hierarchy is a tree structure that contains all profit centers belonging to a controlling area
and that reflects the organizational structure used in Profit Center Accounting

o Menu Path:
IMG – Controlling – Profit Center Accounting – Master Data – Profit Center – Define Standard
Hierarchy

o T-Code: KCH1
Create Profit Center Group(page9)
o Profit Center can be grouped together to form an hierarchical structure based on geography,
functions etc. In this step we will create profit center group under profit center standard hierarchy.
o Profit center groups are collections of profit centers with similar characteristics.

o Menu Path:
IMG – Controlling – Profit Center Accounting – Master Data – Profit Center – Define Profit Center
Groups.

o T-Code: KCH1
Define Profit Center (page10)
o Organizational unit in Accounting that reflects a management-oriented structure of the organization
for the purpose of internal control.

o Menu Path:
IMG – Controlling – Profit Center Accounting – Master Data – Profit Center – Define Profit Center .

o T-Code: KE51

Actual Postings
Actual Posting Maintenance (page11)
o Actual data is reflected in Profit Center Accounting From the account assignment objects foe both
postings in Financial Accounting (revenues, primary Costs) and allocations in cost accounting.
 Period Accounting - Simple Solution
 Cost of sale Accounting – Complex Solution

o 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.

Define Document Types (page12)

o Document Type Controls things like what currencies the posting can be maintained in the document
number range, and the transaction must be balanced.

o Menu Path:
IMG – Controlling – Profit Center Accounting – Actual Postings – Basic Settings: Actual – Maintain
Document Types .
 o Code: GCBX
Define Profit Center Document Number Range (page13)
o When we post to Profit Center Accounting, system creates profit center documents. These
documents are uniquely identified with a document number

o Menu Path:
IMG – Controlling – Profit Center Accounting – Actual Postings – Basic Settings: Actual – Define
number Ranges for Documents .

o Code: GB02

Maintain Automatic Account Assignment of Revenue Elements (page13)

o Menu Path:
IMG – Controlling – Profit Center Accounting – Actual Postings – Maintain Automatic Account
Assignment of Revenue Elements.

o Code: OKB9

Choose Additional Balance Sheet And P&L Accounts (page13)

o Menu Path:
IMG – Controlling – Profit Center Accounting – Actual Postings – Choose Additional Balance Sheet
And P&L Accounts – Choose Accounts .

o Code: 3KEH

Allow Balances To Be Carried Forward (page13)

o Menu Path:
IMG – Controlling – Profit Center Accounting – Basic Settings –Balance Carryforward – Allow
Balances to Be Carried Forward .

o Code: 2KET

Thank You