7. Financial Accounting: Income Statement
• Profit & Loss Statement
– Cost of Sales
– Profit or Loss
Management Gauging Success
profits: good
losses: bad
Revenues and Expenses
8. Managerial Accounting
• Internally focuses on a companies costs
and profitability.
• Helps management to determine
profitability of a region, product, or
marketing campaign.
• Managers control the flexible
configurations based on needs.
9. Managerial Accounting
• Unlike an un-integrated system, ERP
automates the transference of costs
– Assembly line to warehouse
• MM Module automates
10. General Ledger Accounts
Like an Automated ERP Checkbook that
depends upon system integration:
SD creates Accounts Receivable
MM creates Accounts Payable
FI coordinates the SD and MM paid and
owed transactions
CO is important as it tracks the individual
costs for profit analysis
11. Controlling (CO)
Controlling
CO Internal Accounting
Cost Accounting
Managerial Accounting
Management Accounting
Flexible – Non-standard
Financial Accounting
FI External Accounting
Financial Statements
Legal Requirements
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Standard
11
12. Reconciliation Accounts
• Reconciliation account
– Accounts receivable, Accounts payable,
Assets
• When you post to an account in the sub-
ledger, the system automatically posts to
the corresponding reconciliation account
• The general ledger is automatically
updated
13. Account Determination
• When you enter a goods movement
(inventory receipt, inventory withdrawal,
variances, etc.), you do not have to enter
G/L accounts since R/3 automatically
determines the correct accounts.
• Automatic Account Determination is set in
Customizing (IMG)
• Uses Chart of Accounts
14. Cost Centers
• Cost centers are used to track WHERE costs
occur in the organization. As costs are incurred,
they are assigned or posted to the appropriate
cost center.
• The posting and assignment of costs to cost
centers is a critical step in using the CO module.
• Cost centers are organized in a Standard
Hierarchy.
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15. Cost Center Standard Hierarchy
• The cost center standard hierarchy organizes cost
centers and provides the ability to organize reports at
different levels in the organization:
FS-CC-## (Standard Hierarchy)
##HQ (Cost Center Group / Hierarchy Area)
HQ Cost Centers
A010 – Finance
A020 – H/R
A030 – Sales
A040 – Marketing
A050 – Purchasing
A060 - Administration
##MFG (Cost Center Group / Hierarchy Area)
MFG Cost Centers
P010 – Production
P020 – Warehouse
P030 – Receiving
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16. Cost Allocation
• Frequently, costs like rent, computer expense,
utilities, etc. have to be allocated to cost centers
to provide accurate cost reporting.
• Costs can be allocated using a statistical key
figure, which defines some measurable value
related to the cost center, like square footage,
head count, CPU hours, etc.
• Costs can also be distributed using fixed
percentages.
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