1. Cost element categories determine whether postings can be made directly or indirectly to a cost element. Primary cost elements allow direct postings while secondary cost elements only allow indirect postings. 2. There are several cost element categories for different purposes like primary, accrual, revenue, sales deduction, external settlement, and balance sheet accounts. Secondary cost element categories are used for internal settlement, order/project analysis, overhead rates, assessments, and activity/process allocation. 3. Each cost element category has specific rules for its use and how values are treated in different modules like whether values are statistical or included in price calculations.

1. Cost Element Categories
Definition
The cost element categoryhas a technical control function. It determines whether you can post to
a cost element directly or indirectly.
Direct posting means: You post a fixed amount to an account by specifying the account number.
You can post directly to all primary cost elements.
Indirect posting means: The system determines the account automatically at the time of posting
You can not enter the account number with the posting transaction. You can only post indirectly
to secondary cost elements.
Use
The following cost element categories can be used for primary cost elements :
 01: Primary cost element
This category of cost element can be debited with all primary postings, for example, in
Financial Accounting (FI) or Materials Management (MM).
 03: Accrual cost element / percentage method
This cost element category may only be used in Cost Center Accounting (CO-OM-CCA) with
the percentage method of accrual calculation. You can post directly in Financial Accounting
to register when actual costs are incurred. The system uses this cost element category to post
accrued costs in Cost Center Accounting.
If you do not want to consider actual costs (for example, additional costs), you can create this
category of cost elements exclusively in Controlling. You define the account in the chart of
accounts, but you do not need to create the account as a G/L account in Financial Accounting.
 04: Accrual cost element / target=actual method
This cost element category may be used only in the target=actual method of accrual
calculation with Cost Center Accounting. You can post the cost directly from Financial
Accounting to register when actual costs are incurred. The system uses this cost element
category to post accrued costs in Cost Center Accounting.
If you do not want to consider actual costs (for example, additional costs), you can create this
category of cost elements exclusively in Controlling. You define the account in the chart of
accounts, but you do not need to create the account as a G/L account in Financial Accounting.
 11: Revenue elements
The cost element category is used to post revenues.
Revenues are displayed in Controlling with a negative sign (-). An exception to this is
Profitability Analysis (CO-PA). In CO-PA revenues are displayed with a positive sign (+).
Caution
If you post revenues to cost centers, the values appear as statistical information only. This
means that you can repost revenues for posting adjustments to other cost centers, but another
allocation is not possible. Revenues are ignored in iterative activity price calculation and are
therefore not included in the allocation price of an activity type.

2. Note
Before you define a revenue element, check whether the posting is in the form of a credit
memo whose costs you want to take into account. If this is the case, use cost element category
01 (primary cost elements), not category 11 (revenue elements). These credit memos appear
as negative costs and are processed in the same way as all other cost elements of category 01.
Example: Cost centers
Cost center with revenue posting Cost center with credit entry
Costs 10,000 Costs 10,000
Revenues -5,000 Credit memo -5,000
Cost effective 10,000 Cost effective 5,000
 12: Sales deduction
Cost elements of this category are used to post sales deductions. Sales deductions (reductions,
adjustments, corrections) are adjustment or deduction postings of revenues, such as discounts
and rebates. Certain revenues, such as freight charged separately in the invoice, surcharges for
small quantities or special orders, are not classified as sales deductions. Such value items are
defined as revenue elements.
The account assignment options for cost elements of this category are the same as for cost
element category 11 (revenue elements). Values on cost centers are displayed statistically
only (as for revenues).
 22: External settlement
Cost elements of this category are used to settleorder, project, or cost object costs to objects
outside of Controlling. CO external objects can be, for example, assets (AM), materials (MM)
or G/L accounts (FI). The system always creates an accounting document when you settle to
external objects.
You cannot use this cost element category for settlement to objects within Controlling (such
as cost centers, orders, or projects). Use secondary cost element category 21 for internal
settlement. In contrast to settlement to CO-external objects, no accounting documents are
generated by the system for settlement to CO internal objects as the value flow occurs
exclusively within CO.
 90: Cost element for balance sheet accounts in Financial Accounting
Cost elements of this category are generated automatically when you create cost elements in
Controlling that have asset reconciliation accounts, that is, special balance sheet accounts, as
corresponding general ledger accounts in Financial Accounting.
You cannot change this cost element category in CO master data maintenance.
FI does not require CO account assignments of category 90. However, if you do enter a CO
account assignment, this is only updated statistically even for true CO objects.
Cost elements of category 90 enable you to control the costs of an order or project budget
during the acquisition of fixed assets that can be directly capitalized. To achieve this you
enter a capital investment order or work breakdown structure (WBS) element in the
appropriate field in the asset master data. The Asset Management (AM) component ensures

3. that when the asset is acquired, the order or WBS element is automatically entered in the
document.
In Controlling, orders and WBS elements are debited statistically. This statistical debit is
checked with the budget during availability control.
The system does not support other uses of category 90 cost elements at present. You cannot
plan using these cost elements.
The following cost element categories can be used for secondary cost elements :
 21: Internal settlement
This cost element category is used to settle (further allocate) order or project costs to
Controlling (CO) internal objects. CO-internal objects are, for example, orders, profitability
segments, cost centers and projects.
You cannot use this cost element category for settlement to CO-external objects (such as
fixed assets, materials, or G/L accounts). Use primary cost element category 22 for external
settlement.
 31: Order/project results analysis
This cost element category is used to save the order/project results analysis data on the
relevant order/project.
 41: Overhead rates
This cost element category is used to further allocate overhead costs using overhead ratesfrom
cost centers to orders.
 42: Assessment
This cost element category is used to allocate costs using the assessment method.
 43: Allocation of activities/processes
This cost element category is used during internal activity allocationand in Activity-Based
Costing.
 50: Incoming orders: sales revenues
This cost element category is used for sales revenues from sales orders with incoming orders
in the current period of the project-related incoming order.
 51: Incoming orders: other revenues
This cost element category is used for other revenues, such as imputed interest, from sales
orders with incoming orders in the current period of the project-related incoming order.
 52: Incoming orders: costs
This cost element category is used for costs from sales orders with incoming orders in the
current period of the project-related incoming order.
 61: Earned values
This cost element category is used for the earned values from the earned value analysis in
Project System.