Chapter 3 - Core Finance: Management Accounting

Profitability centers can also be the receivers of...

costs and revenues in direct postings or settlements or orders received in materials management.

Statistical Key Figures

represents a basis for cost allocation in controlling postings such as distributions and assessments.

Settlement

A settlement is the distribution of costs collected on an internal order. In the settlement process, the system transfers collected costs to one or more costs receivers by crediting the internal order and debiting the receivers.

Tracing Factor

A user-defined rule defines a basis for transferring values from the sender to the receiver. In particular, a tracing factor is a specific statistical key figure or activity type that is posted to the receiver cost object

Cost Center (in the real world)

An organizational unit within the controlling area representing an enclosed location where the costs occur.

Internal orders are created at WHICH area level?

Controlling area level

In the system, a cost center is a master record in.....

Cost Center Accounting

Material Ledger

Enables the evaluation of inventories using the standard price and moving average price methods. This is a mandatory approach in SAP S/4 HANA.

Fixed Values

Valid for all subsequent posting periods of the fiscal year (Fxd val.)

Total Values

Valid only in the posting period in which the key figure is entered (Tot. values)

Internal Order

a flexible management tool that you can use as an interim cost collector of time-restricted jobs or small projects in a controlling area.

Activity-based costing

concerned with providing a process-oriented, cross-functional perspective of overhead costs. By assigning the cost sources to their originating business process, activity-based costing provides an enhanced product costing view. It provides a tree structure representing the standard hierarchy of business processes and business processes assigned to this hierarchy.

A prerequisite to creating a cost center master record is to WHAT?

define a standard hierarchy, a tree-like structure of all the cost centers in a controlling area.

Statistical key figures are identified by what?

four-digit numeric keys

A controlling area plays a central role in .......

overhead cost controlling

In the system, an internal order is a master record in....

overhead cost controlling

True controlling objects must be assigned to...

purchase order line items if you buy a nonstock item or stock item for consumption

Cost element accounting is concerned with WHAT?

recording and monitoring costs and revenues reflected in management accounting

Period-end closing

the periodic cost allocation process companies carry out at period end. It consists of several tasks you must perform in a certain sequence.

The controlling module provides...

true and statistical controlling objects to record and monitor a controlling area's costs and revenues. The system also supports postings and allocations between controlling objects.

A cost center is a cost center that collects...

various costs of delimited location within the controlling area

From a cost controlling standpoint, you can structure the organizational divisions (i.e., cost centers) according to several criteria, such as...

-Area of responsibility -Spatial -Functional Requirements -Activity Related -Position or group related

The following system objects can also be assigned to a cost center in their master records:

-Asset -Equipment and functional location -Work center -Work breakdown structure (WBS) element

What are some of the several items that will be maintained in the master record?

-Basic data -Control data -Address -Communication

Cost object controlling enables a manufacturing enterprise to perform the following activities:

-Calculate planned costs (budgeted costs) -Record/collect actual costs for the cost objects -Compare actual costs with both target and planned costs and analyze variances -Calculate WIP values -Settle variances to other components such as profitability analysis and financial accounting

The controlling module uses WHICH organizational data to map the management accounting-relevant organizational structure of your enterprise into the system?

-Client -Operating concern -Controlling area

In cost center master data, a cost center can be assigned to the following objects:

-Company code -Business area -Profit center -Functional area

Transactions in project systems

-Confirmations -Material processing -Settlement

Which currencies can be used in controlling?

-Controlling Area Currency -Controlling object currency -Transaction Currency

Which key processes complement each other for efficient internal reporting and accurate cost allocations in management accounting?

-Cost (and revenue) element accounting -Overhead cost controlling --cost center accounting --internal orders --activity-based costing -Profitability analysis and sales controlling -Product cost controlling -Profit center accounting

SAP S/4HANA provides the controlling module to support WHICH key processes in management accounting?

-Cost and revenue element accounting -Overhead cost controlling -Product cost controlling -Profitability analysis and sales controlling

Activity Types are necessary for which items?

-Cost calculation at the cost center providing the activity -Cost allocation between the cost center providing the activity and the receiver of the activity, which may be another cost center, project, order, or activity-based process

WHICH objects can be assigned a profit center in their master records?

-Cost centers -Fixed assets -Internal orders -Materials

What master data assignments are possible within controlling?

-Cost centers are created in the controlling area level and assigned to the standard hierarchy. In this standard hierarchy, supporting cost centers can be assigned to other cost centers -Activity types are created in the controlling area and assigned to cost centers in activity type planning -Internal orders are created in the controlling area and assigned to a responsible cost center -Statistical key figures are created in the controlling area

Some true controlling objects to which you can make true postings include the following:

-Cost centers for account assignment of costs -Projects (true projects, i.e., not marked as statistical) -Networks -Cost objects (manufacturing orders, sales order line items, projects, and WBS elements) -Profitability segments -Fixed assets -Internal orders (true) -Make-to-order (MTO) sales order (a sales order with cost collector) -Business process (master data in activity-based costing)

What master data creates a foundation for the transaction in controlling?

-Cost element --Primary cost or revenue element --Secondary cost element -Cost center -Activity type -Statistical key figure -Internal order -Profit Center -Business Process

Cost estimate results can serve as a basis for price updates and as an important source of information for the following use cases in other application components:

-Cost object controlling -Materials management -Sales and distribution -Profitability analysis

In general, internal orders can be settled to the following objects:

-Cost objects, including cost centers, orders, projects, profitability segments, and assets -General ledger accounts -Sales orders with cost collectors

In general, profitability analysis receives costs and activity allocations through the following transactions from controlling:

-Direct and indirect activity allocations -Order or project settlements -Assessments -Template allocations

Examples of cross-module data assignments:

-Financial accounting -Logistics -Human experience management

Logistics-controlling master data can be assigned to several organizational master data in the following ways:

-Key logistics processes -Production -Logistics processes -Project Systems -Plant maintenance

Transactions in management accounting

-Manual actual postings -Assessments and distributions -Internal order Settlements

Transactions in plant maintenance

-Material processing -Completing confirmation -Settlement

What mandatory data must be maintained in the Basic data view of the cost center master record?

-Name (define the name of the cost center) -Cost Center Category (Choose one of the cost center categories defined in the system. Cost center categories are defined in Customizing. Some activity types are available only for specific cost center categories. Categories are also necessary for reporting and evaluations.) -Hierarchy area (The classification of the cost center in the standard hierarchy) -Person Responsible (In this field, enter the name of the cost center manager) -Currency (In this field, specify the cost center currency. Note that the controlling area currency is the default value for this field)

Internal orders can be categorized in the following ways...

-Overhead Orders -Investment Orders -Accrual Orders -Orders with revenue

Product cost accounting is concerned with....

-Planning the cost of products or services -Collecting and tracking the actual cost of production orders -Providing the actual costs of products or services

Two types of cost and revenue elements exist:

-Primary cost or revenue elements -Secondary cost elements

Product cost planning uses the following data structures for this purpose:

-Quantity structure -Value structure

Profit centers can be structure according to various criteria, such as the following:

-Region (branch offices, plants) -Function (production, sales) -Product (product ranges, divisions)

WHICH objects can be assigned to a profit center?

-Sales orders -Projects -Networks -Network activities -Production orders -WBS elements -Maintenance orders

Some statistical controlling objects to which you can make statistical postings include the following:

-Statistical projects -Statistical internal orders -Profit centers -Cost centers for account assignments of revenues

To set up an operation concern for profitability analysis, you must include....

-The operating concern's data structure (including Characteristics and Value fields) -The operating concern's currency and fiscal year variant

The following transactions can lead to updates in the controlling module:

-Transactions in management accounting -Transactions in financial accounting -Transactions in purchase-to-pay -Transactions in plan-to-produce -Transactions in sales and distribution -Transactions in plant maintenance -Transactions in Project System

Which organizational data assignments are possible within controlling?

-You must assign each operating concern at least one controlling area -Several controlling areas can be assigned to an operating concern

To create a cost center master record, you must choose WHAT?

-a controlling area -a validity period

Cost centers may receive data in different ways, including...

-direct postings -business processes -periodic postings -allocations -assessment and distributions -settlements

Four categories of internal orders exist:

1. Overhead orders 2. Investment orders 3. Accrual orders 4. Orders with revenue

The 3 types of standard prices that exist in material master records:

1. The previous price 2. The current price 3. The future price (the future price turns into the current (standard) price when you release the standard cost estimate.)

Completion confirmation (Transactions in plant maintenance)

A completion confirmation triggers an internal activity allocation between the cost centers assigned to work centers and the plant maintenance order, debiting the order with the costs, thus integrating plant maintenance with controlling

Depreciation posting run (Transactions in financial accounting)

A depreciation posting run can post cost centers and cost elements assigned to the asset, thus integrating asset accounting with controlling

Key logistics processes (part of logistics)

A material is a master record in all key logistics processes including purchasing, sales and distribution, and production.

Logistics processes (part of logistics)

A plant is an organizational data in all logistics processes except for Project System. An internal order is a master record in controlling. You can assign the internal order to a plant in its master record

Transactions in plan-to-produce

A production order is a true controlling object and collects and transfers costs (debits and credits) during its lifecycle. The system records these debits and credits by creating a controlling document, thus integrating controlling with production. Some production transactions that impact controlling include the following: -Goods receipt in production -Goods issue posting in production -Confirmation in production -Settlement in production

Value structure

A quantity structure may not be available for some products or services. In this case, you can use a value structure involving the following data: material prices, activity prices, process prices, and overhead costs.

Production (part of logistics)

A work center is master data in production. An activity type is assigned to a cost center in activity planning, and that cost center can be assigned a work center in its master record. You can see the cost enter and activity types in the costing view of a work center master record

Transactions in financial accounting

All cost and revenue postings to financial accounting flow into cost element accounting. Also, transactions in financial accounting are tightly integrated with controlling. -Depreciation posting run -Asset acquisitions -Financial accounting postings

Project System (part of logistics)

An internal order can be assigned to the WBS elements of projects. Project centers can be assigned to several project elements, such as project definitions, WBS elements, networks, and network activities

Internal order settlements (Transactions in management accounting)

An internal order is a part of controlling; it serves as an interim cost collector during its lifecycle and settles to different objects, including general ledger accounts, assets, projects, and sales orders with the cost object, thus integrating controlling with other system components.

Assessments and distributions (Transactions in management accounting)

Both assessments and distributions result in allocations of costs booked to primary cost elements linked to general ledger accounting, thus integrating controlling with financial accounting. Real estate objects and WBS elements can be receivers of assessments.

CCtr Categories

By using this field, you can restrict the use of the activity type to certain categories. If you choose *, the activity type will be unrestricted

Statistical posting

Can post the same cost item to up to three statistical objects for informational purposes. They cannot be standalone; you must always enter a true controlling object for the cost item.

Profitability Analysis

Concerned with analyzing a company's external market segments in terms of revenue, sales, discounts, returns, and cost of goods sold (COGS). Profitability analysis extracts data from other application components to enable comprehensive analysis of individual market segments.

Cost Object Controlling

Concerned with preliminary, simultaneous, and final costing of objects such as production orders or sales orders for an MTO manufacturing strategy

Profit Center Accounting

Concerned with the analysis of internal P&L for the profit centers. A profit center is master data in profit center accounting. You can assign each profit center to each object for which you want to analyze P&L.

Confirmation in production (Transactions in plan-to-produce)

Confirming a production order creates a further debit on the production order. In this case, a controlling document is created to record this debit in the order, thus integrating production with controlling

Transactions in purchase-to-pay

Controlling objects can be used for account assignments in purchase orders. When you post a goods receipt for these orders, the system generates and accounting documents to record the postings to controlling objects, such as cost centers. Some transactions in purchase-to-pay with a controlling impact include the following: -Goods receipt -Invoice verification

Human Experience Management (HXM) (part of logistics)

Cost centers can be assigned to positions, persons, and organizational units in the organizational structure of human resources

Cost Element (in the system)

Cost elements are master data in cost element accounting and cost center accounting. Cost elements are also using in the general ledger accounting as they record the company's primary and secondary costs.

Manual actual postings (Transactions in management accounting)

Customer orders, network activities, WBS elements, and fixed assets can be receivers of manual actual postings in controlling, such as direct activity allocations, cost or revenue repostings, or manual cost allocations, thus integration controlling with the relevant system components.

Plant Maintenance (part of logistics)

Equipment and functional location are master records in plant maintenance. You can assign a cost center to them in their master records

Invoice verifications (Transactions in purchase-to-pay)

If the total invoice amount is different than the total invoice line item amount, the system creates a controlling document that includes updates to the previously defined cost center/object for procurement costs

Goods receipt (Transactions in purchase-to-pay)

If you buy a stock item for stock, the goods receipt posting does not create a controlling document. Suppose you buy a stock item for consumption.

material processing (Transactions in plant maintenance)

If you're using a nonstock item in maintenance, you'll need to purchase it. The system generates a purchase requisition to start the standard process with the maintenance order as an account assignment object. the system generates controlling documents during goods receipt by posting an invoice entry to update the data in the order and the cost center assigned to the equipment

Goods issue posting in production (Transactions in plan-to-produce)

In production, the goods issue is posted for material withdrawal. In this case, a controlling document is created to record actual costs posted to the production order

Goods receipt in production (Transactions in plan-to-produce)

In production, you post a goods receipt to deliver the finished good into inventory. In this case, the system creates a controlling document and an accounting document

Settlement (Transactions in project systems)

In settlement of a project, costs and revenues are transferred to fixed assets, orders, cost centers, or profitability segments

What is Management Accounting?

It is a particular branch of accounting that provides managers in an organization with several views of costs and revenues across controlling areas.

Neutral expenditures

Nonoperational expenses reflected only in financial accounting but not in management accounting (e.g., gifts, donations). These costs are recorded in general ledger accounts as nonoperational expenses and income

Operational expenditures or costs

Operational expenditures or costs are expenditures related to the core business operations of the company. These costs are reflected both in financial accounting and management accounting

Actual Costing

Periodically calculates an actual price for each material that includes all actual costs for the period in question.

What is an Operating Concern?

The valuation level for profitability analysis, and it structures the enterprise's external market segments.

Imputed Costs

These costs are reflected only in management accounting but not in financial accounting. Examples include opportunity costs, differences between legal depreciation and actual depreciation, and rent costs.

Orders with revenue

These orders can be used to monitor costs and revenues arising from activities with external partners or internal activities not belonging to core business operations.

Primary cost or revenue elements

They record the company's expenses for core business operations, such as salaries, energy costs, material expenses, depreciation expenses, labor costs, consulting costs, and administration expenses. Primary cost or revenue elements are tightly integrated with general ledger accounting since they are income statement accounts.

Secondary Cost Elements

They record the costs resulting from value flows within controlling, such as allocations and management accounting adjustments. Internal activity allocation, overhead allocation, and order settlement are examples of secondary cost elements. These accounts are not posted directly but instead indirectly through the objects they are assigned to, such as activity types. They receive data from internal activity allocations, assessments, and internal settlements. The balances in secondary cost elements are used only in controlling.

Periodic Reposting

This allocation method in controlling is based on defined rules to allocate primary costs from a sender to other receivers. In this method, you don't need to use a cost center for the sender.

Statistical object

This controlling object is used for information purposes only. A statistical cost object must always be accompanied by an additional entity that carries the actual value

Assessment

This controlling transaction is used to allocate primary and secondary costs from a sender cost center to receiver controlling objects using a secondary assessment cost element

Transaction Currency

This currency is the currency used in documents posted in controlling. This currency can be different than the controlling area currency or the controlling object currency. The system converts this currency to other currencies using predetermined rates.

Standard Cost Estimate

This group of cost items is generated in product cost planning to value materials and services. This value can be based on quantity structures or value structures.

ATyp Category

This indicatory is necessary to determine the method of activity quantity calculation and activity allocation method.

True (real) Object

This is an account assignment (controlling) object which can carry individual postings without the support of other cost objects.

Product Cost Controlling

This key process in management accounting is concerned with the planning and valuation of products and services as well as the ability to monitor production costs. Product cost controlling consists of product cost planning, product cost controlling, and the material Ledger/actual costing

Cost Center Accounting

This key process is management accounting provides a view of overhead costs and revenues by cost centers representing locations, responsibility areas, and allocation areas.

Direct Activity Allocation

This process manually allocated activity quantities from a cost center to other cost objects.

Characteristic

This reporting element in profitability analysis defines the level at which you would like to analyze the operating concern

Settlement Rule

This set of distribution rules define account assignments and the portions of actual costs to be settled to receivers

Quantity structure

This structure includes the bill of materials (BOM) and routing. When you use this structure, you should specify the material, plant, lot size, and costing variant

Activity Unit

This value is the quantity unit the system should use when recording and posting consumed activity quantities

Activity Allocation

Transfer of activity type quantities from a cost center to other controlling objects by using either a direct or an indirect activity allocation

Financial accounting postings (Transactions in financial accounting)

When you post to a cost or revenue element in financial accounting, you must enter a true controlling object, such as a WBS element, internal order, or cost center. In this case, the profit center assigned to these objects receives data automatically. You can also use the profit center as the statistical object.

Account-based profitability analysis

With this method, you can create profitability analysis reports at the general ledger account level and slice and dice data by characteristics, such as by product, customer, and region. Account-based profitability analysis collects data from sales and distribution when a goods issue is posted and when an invoice is generated for the goods issue.

Costing-based profitability analysis

With this method, you can create profitability analysis reports at the value fields level. Costing-based profitability analysis collects data from sales and distribution when a sales order is created and when an invoice is generated for the order.

Confirmations (Transactions in project systems)

You can confirm actual activity times and reasons for time variances by using the cross-application time sheet, which can trigger an internal activity allocation activity in controlling

Asset acquisitions (Transactions in financial accounting)

You can produce assets internally by using internal orders, thus integrating asset accounting with controlling

Internal Orders

You can use internal orders to plan, collect, and settle the collected costs of small jobs and tasks in the controlling area.

Investment Orders

You can use investment orders to track the costs of simple jobs relevant to fixed assets. These orders can be settled to assets, projects, cost centers, or general ledger accounts.

Overhead Orders

You can use overhead orders to track the overhead costs of time-restricted jobs. These orders can be settled to other cost objects, such as profitability segments, cost centers, projects, or orders

Accrual Orders

You can use these orders to offset postings of costs calculated in controlling to cost centers. These orders can be settled to profitability segments and cost centers

Control data view includes...

a record quantity indicator and lock indicator that locks the cost center against planning and posting activities

An activity type can be linked to a cost center or several cost centers using....

activity type planning

Overhead cost controlling is concerned with...

coordinating, monitoring and optimizing a business organization's overhead costs

In the system, statistical key figures are master data in.....

cost center accounting

You can transfer costs to profitability centers from...

cost centers, orders, and projects.

Cost and revenue elements are master data in.....

cost element accounting and cost center accounting

Another way that profit centers can receive data is by....

distributing or assessing balance sheet items between profit centers

Cross-module data assignments

in the system connect the business processes in SAP S/4HANA and lead to data flows between the system's components.

Cost Element (in the real world)

represents a type of cost that occurs in several cost centers or represents the expense of a resource consumed in various business activities.

Activity Type

represents the productive output of cost centers, measured in time or unit increments, such as labor hours, machine hours, maintenance hours, or units produced.

Activity Price

The price of an activity planned for a cost center. This rate is used to calculate the costs transferred in activity allocations

You must maintain the following mandatory fields in the Basic data view of an activity type master record:

-Activity Unit -CCtr Categories -ATyp category

The calculation of cost allocations between cost centers and other controlling objects is performed based on the following tracing factors:

-Activity types -Statistical key figures

Financial accounting- potential integrations between financial accounting and controlling via data assignments:

-An asset is a master record in financial accounting. You can assign cost centers or investment orders to fixed assets in the asset master record. -A profit center is a master record in profit center accounting and in general ledger accounting. You can assign a profit center to an asset in the asset master record. Cost centers can be assigned to company codes and profit centers in their master records. Segments in document splitting and financial statements are derived from profit centers. -A controlling area is organizational data in controlling. To achieve cross-company code cost accounting, you must assign company codes to the controlling area. A prerequisite for this organizational data assignment is that all company codes assigned to a controlling area must be assigned the same operative chart of accounts and same fiscal year variant. -A general ledger account is a master record in financial accounting. You can assign a general ledge account as a settlement receiver to an internal order. Internal orders can also be assigned business areas in the internal order master record. -Primary cost and revenue elements are master data in controlling. They are created in general ledger accounting as P&L accounts and assigned to company codes. -Company codes and business areas are organizational data in financial accounting. Cost centers, profit centers, business process master records, and internal orders can be assigned to company codes and business areas in their master records.

Settlement in production (Transactions in plan-to-produce)

Profitability analysis, part of controlling, receives data from sales orders, goods issues, and invoice postings. When you post a goods issue, the system generates a controlling document to update controlling objects based on the cost of selling the material, thus integrating controlling with sales and distribution

Material processing (Transactions in project systems)

Purchasing of nonstock materials assigned to project network activities creates an integration between controlling and Project System

Controlling Area

Represents a subdivision of an enterprise from a cost accounting perspective

Profitability segment

Represents an external market segment of a company. It is a combination of values of characteristics. It is a true controlling object.

_______ and ____________ is an important data source for profitability analysis

Sales and distribution

Profitability analysis receives data from...

Sales orders, cost centers, assessments, settlements, projects, and costs and revenues from direct postings.

Settlement (Transactions in plant maintenance)

Settlement credits the order for the actual costs and transfer debits to the cost elements, asset master records, and cost centers assigned to them, thus integrating plan maintenance with controlling.

T/F: There is no profitability segment master record.

TRUE. A profitability segment is created as a combination of several characteristics when it is addressed in postings, allocations, settlements, or profitability analysis reports.

T/F: A profit center does not have its own master data

TRUE. It is created automatically in the system when it is addressed in transactions such as settlements or profitability analysis reports.

T/F: The Material Ledger and actual costing are two separate application components

TRUE. The new actual costing is a standalone component and is not technically linked to the Material Ledger

Order Type

The Order Type includes critical control functions that determine number ranges, settlement profile, commitment management, and the default values of master data fields.

Controlling Area Currency

The controlling area currency is the currency used in cost accounting

Integration via Transactions

The controlling module tightly integrates with other system modules via transaction involving controlling objects.

Controlling Object Currency (Company Code Currency)

The currency is defined in the master record of a controlling object, such as a cost center, a profit center, an internal order, or an activity type. Controlling objects are assigned to company codes. As a result, the company code currency is the default currency for objects assigned to a company code. However, the currency can be chanced if the company code currency is the same as the controlling area currency.

Operating Concern (In the system)

The highest organizational level in controlling-specific organizational structure and valuation level for profitability analysis