Profit Center Accounting

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Profit Center Accounting

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.
Parallel Currencies in Profit Center Acctn.

EC-
Profit Center Accounting
PCA

Company Special
Transaction
Code EC PCA
Currency
Currency Currency

-
Organizational Units & Master Data
A Grp Operating
Operating Concern Concern (4000)

A Grp Controlling
Controlling Area Area (1000)

Profit Centers

Corporate
Laminate Flooring Door Clads Cubical Veneer
common

Cocd
Company Codes 4000

Gen Sales and


Cost Centers Purchasing
Services Marketing
R&T
13 16
14 15

Other Cost Objects Orders Cost Objects


Benefits in Profit Center Accounting

Useful insights into where profit is earned within a


complex business
Comparison can be made between similar Profit
Centers
Finance can be allocated more efficiently where it
makes the best return
Segment Wise reporting can be done.
Automatic Derivation/Splitting of Profit Centers
Master Data in Profit Center Accounting

Profit Centers

Profit Center Groups

Accounts P&L, Balance Sheet Items


Accounts in PCA
A Grp Chart of Accounts

Financial Accounting
1 2 3 4 8
Assets Liabilities Equity Expense Revenue
accounts

1 2 3 4 8 9
Current Non- Material Primary Revenue
opera- inventory cost Secondary
financial elements cost
ting elements
assets costs, elements
and revenue
short-
term
capital Controlling

Profit Center Accounting


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
Determination of Profit Centers in P&L

Source Transaction Profit


center

Billing Document Material/Plant of Sales Order


Substitution

Invoice Receipt Material/Plant


of Purchase Order

Goods Movement Material/Plant

Direct Posting from FI Indirect /Manual Assignment

Other P&L Accounts Customized Automatic


Account Assignment
Proposed Organizational Hierarchy
Controlling Area 1000

Segment- Line of Business

Corporate
Laminate Flooring Door Clads Cubical Veneer
common

Profit Center Sales Office Wise

Cocd
Company Codes 4000

Sales and
General
Cost Centers Purchase
Exp
Marketing
Exp

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