Business Area

[Former Member]

Hi All,

Can anyone tell me what is business area .is it link with co(controlling area)?

Regards,

Ashima

[Former Member · Accepted solution]

Hello,

Business Areas in SAP are used to differentiate transactions originating from different points/lines/locations in business. It is used to fascilitate internal reporting for finacial purpose.

Using the options in controlling (EC-PCA, Enterprise Controlling, Profit Centre Accounting), you can even draw up Balance Sheets and PL statements for your business areas and hence this is used for management accounting in some companies (like HP, Dell, etc) when it wants to know the operating profits for different business areas/lines.

Business Areas are not much relevant in FI but are much more relevant in CO.

All transactions in FI pass through G/L accounts. The data in FI is then passed to CO through primary cost elements.

According to the settings that you have configured for your controlling area and operating concern, the costs are distributed to the various cost centers (Cost Center Accounting & CO-PA). The costs are then apportioned to the various cost centers (which may or may not be a part of your business areas or may be independent cost centers).

For transactions not part of business area, they are transferred to independent cost centers (e.g. like Head Office Salaries, HR, etc) and hence, cannot be drawn up as a financial statement but just as line item displays in your reconciliation ledger (if you have activated it in the CO-OM-CEL {Cost Element Accounting})

Financial statements of Business areas are unbalanced because not always does the debit and credit entries of a transaction lie in the same business area/cost center; but for cost accounting purposes, they are reasonably sufficient.

Prase

[Former Member]

Thnx

[Former Member]

Hi Ashima,

Business Area. The system posts costs and revenue according to the business area. The business area can be equivalent to the:

- sales area (if the accounts are to be posted according to sales)

- plant/division (if the accounts are to be posted according to products)

The business area is defined in Customizing for Sales.

o Business area. A unit in an enterprise, grouping product and market combinations as homogeneously as possible for the purpose of developing unified business policy.

Financial Accounting (FI). A business area is an organizational unit within financial accounting which represents a separate area of operations or responsibilities within an organization. Financial accounting transactions can be allocated to a specific business area

[Former Member]

Business area has been defined by others above.

An example of how we have defined our business area is as follows.

Its a construction company, and we have two business area

1. Engineering: which handles project related to construction of buildings and sites

2. Power: which handles projects in the power segment like building a power plant

this will give u a better idea of a business area

anand

[Former Member]

HI,

Business area

u2022 The Business Area is a separate business unit for which internal reporting can be carried out. A company code may be divided into multiple business areas. A business area may also be shared by several company codes.

u2022 Business area is not limited by company codes. For this reason, the business areas in all company codes must have the same description. Using organizational unit is optional.

u2022 Business area can be used to prepare balance sheets and profit and loss statements not only for company code, but also for other internal areas (E.g., division-related).

u2022 The relevant business area is determined for each order item according to defined rule.

u2022 Rules for Business area determination

 Business Area assignment by Plant and Item division.

 Business Area assignment by sales area.

 Business Area assignment by Sales Organization and D.C, Item Division.

HOPE IT IS USEFUL FOR YOU.

BHUSHAN

Edited by: BHUSHAN S DHAKE on Jul 31, 2008 6:56 AM

[Lakshmipathi]

Dear Ashima

Business areas are primarily used to facilitate external segment reporting across company codes, covering the company's main areas of operation (product lines, branches).

You can assign all balance sheet items, such as fixed assets, receivables, payables, and material stock, as well as the entire P&L statement directly to business areas. You can only assign banks, equity, and taxes manually to business areas indirectly. For this reason, it is not possible to create the legally-required financial statements and tax reports at business area level. Financial statements at business area level are therefore only suitable for internal reporting.

Organizational unit of Financial Accounting that represents a separate area of operations or responsibilities within an organization, and to which value changes recorded in Financial Accounting can be allocated.

You can assign a business area to each line item.

The advantage of assigning business areas to line items is that you can create internal financial statements based on the business area.

thanks

G. Lakshmipathi

[former_member204513]

Dear Ashima,

Business area

An organizational unit of financial accounting that represents a separate area of operations or responsibilities within an organization and to which value changes recorded in Financial Accounting can be allocated.

You can create financial statements for business areas, and you can use these statements for various internal reporting purposes.

Use

You can assign a business area to each line item.

The advantage of assigning business areas to line items is that you can create internal financial statements based on the business area.

is it link with co(controlling area)?

Business area will not have link with controlling area

Business area will assigned to the Plant and sales area

I hope it will help you,

Regards,

Murali.

[Former Member]

Hi,

Business area is an organisational unit that corresponds to a specific business segment or area of responsibilityin a company.

In T.code:OX03 - Creation of new Business Area and In T.code:OMJ7 and you can link plant and division to your business area.

Business Area. The system posts costs and revenue according to the business area. The business area can be equivalent to the:

sales area (if the accounts are to be posted according to sales)

plant/division (if the accounts are to be posted according to products)

The business area is defined in Customizing for Sales.

o Business area. A unit in an enterprise, grouping product and market combinations as homogeneously as possible for the purpose of developing unified business policy.

o Financial Accounting (FI). A business area is an organizational unit within financial accounting which represents a separate area of operations or responsibilities within an organization. Financial accounting transactions can be allocated to a specific business area.

For more check the link:

http://www.sap-basis-abap.com/sapfi003.htm

http://help.sap.com/printdocu/core/Print46c/en/data/pdf/FIBUSI/FIBUSI.pdf

http://www.idi.ntnu.no/emner/tdt4730/pdf/brinkman-ch7.pdf

http://www.sap-img.com/sap-sd/sd-questions-on-corporate-structure.htm

Regards,

Raja

[Former Member]

Hi,

The functions of business area is to create balance sheets and profit and loss statement below the company code level. It functionality can be duplicated using Profit center accouting.

OX03 - Creation of new Business Area

New Business Areas can be created anytime in the Enterprise structure in the IMG. However, in the year of creation, no comparison can be done with the previous year data as the Business Area did not exist in the previous year and there are no postings in the previous year.

After create the new Business Areas, new G/L accounts should be created for :-

Sales

Cost of Sales

External Process Cost

Consumption

Material Change

Purchase

Cost of Difference for Production

Factory Output for Production Order

Next create a default account assignment to maintained the link for cost center and business area.

Transaction OKB9

Best Regards,

Amit