Last Updated on November 21, 2022 by Pradeep
Profit Center Accounting in SAP is an important topic of SAP CO. Thus, usually, interviewers ask questions on this subject, considering important questions in SAP FICO interviews. Let’s learn a few of them with explanations.
Q1. What is Profit Center Accounting in SAP?
The Profit Centers reflect a management-oriented structure of your company for internal control. You can analyse the operating results using either the cost of sales approach, or the period accounting approach. Besides revenues and expenses, you can use the profit center as a responsibility area for assets and liabilities.
Q2. What is the use of Profit Centers?
We use Profit center Accounting ( PCA) primarily for performance reporting of responsibility areas. With this we generate P/L statements under period accounting. Thus, we can transfer transaction data from other components through Profit Center.
Further, we have two types of data reporting in SAP. I.e. Statistical and Real. Here in PCA, all the posting is in nature.
Since, the Profit Center is not an account assignment object in CO. Thus, The integration in the SAP system makes it possible to post profit-relevant data to PCA automatically as soon as we post the transaction.
Q3. What is the connection between Cost Center and Profit Center?
The cost centre is one of the Cost Objects through which we record the cost incurred. To transfer this cost to the Profit Center, we need to assign the profit centre with the cost object (i.e. cost center).
Thus, to summarise, through the cost center, we record the cost. Whereas, with Profit Center, we can record cost, and revenue.
Q4. – What is the purpose of creating a Profit Center in SAP Controlling?
Ans. – The purpose of creating a Profit Center in SAP is to analyse the revenues and costs for a particular product line, plant or business unit. You can generate balance sheets and profit and loss accounts per profit center. Still, we should use it as a tool for internal reporting purposes only.
If one has to produce the Balance sheets and Profit and Loss Accounts for a profit center, then it is advisable to create it as a company code instead of a profit center.
Profit Center Accounting:- Read the Detailed Guide
Q5. – How do the cost and revenue flow to the profit center?
Ans. – The SAP system stores the profit center in the Cost Center. This way the costs flow to the profit center.
The system also stores it in the Material Master. Hence, Profit Center automatically picks up all sales orders of the finished products from the material master. Further, the system passes all the revenues and costs of the sales order for that finished product onto this profit center.
Likewise, you create a profit center document in addition to the Finance document whenever revenue or consumption takes place. This document contains the details of the profit center.
Once both the costs and revenues flow to the profit center you can write reports using the Report Painter to get intelligent analysis. You can also use SAP standard reports statistical ‘key figures’ created in the cost center accounting module. You require them also in the profit center accounting module.
Read Related: SAP Controlling Interview Questions on Profit Center
Q6. – Do we require to maintain the SKF figure in Profit Center Accounting in SAP?
Ans. – No, Since we create the SKF (Statistical Key Figures) in the controlling area, we don’t require it to maintain in PCA. Profit Center is a submodule within the controlling area. The SKF figure is created for the controlling area and is available in the Profit Center accounting module.
Q7. – What precautions do you take while maintaining the 3KEH table for Profit Center Accounting?
Ans. – We should take the following precautions:
- You should not maintain the customer and vendor reconciliation accounts in the 3KEH table.
- Further, you should also not maintain the special GL accounts in this table.
- As per the process, we transfer the customer and vendor balances to the profit center module through separate month-end programs. Thus, maintaining the reconciliation accounts here will result in double posting in the profit center module.
Q8. – Should you maintain secondary cost elements in the 3KEH Table?
Ans. – No, here we maintain only those accounts for which the value should flow from Finance to PCA. Secondary cost elements are already defined in the controlling module which reflects posting in PCA also.
Learn more about:- Important Tables in SAP FICO
Q9. – How can we maintain the default settings for cost elements per company code?
Ans. – We can maintain the default settings in transaction OKB9. Here we can specify for a company code, the cost element which is the cost center to default or whether to derive the profitability segment automatically.
Further, we can also know whether the business area is mandatory or the profit center mandatory. Likewise, we can also maintain the default business area and profit centers.
Q10. – What are the other vital activities in the profit center?
Ans. – The assignments of the profit center to the cost center and of a profit center to the material master is what determines the success of the profit center posting. If done wrongly, the profit center postings will not come in properly.
Use of Profit Center Accounting in O2C – Watch Video
