Cost of Sales Accounting Method 

Use

In the United Kingdom, you prepare your profit and loss statement using the cost of sales accounting method. The cost of sales accounting method matches the sales for the reporting period to the production costs of these sales.

To capture the matching principle in the system, you assign your periodic operational expenses to functional areas such as production, administration, and sales and distribution. The expenses and sales, which are not assigned to functional areas, are directly transferred to the profit and loss statement.

Therefore, the system must determine a functional area for certain expenses. The functional area can be retrieved from the master record of the G/L account, cost center, or the cost center category. Moreover, you can also directly enter the functional area when posting. The system uses the substitution to check the values and make a replacement if necessary. In the substitution, the cost center category, which is found in the cost center master data, is used to determine a functional area.

Prerequisites

If you only use Financial Accounting, you must transfer the necessary controlling data from your external application to your system by using additional account assignments.

Features

The system is delivered with standard settings that allow the cost of sales accounting method. These delivered settings include sample functional areas, cost center data, and a substitution rule.

Functional Areas

Functional Area	Description
0100	Production
0300	Sales and Distribution
0400	Administration
0500	Research and Development
0980	Costing-based costs

Cost Center Data

The following cost centers and cost center areas are precustomized in the system:

Cost Center	Description	Cost Center Area	Cost Center Category	Description
10100	Sales	101	V	Sales
20100	Marketing	201	V	Sales
30100	Production	301	F	Production
40100	Finance	401	W	Administration
40200	Human Resources	402	W	Administration
90100	Assessments	901	H

Substitution

The substitution 01-UKV for cost of sales accounting is precustomized. When you create a company code using the template for the United Kingdom, the system assigns 01-UKV to the company code.

Activities

The Customizing settings for cost of sales accounting are delivered only as an example. You can use these settings as a template for your own configuration. In Customizing for Financial Accounting Global Settings, choose Company Code ® Cost of Sales Accounting.