Show TOC

 Business Area

Definition

An organizational unit in external accounting, which corresponds to a separate operational or responsibility area in the organization, and value flows recorded in Financial Accounting can be assigned to it.

Use

The business area should be treated as a separate economic unit, for which you can create an internal balance sheet and a profit and loss statement. The business area is, however, only an internal organizational unit and does not have any external impact.

You define business areas if you wish to create a balance sheet and a profit and loss statement for internal areas, in addition to company codes.

If you want to create business area balance sheets for internal reporting purposes, you must maintain the business area within Controlling as well. This means that when you create cost center master records you need to specify the business area. CO objects (such as, cost centers and internal orders) aid account assignment, as the business area can be derived from the master data records. When you post primary costs to a cost center, the system determines the business area automatically from the cost center master data. This enables the costs to be assigned to the correct business area. Therefore, you do not need to manually set the business area in the posting document, as the system does this, and thus reduces the number of incorrect assignments to a minimum.