Key Differences:

Feature Company Company Code

Purpose Represents the overall organization, legal Represents a specific legal entity or
entity for creating financial statements. subsidiary for separate accounting and
reporting.

Reportin Consolidated financial statements are Individual financial statements are created
g created at the company level. at the company code level.

Hierarchy Top-level organizational unit. Subsidiary within a company.

Number One company per SAP system. Multiple company codes can exist within
one company.

In SAP, a company is the top-level organizational unit, representing a legally independent entity for
which financial statements can be created. A company code, on the other hand, is a more granular
unit within a company, representing a legal entity or subsidiary for which a separate set of accounts
and financial reporting is maintained.

 Company: The overall organization (e.g., a parent company like "Digital USA").

 Company Code: Individual, self-contained accounting units within that organization (e.g.,
"Digital India", "Digital Japan").

ECC Vs S4 HANA

Key Differences:

 Database:

S/4HANA uses SAP HANA in-memory database, while ECC can use various databases (Oracle, SQL
Server, etc.).

 Data Processing:

S/4HANA processes data in real-time in memory, offering faster reporting and analysis. ECC relies on
batch processing for many tasks.

 Data Model:

S/4HANA utilizes the Universal Journal, a single data table, simplifying data management. ECC uses
multiple tables for different modules.

 Reporting:
S/4HANA offers real-time reporting with multi-dimensional analysis and visualization
capabilities. ECC requires more specialized knowledge to create real-time reports.

 User Interface:

S/4HANA uses the SAP Fiori UX, providing a modern, role-based interface. ECC has a more traditional
interface.

 Deployment:

S/4HANA offers cloud-based and hybrid deployment options, while ECC primarily runs on-premises.

 Modules:

Some modules have changed or been enhanced in S/4HANA compared to ECC, such as Extended
Warehouse Management (EWM) replacing Warehouse Management (WM) and a more integrated
approach to credit management.

 Business Partner:

S/4HANA combines customer and vendor data into a single Business Partner record, while ECC
maintains separate records.

 Financial and Controlling:

S/4HANA integrates FI and CO functions, using the Universal Journal to store both GL accounts and
cost elements, whereas ECC has separate mappings.

 General Ledger:

S/4HANA uses the new General Ledger (GL), which is a prerequisite for new asset accounting. ECC
can run on either the classic or new GL.

Classic GL Vs NEW GL

New GL accounting is the new funcationality which came into existence from ECC 5.0 Version in SAP
which we call as mySAP ERP. Upto SAP 4.7EE we are using Classical GL Accounting. In Classical GL
accounting General Ledger, Profit Center Acting, Reconciliation Ledger, Business Area, Spl Prupose
Legers and Cost of Sales Accounting are different components but all these are incorporated in New
GL accounting.

The New funcationalites included in New GL Accounting are,

1. Extended Data Structure:- This allows us to activate additional fields(e.g., segment) in the New GL
table.

2. Parallel Ledgers:- This provides the ability to produce different sets of financial statments.

3. Document Splitting:- This allows real-time allocation of an account assignment object to all your
balance sheet postings, this is particularly relevant when you have postings from subledgers.

4. Improved Management Reproting:- Profit centers are now part of GL, which allows you to produce
departmental or management accounts directly from the GL.
5. Segment Reproting:- A segment is a new account assignment object that can be used to produce
segment reports to provide an additional dimension. It helps in running analyses for objects at a level
lower than company code. This is in line with the IFRS/IAS segement reporting requirements.

6. Fast Close:- A reduction in the amount of time needed to complete the period end cycle enables a
fast close to be completed.

But for the above mentioned funcatioanities different configurations settings we has to go.

When coming to Special Purpose Ledgers:-

They are used in reproting. These are all basically user-defined ledgers, which can be maintained
either as GL or subsidiary ones with various account assignment objects (with SAP-dimensions like
cost center, business area, profit center etc or customer-defined dimensions like region, area etc)

Once defined, this functionalit helps you to reprot at various levels. Ideally you collect the
information, combine them and create the totals. This is something like an additional reproting
feature, and usage of this feature will have no effect on the regular funcationalities of SAP.

Profit Center

In SAP, a profit center is an organizational unit used for internal management and reporting, enabling
the tracking of revenue and costs for specific business areas or segments. It allows companies to
assess the profitability of individual units, like product lines, regions, or departments, aiding in
strategic decision-making and performance analysis.

Purpose and Benefits:

 Internal Reporting and Analysis:

Profit centers facilitate the creation of financial statements (profit and loss statements, balance
sheets) for specific areas, providing detailed insights into their profitability.

 Performance Evaluation:

Managers can use profit center data to evaluate the financial performance of their units, identify
areas for improvement, and make informed decisions.

 Budgeting and Planning:

Profit centers can be used for budgeting and planning purposes, allowing for more accurate forecasts
and resource allocation based on the expected performance of each unit.

 Delegation of Responsibility:

The creation of profit centers enables the delegation of management responsibility to individual
units, fostering a sense of ownership and accountability.

 Cost and Revenue Tracking:

Profit centers track both costs and revenues associated with specific business areas, allowing for a
comprehensive analysis of profitability.

 Investment Center Analysis:

 Cross-Comparison:

Profit centers enable cross-comparison of performance between different units, facilitating

Key Differences from Cost Centers:

 Focus:

Cost centers focus on the management of costs and resource allocation, while profit centers focus on
generating revenue and maximizing profitability.

 Responsibility:

Cost centers are responsible for managing expenses, while profit centers are responsible for both
expenses and revenues.

 Reporting:

Cost centers are used for internal reporting purposes, while profit centers can also be used for
external reporting.

In essence, profit centers are a powerful tool for managing and analyzing the financial performance
of different parts of an organization, enabling better decision-making and strategic planning.

Cost Center

In SAP FICO, a cost center represents a defined location within the organization where costs are
incurred and tracked, according to SAP Learning. It's an organizational unit used for cost allocation
and budget management, and it helps in comparing planned versus actual costs for reporting
purposes.

Key aspects of cost centers in SAP FICO:

 Organizational Unit:

Cost centers represent specific areas, departments, or functions within the company.

 Cost Allocation:

They are used to allocate expenses to a particular department or area of responsibility.

 Budget Management:

Cost centers are associated with budgets, allowing for the tracking and management of expenses
against planned amounts.

 Cost Tracking:

They help in identifying and tracking costs within the organization.

 Reporting:
Cost centers enable the creation of reports that show the costs incurred by different departments or
functions.

 Hierarchy:

Cost centers can be organized hierarchically, allowing for consolidation of costs across different levels
of the organization.

 Integration with other modules:

Cost center information is used in various other SAP modules, such as production planning,
procurement, and human resources.

In essence, cost centers provide a granular view of costs within the organization, enabling better
financial management and control.

Example:

A manufacturing company might have cost centers for:

 Assembly Department: To track costs related to the assembly of products.

 Quality Control: To track costs related to quality control activities.

 Sales Department: To track costs related to sales and marketing activities.

 Accounting Department: To track costs related to accounting and finance functions.

By using cost centers, the company can better understand its costs, manage its budgets, and make
more informed decisions.

Asset Accounting Entries

purchase of asset

Asset A/C (70) Dr

To vendor (31) Cr

Sales of asset

Customer A/C (01) Dr

Asset Sale A/C (50) Cr

Acc. Dep. on Asset (70) Dr

Asset A/C (75) Cr

Asset Sale A/C (40) Dr

Profit on Asset sale (50) Cr or Loss on Asset sale (40) Dr

Deprecation posting

Depreciation A/C Dr

To Acc. Dep A/C Cr

Asset A/C (75) Cr

Acc. Dep A/C (70) Dr

Loss due to Scrapping A/C (40) Dr

transfer of an asset

ABUMN----->Asset transfer within Company Code

70 Asset debited in NEW Business Area

75 Asset credited in OLD Business Area

70 Acc. Dep debited in OLD Business Area

75 Acc. Dep credited in NEW Business Area

ABT1N------>InterCompany Asset Transfer

OLD Company Code 75 OLD Business Area Asset A/C Credit

OLD Company Code 70 OLD Business Area Acc. Dep Debit

OLD Company Code 40 OLD Business Area Asset sale A/C Debit

NEW Company Code 70 NEW Business Area Asset A/C Debit

NEW Company Code 50 NEW Business Area InterCompanyClearing Credit

P2P Cycle

Detailed Accounting Entries:

1. Purchase Requisition (PR): No accounting entries are made.

2. Purchase Order (PO): No accounting entries are made.

3. Goods Receipt (GR):

o Debit: Inventory or Expense account.

o Credit: Goods Receipt/Invoice Receipt (GR/IR) account (Clearing account).

4. Invoice Receipt (IR):

o Debit: Goods Receipt/Invoice Receipt (GR/IR) account (Clearing account).

o Credit: Vendor account.

5. Payment:

o Debit: Vendor account.

o Credit: Bank account.

SAP Transactions:
  Purchase Requisition: ME51N.

 Purchase Order: ME21N.

 Goods Receipt: MIGO.

 Invoice Receipt: MIRO.

 Vendor Payment: F-53/F110.

O2C entries

Detailed Steps and Accounting Entries:

1. 1. Sales Order Creation:

No accounting entries are made when a sales order is created in SAP. This is a record of the
customer's request and initiates the process.

2. 2. Order Picking and Packing:

Inventory is picked and packed for shipment. The accounting entry here involves debiting an
inventory account (e.g., "Inventory Account") and crediting the COGS account.

3. 3. Goods Issue/Order Shipment:

Once the goods are shipped, a Goods Issue (GI) is posted. The accounting entry is a debit to the
COGS account and a credit to the inventory account.

4. 4. Billing/Invoicing:

An invoice is created and sent to the customer. The customer account (accounts receivable) is
debited, and revenue is credited. Additionally, tax and freight adjustments may be made to other
relevant accounts.

5. 5. Payment Receipt:

When payment is received from the customer, the bank account (cash) is debited, and the customer
account (accounts receivable) is credited.

In summary:

 Initial Order: No accounting entries.

 Picking/Packing: Inventory account (debit) and COGS account (credit).

 Shipping: COGS account (debit) and inventory account (credit).

 Invoicing: Customer account (debit), Revenue account (credit), and potentially tax and
freight adjustments.

 Payment: Bank/Cash account (debit) and customer account (credit).

Asset purchased from MM

Creation of Asset Class (T - Code: AS01)

Purchase Requisition (T - Code: ME51N)

Purchase Order Account assignment category u2013 A (T - Code: ME21N)

Release P.O (T - Code: ME29)

Goods Receipt (T - Code: MIGO)

Invoice Verification (T - Code: MIRO)

Release Blocked Invoices (T u2013 Code: MRBR)

Vendor Payment with Clearing (T - Code: F-58)

Accounting Entries If You select check box GR non valuated in config

Invoice Verification (T - Code: MIRO)

Asset Account u2013 Debit

Vendor Account u2013 Credit

Vendor Payment with Clearing (T - Code: F-58)

Vendor Account u2013 Debit

Bank Issues Account u2013 Credit

Accounting Entries If You deselect check box GR non valuated in config

Goods Receipt (T - Code: MIGO)

Asset Account u2013 Debit

GR/IR Clearing Account u2013 Credit u2013 WRX

Invoice Verification (T - Code: MIRO)

GR/IR Clearing Account u2013 Debit u2013 WRX

Vendor Account u2013 Credit

Vendor Payment with Clearing (T - Code: F-58)

Vendor Account u2013 Debit

Bank Issues Account u2013 Credit