Financial Accounting ()



SAP Glossary for Finance & Controlling

To help clarify the meaning of sometimes confusing SAP terms (okay, always confusing!) the good folks at SAP have provided a glossary with their online Help facility. A number of these entries are relevant to finance and controlling area and have been listed in this document. They are in alphabetical order within the following sections:-

Basis (the technical core of SAP - however there are a number of basis terms it is necessary to understand)

Fixed Asset and Financial Accounting

Controlling

Inventory valuation and product cost controlling

This glossary contains :-

the SAP term

the SAP component to which it applies

an explanation of the term.

|BASIS |

|ABAP |BC |Advanced Business Application Programming. Programming language developed by SAP for application development purposes (used by IT to develop reports and interfaces). |

|Authorization |BC |Authority to perform a particular action in the R/3 System. Each authorization refers to one authorization object and defines one or more permissible values for each |

| | |authorization field listed in the authorization object. Authorizations are combined in profiles which are entered in a user's master record. |

|Batch input |BC |Interface that facilitates the transfer of large amounts of data to an SAP system. You can use batch input to transfer both legacy data and external data to the SAP |

| | |system |

|BAPI |BC |Business Application Programming Interface. Standard interface that facilitates the integration of R/3 with the processes and data of other business application |

| | |systems. |

|Client |BC |The system environment. It defines the database available to the system. There will be separate development client and production client among others. If an action or |

| | |object is at “client level” then it is available to all within the client (examples an ABAP report, or basic material master or customer information). |

|Customizing |BC |Setting system parameters to influence the way in which SAP works for an organisation. Also called configuration. |

|Number assignment |CA |The process of assigning numbers to objects (for example, materials and documents). There are two types of number assignment: |

| | |Internal, where numbers are assigned automatically by the system (recommended to be used wherever possible) |

| | |External, where numbers are assigned manually by the user |

|Report Painter |BC |Tool for creating reports that meet specific business and reporting requirements. The Report Painter enables the user to report on data from multiple applications. The |

| | |Report Painter uses a graphical report structure which forms the basis for the report definition. When defining the report, the user works with a structure that |

| | |corresponds to the final structure of the report when the report data are output. The R/3 System is delivered with several row and column models. These models can be |

| | |used as 'building blocks' to help the user create reports quickly and simply (typically used by end-users). |

|Report Writer |BC |Tool for creating reports that meet specific business and reporting requirements. The Report Writer enables the user to report on data from multiple applications. Using|

| | |functions such as sets, variables, formulas, cells and key figures, the user can create complex reports that meet specific reporting requirements. More difficult to use|

| | |than Report Painter (typically used by IT or super-users). |

|Transaction |BC |Logical process in the R/3 System.From the user's point of view, a transaction is a self-contained unit (e.g. generate a list of customers, change the address of a |

| | |customer, book a flight reservation for a customer, execute a program). In terms of dialog programming, it is a complex object consisting of a module pool and screens, |

| | |and is called with a transaction code. |

|FIXED ASSET AND FINANCIAL ACCOUNTING |

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|FIXED ASSET ACCOUNTING |

|Asset Accounting |FI-AA |Asset Accounting is a sub-ledger accounting module in Financial Accounting, in which all business activities for fixed assets are recorded |

|Chart of depreciation |FI-AA |The chart of depreciation contains the defined depreciation areas. It also contains the rules for the evaluation of assets that are valid in a given country or economic|

| | |area. Each company code is allocated to one chart of depreciation. Several company codes can work with the same chart of depreciation. The chart of depreciation and the|

| | |chart of accounts are completely independent of one another |

|Depreciation area |FI-AA |A depreciation area shows the valuation of assets for a particular purpose (for example, for individual financial statements, balance sheets for tax purposes, |

| | |cost-accounting values, and so on). Alongside 'real' areas, it is possible to define derived areas. The values for these derived areas are calculated from two or more |

| | |real areas. |

|Depreciation key |FI-AA |Key for calculating depreciation amounts. The depreciation key controls the following for each asset and for each depreciation area: |

| | |automatic calculation of planned depreciation |

| | |automatic calculation of interest |

| | |maximum percentages for manual depreciation |

|Low-value asset |FI-AA |Asset for which the acquisition and production costs, reduced by the existing turnover tax, does not exceed a certain pre-defined amount. Low-value assets can be |

| | |completely written off during the acquisition period. |

|Valuation method |FI-AA |The valuation method determines how an asset is valued during its useful life. The most important parameter belonging to a valuation method is the key for the automatic|

| | |calculation of planned depreciation. Other parameters include the useful life, period control, changeover key ect. |

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|FINANCIAL ACCOUNTING |

|Account assignment FI |FI |Specification of which accounts to post to from a business transaction. See also "Additional account assignment". |

|Account determination |FI |Automatic system function which determines automatically for the user during any posting transaction the accounts in financial accounting to which the amount(s) in |

| | |question should be posted. |

|Additional account |FI |All entries in a line item that are made in addition to account number, amount and posting key. These can include: payment terms, payment method, cost center. |

|assignment | | |

|Automatic posting |FI |Posting that is made automatically by the system in certain transactions. e.g: Output and input tax postings , Postings for the exchange rate difference , Postings |

| | |for cash discount paid and received. Each individual automatic posting is represented by a separate line item. |

|Bill of exchange |FI |Promise to pay in the form of an abstract payment paper detached from the original legal transaction. |

|(BOM) | |BoE payment request = Request to a customer to pay his or her debts by bill of exchange. This procedure is common in Spain, Italy and France. Requests for payment by |

| | |bill of exchange are posted in the SAP system as noted items. |

| | |BoE usage = Presenting a bill of exchange to a third party for purposes of refinancing. |

| | |BoE collection = Special usage of a bill of exchange, whereby a bank undertakes to present a bill to the drawee at the end of its term. If a bank undertakes the |

| | |collection of a bill of exchange, it levies a collection charge on the customer. |

|Business areas |FI |A business area is an organizational unit of financial accounting that represents a separate area of operations or responsibilities within an organization. Financial |

| | |accounting transactions can be allocated to a specific business area. They are used in external segment reporting across company codes based on the significant fields |

| | |of operation (for example, product lines) of a business enterprise. All essential balance sheet items, such as fixed assets, receivables, payables, and inventories, and|

| | |all items of the profit and loss statement can be assigned directly to a business area. The balance sheet items for banks, capital, and taxes, however, cannot be |

| | |directly assigned to business areas. They need to be assigned manually. This means that business area financial statements cannot be drawn up for commercial and tax |

| | |lax. Business area balance sheets and income statements are used only for internal reporting purposes. The system can determine the appropriate business area from |

| | |information such as the material, plant, or cost center you enter in a business transaction like a goods movement. Assignments you make, for example, between cost |

| | |centers and business areas, or the combination of information you specify, for example, a plant and a particular division, form the basis the system uses to determine |

| | |the appropriate business area to assign to an item. |

|Cash management position |FI/TR |The cash management position shows the short-term activity in your bank accounts. This display draws data from two sources: |

| | |FI postings to G/L accounts relevant to Cash Management memo records (payment advice notes) entered for planning purposes |

|Clearing business area |FI |Additional account assignment in the document that is used to calculate receivables and payables between business areas. |

|Collective invoice |FI/SD |Billing document for several deliveries to one customer which is created at the end of each period. |

|Commodity code |MM |Official key as defined in the European Communities' harmonized system for describing and coding commodities. Commodity codes are relevant to Intrastate and to EC |

| | |foreign trade statistics. |

|Company code |FI |The smallest organizational unit for which a complete self-contained set of accounts can be drawn up for purposes of external reporting. |

| | |The process of external reporting involves recording all relevant transactions and generating all supporting documents for financial statements such as balance sheets |

| | |and profit and loss statements |

|Consumable material |MM |Material or service that is the object of procurement and whose value is settled via the cost element accounts or fixed asset accounts. |

| | |No inventory is held, and there may not even be a material master record. |

|Credit control area |FI |Organizational unit that represents an area responsible for granting and monitoring customer credit. |

| | |This organizational unit is either a single company code or comprised of several company codes when credit control is performed across multiple company codes. In a |

| | |credit control area, credit information can exist for each customer. |

|Cross-company code posting|FI |Posting transaction involving several company codes. The system creates a document for each company code involved. Cross-company code postings are used to process |

| | |centralized purchasing or centralized payment, for example |

|Customer |FI/SD |Business partner, with whom you have a relationship involving the transfer of goods and/or services. A customer can deal with several sales areas. The customers of a |

| | |sales area can be assigned to a customer hierarchy. Within a customer hierarchy, it is possible to determine pricing agreements for the highest hierarchy level (e.g. |

| | |head offices) that can also be valid for the subordinate hierarchy levels (e.g. branches). For a customer designated as a ship-to party, the different unloading points |

| | |and receiving points can be determined. |

| | |A customer can have the following partner functions: sold-to party , bill-to party , payer , ship-to party |

|Dunning |FI-AR |The process of customer and internal notifications to ensure collection of unpaid bills. |

|evaluated receipt |MM |Procedure for automatic settlement based on goods receipts. Evaluated receipt settlement involves an understanding between the vendor and the buying entity whereby the |

|settlement | |former does not issue invoices in respect of purchase orders issued by the latter. Instead, an invoice document is posted automatically in the buying entity's system on|

| | |the basis of data from the PO and goods receipts. Use of this procedure precludes invoice variances (for example, the charging of too high a price by the vendor). |

|Invoice Verification |MM/FI |Term for the entry and checking of incoming (vendor) invoices (also known as "invoice matching", "invoice validation", and "invoice clearance"). In invoice |

| | |verification, vendor invoices are compared with the purchase order and the goods receipt, and are checked in three ways :content , price , quantity. |

|Logistics Information |LO-LIS |The information systems in LIS can be used to plan, control, and monitor business events. They are fleixble tools for collecting, aggregating and analyzing data from |

|System | |the operative applications. The level of detail in which information is displayed is freely definable. Informative key figures enable you to continually control target |

| | |criteria and to react in time to exceptional situations. Data can be analyzed using either standard analyses or flexible analyses. The Logistics Information System is |

| | |made up of the following information systems: |

| | |Sales Information System |

| | |Purchasing Information System |

| | |Inventory Controlling |

| | |Shop Floor Information System |

| | |Plant Maintenance Information System |

| | |Quality Management Information System |

|One-time customer |FI/SD |Term for a collective customer master record used for the processing of transactions involving miscellaneous customers that are not included among a vendor's regular |

| | |customers. If a transaction is entered for a one-time customer, the customer data must be entered manually. |

|One-time vendor |FI/MM |Term for a collective vendor master record used for the processing of transactions involving miscellaneous vendors that are not included among a customer's regular |

| | |suppliers. If an RFQ or a PO is sent to a one-time vendor, details of the latter's address must be entered manually |

|Plant |LO |Organizational unit within Logistics, serving to subdivide an enterprise according to production, procurement, maintenance, and materials planning aspects. A plant is a|

| | |place where either materials are produced or goods and services provided. A plant can assume a variety of roles: |

| | |As a maintenance plant, it includes the maintenance objects that are spatially located within this plant. The maintenance tasks that are to be performed are specified |

| | |within a maintenance planning plant. |

| | |As a retail or wholesale site, it makes merchandise available for distribution and sale. |

| | |A plant can be subdivided into storage locations, allowing stocks of materials to be broken down according to predefined criteria (e.g., location and materials planning|

| | |aspects). A plant can be subdivided into locations and operational areas. Subdivision into locations takes geographical criteria into account, whereas subdivision into |

| | |operational areas reflects responsibilities for maintenance. The preferred shipping point for a plant is defined as the default shipping point, which depends on the |

| | |shipping condition and the loading condition. For the placement of materials in storage (stock put-away), a storage location is assigned to a plant. The storage |

| | |location depends on the storage condition and the placement situation. The business area that is responsible for a plant is determined as a function of the division. As|

| | |a rule, a valuation area corresponds to a plant. |

|Posting gross |MM |Posting method used for entering invoices containing cash discounts. The cash discount amount is only taken into account when the invoice is paid and posted as a cash |

| | |discount amount not affecting net income. |

|Reconciliation account |FI |G/L account, to which transactions in the subsidiary ledgers, (such as in the customer, vendor or assets areas), are automatically updated. |

| | |It is generally the case that several subledger accounts post to a common reconciliation account. This ensures that the developments in the subledger accounts are |

| | |accurately reflected in the general ledger (i.e. in line with balance sheet conventions). You can set up a reconciliation account for, say, all overseas customers. |

|Vendor |MM/FI |External supplier: a business partner from whom materials or services can be procured. The information on a vendor is structured according to purchasing organization, |

| | |allowing each purchasing organization to store its own specific data on the vendor concerned. In Financial Accounting, a vendor is generally a creditor, whereas in |

| | |logistics various roles can be specified for a vendor (such as "ordering address", "goods supplier", or "invoicing party"). |

|CONTROLLING |

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|Controlling |CO |Instrument that supports management's decision-making processes : planning , monitoring , reporting , consulting , informing. |

| | |Includes financial controlling , investment controlling , cost and profitability controlling . |

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|Account assignment CO |CO |Allocation of the costs and revenue of a transaction to a debited entry (cost object, cost center, cost collector) on a specific posting date. Debit entries can be: |

| | |cost centers, orders, projects, cost objects |

|Activities and activity |CO |Planning and allocation of activities requires recording quantities measured in activity units. Valuations of activity quantities are carried out using activity prices |

|prices | |(allocation prices). In Overhead Cost Controlling (CO-OM), costs are divided into fixed and variable portions based on the activity quantities. Classifying cost center |

| | |activities as separate activity types should therefore take the relevancy of specific costs into account. Activity prices can be posted manually or calculated |

| | |automatically based on the costs assignable to the activities. Different activity prices can be calculated using plan costs and/or actual costs. Planning, allocation, |

| | |and monitoring of costs can occur at the activity type or cost center levels. Actual costs can be posted on the cost center level only. Assignment of costs so posted |

| | |proceeds with the aid of the splitting function. Activity inputs from one cost center to other cost centers, orders, or business processes represent utilization of the |

| | |cost center's resources. A cost center may include one activity type, multiple activity types, or no activity types. Example: Sample activity types in production cost |

| | |centers would be machine hours or finished units. |

|Allocation price |CO |Value used in internal activity allocation for the internal movement of costs between cost objects, such as cost centers. The allocation price may be entered manually |

| | |or be determined iteratively (could be used for service cost centers to pass on costs to production cost centers). |

|Assessment |CO |Assessment is a method of internal cost allocation in which you transfer the costs of a sender cost center to receiver CO objects (orders, other cost centers, and so |

| | |on) under an assessment cost element. The system supports both the hierarchical method (where the user determines the assessment sequence) and the iterative method |

| | |(where the system determines the sequence via iteration). Example: You can assess the costs from the cost center "Cafeteria" to receiver cost centers in proportion to |

| | |the statistical key figure "employees" for each cost center. Receiver cost center A has 10 employees, while receiver cost center B has 90. In this case, the system |

| | |would assess 10% of the costs to cost center A and 90% to cost center B. The credit entered on the cost center "Cafeteria" and the debits entered on the receiver cost |

| | |centers are all stored under the assessment cost element. Depending on the system settings, you can assess all the costs of the sender cost center "Cafeteria" or only |

| | |part of them |

|CO activity |CO |Physical measure of the activity output/production in a cost center e.g. number of units produced , hours , machine times . |

|Budget |CO/TR |The budget is the approved cost structure for an action or project in a particular period. In SAP, budgeting differs from cost planning in that it is binding. |

|Commitment |CO/FI |Contractual or scheduled commitment, that is not yet reflected in financial accounting, but that will lead to actual expenditures in the future. |

| | |Commitment management provides for early recording and analyzing of such commitments regarding their cost and financial effects. |

| | |Commitments are managed for the following objects :CO production orders ,Production orders ,Internal orders or more normally Cost centers. |

|Controlling area |CO |Organizational unit used to represent a closed system for cost accounting purposes. A controlling area may include single or multiple company codes that may use |

| | |different currencies. These company codes must use the same operative chart of accounts. All internal allocations refer exclusively to objects in the same controlling |

| | |area. |

|Cost center |CO |An organizational unit within a controlling area that represents a separate location of cost incurrence. The definition can be based on functional requirements, |

| | |allocation criteria, activities or services provided, physical location, and/or area of responsibility. Cost centers are combined into hierarchical decision, |

| | |managerial, and responsibility groups. Cost centers support differentiated assignment of overhead costs to organizational activities based on utilization of the |

| | |relevant areas (cost determination function) and for differentiated monitoring of costs arising in an organization (cost controlling functions). Cost centers can |

| | |include activity types, which categorize the specific activities undertaken by cost centers. |

|Cost element |CO |Classification of the organization's valuated consumption of production factors within a controlling area. |

| | |A cost element corresponds to a cost-relevant item in the chart of accounts. Different types of cost element include : material cost elements , settlement cost elements|

| | |for orders , cost elements for allocating internal activities. |

|Indirect activity |CO |Method of periodic allocation to determine the input of activity indirectly allocated from the sender (cost center/activity type) from the perspective of the receiver. |

|allocation | |If entering the activity consumed by the receiver is not possible, this method can be used to distribute the total activity quantity from the sender to the receivers |

|Direct activity allocation|CO |Direct internal activity allocation is a method of internal cost allocation, by which valuated activities from cost centers can be assigned by cause to cost receivers. |

| | |Activities represent the output of a cost center (such as production hours or machine hours). These outputs are defined in the R/3 System with activity types. The |

| | |activity types are valued with prices which are either fixed by the user (political prices) or calculated automatically. To calculate the iterative prices, the R/3 |

| | |System divides the cost center planned costs assigned to the activity types by the planned activity (or capacity depending on how the System is set up). On allocation |

| | |the activity produced by the cost center is multiplied by the activity price. These are the costs to be allocated. The sender cost center is credited with this amount |

| | |and the receiver object is debited accordingly |

|Internal cost allocation |CO |Allocation of costs based on the quantity of activity produced on a cost center. The activity quantity is multiplied with the planned activity price (standard rate). |

| | |The result is the costs to be allocated. The sender cost center is credited by this amount and the receiver cost center is debited correspondingly. |

|Internal order |CO |Object used to monitor sub-areas of costs and, in some instances, revenues. Internal orders can monitor costs of temporary measures, costs and revenues related to the |

| | |offering of a specific activity, or, alternately, can be used for detailed monitoring of ongoing costs. Internal orders are divided into the following categories: |

| | |Overhead orders monitor sub-areas of indirect costs arising from temporary measures. They can also be used for detailed monitoring of ongoing plan and actual costs |

| | |independently of organizational cost center structures and business processes (e.g. promotions) |

| | |Investment orders monitor investment costs which can be capitalized and settled wholly or in part to fixed assets. |

| | |Imputed orders monitor period-based accrual between expenses posted in external accounting and imputed costs in internal accounting. |

| | |Orders with revenues monitor the costs and revenues arising from activities for partners outside the organizational boundaries, or from activities not belonging to the |

| | |core business of the organization |

|Overhead Cost Controlling |CO |Component in Controlling (CO) used for planning, managing, and monitoring overhead. Overhead Cost Controlling allows you to analyze responsibility areas (cost centers) |

| | |as well as individual orders and projects as the focal points for decision-support |

|PA transfer structure |CO |A PA transfer structure is a rule which assigns costs, revenues and quantities from other applications to the value fields and quantity fields in Profitability |

| | |Analysis. PA transfer structures are used to settle orders, assign direct postings from Financial Accounting, and allocate internal activities from CO-OM. A PA transfer|

| | |structure can consist of any number of value field assignments. A value field assignment is the assignment of individual cost/revenue element groups or variance |

| | |categories to the desired value or quantity field. The value field assigments in a PA transfer structure must be: |

| | |Complete : All the cost and revenue elements which receive costs or revenues must be assigned to the structure. |

| | |Unique : Each cost or revenue element can only occur once within the structure |

|Cost of sales or period |CO |Whereas in cost-of-sales accounting the costs are set off against the revenue accountable to them, period accounting takes into account all the costs of the period, |

|accounting | |regardless of whether the corresponding revenue was earned in that period |

|Primary cost element |CO |Cost-controlling-relevant item in the chart of accounts that must have a corresponding account in Financial Accounting. It must be created first as an account in FI |

| | |before being created in CO. |

|Profit center |CO |The business object "Profit center" is an organizational unit in accounting that reflects a management-oriented structure of the organization for the purpose of |

| | |internal control. You can analyze operating results for profit centers using either the cost-of-sales or the period accounting approach. By calculating the fixed |

| | |capital as well, you can expand your profit centers for use as investment centers. In profitability accounting at the profit center level, all costs and revenues from |

| | |the profit-relevant logistic activities and other allocations are transferred as statistical postings to the relevenat profit centers. The exchange of goods and |

| | |services between profit centers can be valuated using the same valuation approach as in financial accounting or another approach (valuation using transfer prices, |

| | |available in Release 4.0). |

|Profitability segment |CO-PA |The object within Profitability Analysis to which costs and revenues are assigned. A profitability segment is defined by a combination of characteristic values. You can|

| | |calculate the profitability of a profitability segment by setting off its sales revenues against its costs. You can use concepts that already exist in the R/3 System |

| | |(customer, product, sales organization, and so on) as characteristics, or you can define your own concepts (such as "order size class"). The system creates the |

| | |profitability segments automatically and assigns each one a unique profitability segment number. |

| | |Profitability segment 1: Product "Prod-1132"/ Customer "100267" |

| | |Profitability segment 2: Industry "Chemicals"/ Country "USA"/ Product group "Laboratory instruments" |

|Operating concern |CO-PA |Represents a part of an organization for which the sales market is structured in a uniform manner. You can assign several controlling areas to one operating concern. |

| | |The individual segments of an operating concern are represented in the form of "profitability segments". By setting off the costs against the revenues, you can |

| | |calculate an operating profit for individual profitability segments, which are defined by a combination of classifying characteristics (for example: product group, |

| | |customer group, country, and distribution channel). |

|Revenue element |CO |Those accounts from a chart of accounts which are used within a controlling area to record the value of products sold. |

|Secondary cost element |CO |Cost element used to distribute costs in internal activity allocation. |

|Settlement |CO |Full or partial allocation of calculated costs from one object to another. The following objects can be senders of settlement |

| | |orders , maintenance orders , CO production orders , production orders , cost objects , customer orders , networks , projects |

| | |The following objects can be receivers of settlement: |

| | |assets , internal orders , profitability segments , cost centers , customer orders , materials , networks , projects , G/L accounts |

|Statistical key figure |CO |Statistical values describing cost centers, profit centers and orders. May be used as a basis for reallocating costs between cost centers (examples could be headcount |

| | |or floorspace). |

|Statistical order |CO |Every internal order can be used as a statistical order. Statistical orders are not charged with costs in the normal sense. The costs posted to them are for information|

| | |purposes only and cannot be settled. |

|Target costs in CO |CO |Costs required to perform a particular activity. In Overhead Cost Controlling, target costs are calculated using the planned costs for the cost center and the planned |

| | |costs for the activity. The target costs are then compared with the actual costs for the period. |

|Transaction-based |CO |Allocation method by which the costs incurred in a business transaction are calculated from the internal exchange of activities and posted in real time to the sender |

|allocation | |and receiver cost centers or orders. Allocations performed using this method include transaction-based transfers, and |

| | |direct internal cost allocation |

|INVENTORY VALUATION & PRODUCT COST CONTROLLING |

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|INVENTORY VALUATION |

|Material valuation |MM |Determination of the value of a stock of materials. Valuation-relevant data includes the selection of valuation method: valuation at standard price or valuation at |

| | |moving price |

| | |Moving average price : Price that changes in consequence of goods movements and the entry of invoices and which is used for valuating a material. The moving average |

| | |price is calculated by dividing the value of the material by the quantity of the material in stock. It is recalculated automatically by the system after each goods |

| | |movement or invoice entry. |

| | |Standard price : Constant price with which a material is valuated, without taking into account goods movements and invoices. |

|Material ledger |CO-PC |The material ledger collects transaction data for materials whose master data is stored in material master. The material ledger uses this data to calculate prices for |

| | |valuation of these materials. The material ledger forms the basis of actual costing and enables stock valuation in multiple curriencies using different valuation |

| | |methods. |

|Non-valuated stock |MM |Stock of a material held by and belonging to a company that is managed on a quantity basis only. Non-valuated stock is "available" but can only be withdrawn from the |

| | |stores/warehouse after first having been transferred to "valuated" stock. |

|Split valuation |MM |Option allowing the values of different stocks of a material within a plant to be managed in different stock accounts. This enables such stocks to be valuated |

| | |separately. Example: Some stocks of a certain material may have been procured externally, whereas others were produced in-house. Using split valuation, you can assign |

| | |your "bought-out" stocks to a different account to your "made-in" stocks and valuate the former at a different price to the latter. You can also valuate such stocks |

| | |using different price control indicators |

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|PRODUCT COST CONTROLLING |

|Product Cost Controlling |CO-PC |Includes Product cost planning : |

| | |Product Costing With Quantity Structure |

| | |Product Costing Without Quantity Structure |

| | |Reference and Simulation Costing |

| | |Also includes Cost Object Controlling: |

| | |Product Cost by Period |

| | |Product Cost by Lot |

| | |Product Cost by Sales Order |

| | |Costs for Intangible Goods and Services |

| | |Actual Costing/Material Ledger |

| | |Information System for Product Cost Controlling |

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|Product Cost Planning | |

|Base object costing |CO-PC |Tool for planning costs and setting prices, with which you manually enter the items in the form of a unit cost estimate. This cost estimate can be used as a component |

| | |in another cost estimate and as a reference when planning other objects in the R/3 System. |

|Bill of material |PP |A complete, formally structured list of the components that make up a product or assembly. The list contains the object number of each component, together with the |

| | |quantity and unit of measure. The components are known as BOM items. With divergent BOMs more than one product may be produced :- |

| | |By-product : Material produced incidental to another material in a joint production process. |

| | |Co-product : Valuable material generated during a production run together with other valuable materials. An apportionment structure defines how the total cost of a |

| | |material is apportioned to the individual coproducts. |

| | |Primary product : the product for whose production the process is carried out. A primary product is distinguished from other products in that its material number is |

| | |stored in the recipe header. |

| | |In a BOM it is possible to flag materials as backflushed (automatic posting of a goods issue for components some time after their actual physical issue for use in an |

| | |order). The goods issue posting of backflushed components is carried out during confirmation |

|Cost estimate |CO-PC |The business object cost estimate is a list of costs for a cost object as determined for a particular costing variant. |

| | |Cost estimates provide the basis for stock valuation, price setting, determining the cost of goods manufactured, and Profitablity Analysis. |

| | |A material cost estimate can be used to calculate a standard price for the online valuation of goods movements, and the cost of goods manufactured or cost of goods sold|

| | |for contribution margin accounting in results analysis.Other versions of material cost estimates provide alternative valuation methods for stock valuation according to |

| | |commercial and tax laws.Preliminary costing of a production order shows the planned debits (such as withdrawals, internal activity allocations, overhead) and credits |

| | |(goods receipts). In simultaneous costing, cost estimates are created for the manufacturing order in respect of every movement, confirmation and so forth, displaying |

| | |the actual costs linked to these business activities.A cost estimate consists of itemizations containing detailed information about the origin of the costs, and of cost|

| | |element itemizations that group the costs according to cost elements. A feature of the material cost estimate is the cost component split, which sorts the costs |

| | |according to the cost components (for example, material costs, personnel costs, overhead, and so on). Any number of cost estimates can be created for a single costing |

| | |object.For materials, these cost estimates can have different parameters, such as validity periods and valuation methods. With order-related costing objects, cost |

| | |estimates include those consisting of planned costs (preliminary costing) and actual costs (simultaneous costing). |

|Cost estimate with |CO-PC |Function for planning costs and setting prices for materials using the data from Production planning and control. This data--the quantity structure--is determined by |

|quantity structure | |the system automatically. The quantity structures are the BOM and routing . |

|Cost estimate without |CO-PC |Function for planning costs and setting prices for materials without using the data from Production Planning and Control. You manually enter the items to be costed |

|quantity structure | |(such as materials and activities) into a unit cost estimate. |

|CO production order |CO-PC |Internal order that represents a production order from the cost accounting point of view. It is planned using a cost estimate without quantity structure and is usually |

| | |settled to inventory. |

|Modified standard cost |CO-PC |Costing type that calculates the cost of goods manufactured for a product during the course of a planning period. It differs from the standard cost estimate in that it |

|estimate | |uses the quantity structure that has changed during the planning period as the basis for calculating costs. |

|Net realizable-value |CO-PC |Method used in joint production to determine the cost of the primary product. This method calculates the cost of the primary product by subtracting the fixed price of |

|method | |the byproduct from the total cost of the manufacturing process |

|Quantity structure |CO-PC |Basis for calculating costs in material costing. Normally consists of a bill of material (BOM) and a routing. |

|Routing |PP |Description of the process used to manufacture plant materials or provide services in the production industry. A routing contains sequences of operations. An operation |

| | |describes how a workstep is to be performed. Operations can be combined into sequences to show parallel or alternative processes. One operation can occur in several |

| | |sequences. Several similar routings and their operations can be combined in one group. An operation can be divided into sub-operations to provide more detail of the |

| | |operation. An operation or sub-operation refers to a work center where it is performed. An operation or sub-operation contains the required activity information. In |

| | |addition, an operation can require a certain quantity of material components or production resources/tools. A routing can be used to produce several materials. It is |

| | |used as a reference to create production orders or run schedule headers. |

|Standard cost estimate |CO-PC |The most important type of cost estimate in material costing. Forms the basis for profit planning or product costing where the emphasis is on determining the variances.|

| | |A standard cost estimate for each product is usually created once at the beginning of the fiscal year or new season. Standard cost estimates calculate the standard |

| | |prices for semifinished products and finished products. The costs calculated in standard cost estimates are used to valuate materials with standard price control |

|Unit costing |CO-PC |Method of costing that does not use bills of material or routings. Unit costing determines planned costs for base objects, or supports detailed planning of objects such|

| | |as orders, cost objects, projects, or sales document items. |

|Work center |PP/CO-PC |A work center is an organizational unit where a workstep is carried out, producing an output. The work center defines where and by whom an operation is to be carried |

| | |out. A cost center is assigned to each work center in the work center master record. The work center has a particular available capacity. The activities performed at or|

| | |by the work center are valuated by charge rates, which are determined by cost centers and activity types. Work centers can be: Machines or People or Production lines |

| | |or Groups of craftsmen |

| |

|Cost Object Controlling | |

|Actuals |CO-PC |Costs actually incurred during a posting period. The actual costs of a particular undertaking can be compared to the planned costs to calculate variances for analysis |

| | |purposes. In Cost Object Controlling, the cost objects are debited with the actual costs. Actual costs comprise the following: Work in process, Scrap , Variances |

| | |When variances are calculated for analysis purposes, the value of the work in process and scrap can be deducted from the actual costs so that the control costs can be |

| | |calculated. The control costs are then compared to the target costs. |

|Order settlement |PP |Complete or partial crediting of an order. The costs which have accrued to an order are debited to one or several allocation receivers belonging to financial or |

| | |managerial accounting. |

|Order-related production |PP/CO-PC |Type of production in which the manufactured products are delivered to inventory without reference to a sales order. The order costs are collected on production orders |

| | |and settled to inventory. Cost object controlling is generally based on the order quantity. |

|Preliminary order cost |CO-PC |Cost estimate for an order based on the quantity structure of the order. Preliminary order cost estimates can be used to calculate planning variances and production |

|estimate | |variances. |

|Target costs in CO-PC |CO-PC |Costs expected to be incurred when a given quantity is produced. In Cost Object Controlling, the target costs are calculated in a cost estimate. The target cost version|

| | |controls which cost estimate is used to calculate the target costs. For example, to determine the total variance you can calculate the target costs in a standard cost |

| | |estimate for the material based on the actual lot size. Target costs are used in variance calculation. They can also be used to valuate the work in process and scrap. |

|Valuation variant |CO-PC |Key that determines what prices the system selects when it valuates the quantity structure of a material cost estimate or order, or when it valuates the costing items |

| | |of a unit cost estimate. A global valuation variant applies to all plants. A local valuation variant applies only to one particular plant. |

|Variance calculation |CO |Procedure used to determine the variances for cost centers, production orders, and cost object hierarchies in the course of period-end closing. By doing this you can |

| | |determine such things as the effects of the following factors: |

| | |changes to the resources used |

| | |changes to the output level of the cost center |

| | |changes to the quantity of goods manufactured |

|WIP calculation |CO-PC |WIP is defined in Sap as unfinished products whose costs are calculated either by subtracting the actual costs of an order from the settled costs of the order, or by |

| | |valuating the yield confirmed to date. Postings for the work in process calculated by this procedure are generated in Financial Accounting when settlement is carried |

| | |out. |

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