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SAP Business One enables you to define profit centers so that you can monitor and regulate the costs of your business processes effectively. The profit center reports give you important information about the costs and revenues that have arisen, sorted by area and department.
First of all, you define the various cost centers or departments in your company as profit centers. You then assign revenue and expense accounts to the profit centers so that any data relevant to a profit center can be updated automatically for all transactions entered in the system. Costs are allocated to the profit centers using information that you define in a distribution rule. This means that any costs incurred will be allocated to the profit centers on the basis of a specific key. If you decide that the way in which costs are allocated no longer reflects the way in which your company works, you simply change the distribution rule as required. You can use the Profit Center Report to generate a profit and loss statement for any profit center and period.
In addition to conventional financial accounting (where the values of all business transactions are recorded), many companies also perform cost accounting. The aim of cost accounting is to determine how profitable a company’s business activities are.
Cost accounting allows you to analyze the expenses and revenue of a specific business area in detail. Some expenses can be assigned to one specific business area. Expenses and revenues that can be assigned to one specific business activity are called direct costs and direct revenues.
In every company, there will always be expenses (and sometimes even revenues) that cannot be assigned to one specific business activity. These include administration costs, advertising costs, and financing costs. In Cost Accounting, these indirect costs (and indirect revenues) are allocated to business activities by means of distribution keys. In addition to the data that you enter for profit centers and distribution rules in the standard fields of SAP Business One, you can also define as many user fields as you want for these objects. This is a convenient way of storing a large quantity of additional data required in your company. If you have created user-defined fields for profit centers and distribution rules, you will find these in the menus for processing these objects in the menu bar.
"Cost Accounting" is part of the SAP Business One line of products, developed by SAP.
SAP Business One is a horizontal product. It offers functionality designed for usage across a wide variety of industries and business types.