Cost of sales accounting:

The company’s profit and loss statement is created using cost of sales accounting.

The profit and loss statement can be created using two types of accounting

Period accounting

Cost of sales accounting

The operating result is the same regardless of the type of the accounting used. The procedure you should use is either

Legally prescribed

Or can be chosen by the company, where legal alternatives are offered, in this case the company considers business criteria such as international comparability, when deciding the type of accounting to use

In period accounting the total result for a period and the total costs of this period are summarized:

1) The total result for a period is the sales revenue minus a reduction in the inventory level or plus an increase in the inventory level

2) The total costs of the period are grouped by expense type, in other words you can just summarize the balance of similar expense accounts such as different account for personal expense. This grouping shows how the costs are distributed to the various production factors

In cost of sales accounting the sales revenue for the period and the sales costs of the period are summarized

1) The sales revenue for the period is determined in the same way as in the period accounting, balance sheet changes are not considered

2) The sales cost of the period represent the expenses related to the sales, the expenses are not grouped by expense type as in the period accounting, instead they are grouped by function such as production, sales, administration, research and development

The cost of goods sold manufactured is determined when the goods are issued, in period accounting the posting is GR/IR clearing account is debited and balance sheet change account is credited, while in the cost of sales accounting the posting is GR/IR account is debited and cost of goods manufactured account is credited

To assign the remaining costs to their origin in cost of sales accounting the sap system requires an additional characteristic, the functional area. Typical functional areas are sales, production, marketing, administration, research and development

The standard program for creating financial statements RFBILA00 contains the profit and loss statement using period accounting. This view is easy to achieve in the sap erp system, as it represents a simple display of a gl account or group of accounts for a report row.

Cost of sales accounting required the use of organizational units called functional areas to divide costs posted to the same expense account to separate report items, as stated above for functional areas, you can present the same type of expense in different sections of your profitability analysis, by grouping expenses by function cost of sales accounting also defines the business transaction that each individual expense in the company results from.

Functional area can be assigned directly to master records, such as cost centers, internal orders, or into gl accounts

For objects where no functional area can be entered in the master data you derive the functional area via a substitution rule

In cost of sales accounting, the coding block that is the list of account assignment objects, is extended to include a field for the functional area. This field is filled by

Manual entries

Automatically entering the functional area using substitution rules

Automatically copying a functional area entered from the master record of p/l account

Automatically copying a functional area entered from the master record of the co object

The sequence above also indicates the priority of the derivation options. Manual entries have the highest priority. The system should be set, however so that a manual entry is not normally required and the functional area is derived from the assigned CO object, the p/l account or using substitution rules

Cost of sales accounting in classic general ledger accounting:

To create the balance sheet in cost of sales accounting in classic general ledger, the sap system required transaction figures for each functional area. In the classic general ledger however the transaction figures are maintained only for the organizational units that is company code and business area. In this case a cost of sales ledger must be used, in which transaction figures are also maintained for each functional area

A special balance sheet report can be used to access these transaction figures, and a profit and loss statement can be created in cost of sales accounting

If additional transaction figures are to be maintained using existing or new account assignment fields, the special ledger component must be used

Cost of sales accounting in new general ledger:

The totals of the table of the new general ledger (FLAGFLEXT) updates the functional areas when the scenario “cost of sales accounting” is assigned to a ledger. There is no need to activate a special ledger in the special ledger component.