An organizational unit of financial accounting that represents a separate area of operations or responsibilities within an organization and to which value changes recorded in Financial Accounting can be allocated.
Business areas are primarily used to facilitate external Segment reporting across company codes, covering the company’s main areas of operation (branches).
In SAP new G/L Accounting, financial statements can be drawn at following levels:
Company Code Profit Centre Business Area
It is due to the above possibility of financial statement, Business Area plays a vital role in SAP Finance. It can give you an additional dimension in to view the statements.
Features of Business Area
1. Different from Company Codes. 2. Not assigned directly to any Company Code 3. Assigned to Cost Centres
IMG Path: Enterprise Structure > Definition > Financial Accounting > Define Business Area
Once we create business areas as per our requirement, it becomes very important to understand how system identifies the relevant Business Areas. System does it using Derivation as explained below:
Material Document Derivation from plant (Material Management module has configuration where default Business Area is assigned to every Plant)
Finance Document Derivation from Cost Centre or manual input in case of manual Journal Entries having all the Balance Sheet Accounts.
Tips Create as many Business Areas same as Plants. This will give you the Financial Statements at Plant level apart from Company Code or Profit Centre. This works a great deal if detailed accounting is required at various plant level. Exercise this option with understanding of client’s environment. If using Business area, mark the same as mandatory in Document Splitting with zero balance. This will ensure that no accounting document is posted without Business Area. IMG Path for Document Splitting: Financial Accounting (New) > General Ledger Accounting (New) > Business Transactions > Document Splitting > Define Document Splitting Characteristics for General Ledger Accounting
Financial Statements can be drawn at various levels as explained below:
Company Code: F.01
Profit Centre: S_PL0_86000028
Business Area: F.01 and S_PL0_86000028
Caution Business Area is an important organization unit and hence it should be finalized after proper discussion with relevant personnel.