Determining the Relevance of Company Codes and Valuation Areas

The assignment of G/L accounts always depends on the chart of accounts. A chart of accounts is assigned to a company code in Customizing for Financial Accounting (FI).

G/L accounts can be assigned per valuation area. When you execute a business process, the valuation area is part of it. In Customizing, you can see whether the valuation area is to be the company code or the plant. This setting must be made before materials are created and Inventory Management transactions are entered.

If a material is subject to split valuation, you can valuate various stocks of the same material differently and manage them in different accounts.

The chart of accounts is a list of all G/L accounts that are jointly used by one or more company codes. It also specifies the numbers and names of each G/L account and information controlling the function of the account.

The chart of accounts is a key in the table for automatic account determination. You have to assign the individual G/L accounts for automatic account determination separately for each chart of accounts because the meaning of a G/L account may differ from one chart of accounts to another.

The chart of accounts is used by both Financial Accounting and Costing.

• A country-specific chart of accounts that considers the legal requirements of a country
• A group chart of accounts that applies to an entire corporate group and is based on  special consolidation aspects

A valuation area is an organizational unit within Logistics that subdivides a company for uniform and complete valuation of material stocks.

In SAP S/4HANA, you specify the level at which your stocks of materials are to be valuated for your company.

Stocks of materials can be valuated at the company code or plant level.

If you have selected a plant as the valuation level, each plant represents a valuation area and the key for the valuation area is identical to the key for the plant.

Valuation Level – Company Code

The figure displays a company in which several company codes use the same chart of accounts and one company code works with a different chart of accounts. In such a situation, automatic account determination must be set up separately at least for each chart of accounts. The valuation areas (the level at which material valuation takes place) are the company codes. If you set the valuation area to company code level, the assignment of G/L accounts is uniform across all plants of a company code (it cannot be plant-specific).

If the valuation area is at company code level, the following options are available:

• Valuation grouping code is deactivated:

  The system would treat the three company codes (1010, 2010, and 2020) to which you have assigned the same chart of accounts, YCOA, identically in terms of account assignment.

• Valuation grouping code is activated:

  In this case, assign a valuation grouping code to each company code (1010, 2010, 2020 and 3000). Assign the same code (0002) to the company codes that are assigned to the same chart of accounts (YCOA) and that must be treated identically in terms of account assignment (2010 and 2020).

  If you use different valuation grouping codes for the company codes of the same chart of accounts, you can assign different G/L accounts for the same business processes in the individual company codes.