Analyzing the Concept of Segment Accounting for Internal and External Purposes

James would now like to create financial statements for different divisions of the company.

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What is Segment Reporting?

Segment reporting breaks down the operations of a company into manageable pieces, or segments, to satisfy GAAP and IFRS reporting standards. You can define segments in SAP S/4HANA.

Annual financial statements supplemented by the segment information from segment reporting provide deeper insights into the financial position, asset position, and profit situation of a company.

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Document splitting enables you to draw up complete financial statements for the following dimensions at any time:

• Segments
• Profit centers
• Business areas
• Customer-defined dimension (customer field)

You use this object to specify the dimensions for which document splitting is performed and the dimensions for which financial statements are possible.

The system creates enhanced data by using a set of rules defined in the system (Active Split). In the case of a related follow-on document, such as a customer payment with or without cash discount, instead of using the rules, the system will be able to refer to the related document, such as an outgoing invoice, to determine the correct enhancement (Passive Split).

How do we analyze the enhanced data by using the Document Splitting Expert Mode in posting simulations?

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For entries that are manually added into the system, you are able to display the original entry as it was inputted (Entry View), as well as the enhanced entries made by the document splitting process (General Ledger View). In contrast, for line items created by system processes, the data is created with the needed data used in document splitting and therefore no Entry View can be displayed.

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Financial statements can be created by each characteristic configured in the document splitting settings. When executing the balance sheet / income statement application, you can choose the financial statement version and ledger to display and select the characteristic desired.

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