Evaluating the value flow from financial accounting

Journal entries posted to financial accounting are one-sided entries in management accounting, as only the line items with cost and revenue G/L accounts are relevant and assigned to controlling account assignments. On the other hand, transfers and allocations within management accounting are two-sided postings with a clear sender-receiver relationship. In this lesson we will focus on the former, analyzing entries made from outside management accounting, such as from financial accounting.

There are generally two cases for posting to cost centers from financial accounting:

• Postings with assignments to the final cost centers directly on the journal entry line item, for example, the payroll expenses of the marketing department.
• Postings with assignment to an auxiliary cost center as an intermediate step before some kind of (automated) allocation transfers the costs to the final receivers, for example, the cafeteria expenses of an office building in Hamburg being posted initially to the Cafeteria Hamburg cost center and then transferred to the individual cost centers of the departments with personnel that eat at the specific cafeteria.

For any journal entry in FI with entries to primary cost G/L accounts, a CO account assignment (such as the cost center) must be specified for each relevant line item. An accounting document is then created. It contains all financial and controlling information.

In the example, the FI document has three line items that debit three profit and loss (P&L) accounts on the controlling object cost center FIN and credited one balance sheet account.

The three P&L accounts in the example are accounts of the G/L account type Primary Costs or Revenue with the cost element type 01 (primary costs). From the user input of cost center FIN, the system derives the profit center YB900 for the cost account line items and also transfers the profit center assignment to the balance sheet account line items.

If several CO account assignment objects are specified or derived for a line item during posting, there is only one account assignment that carries real costs. All other account assignment objects are posted to statistically.

• Real costs can be allocated to other objects within controlling. The account assignment that carries the real costs acts as the sender object in this case. A cost center is always a real account assignment object, but isn't always the receiver of real costs. If two real controlling account assignment objects are posted to at the same time for a line item, the cost center is posted to statistically. For example, if you post to a WBS element and a cost center, the WBS element will receive the real costs and the cost center the statistical costs.
• Statistical costs are posted to account assignments for reporting and analysis purposes. These can't be the object of further allocations in management accounting. As stated, the cost center is always a real object, but can receive statistical postings. Other controlling objects, such as WBS elements or internal orders can be defined as real or statistical in their master record. Any object defined as statistical will never have real costs posted to them. If you input a statistical WBS element on a line item, the system will derive the cost center from the WBS element master record and the real posting will be made on the cost center.

In the example shown in the figure, the cost center, as the only account assignment object is automatically considered as the real accounting object for the line item. The profit center is derived from the master record of the cost center and is posted to statistically.