Can you explain the difference between business area and profit center.

Profit Center - The profit center view shows the various internal areas of responsibilities. Objects such as cost centers, materials, etc can be used for profit center 
analysis. Profit center can be used to determine the revenues, costs, and profitability for specfic areas of responsibility.

Business Area - Business area forms an important part of external reporting. Analysis of various segments, product divisions, regions etc is possible using business areas.

Business Area: This is optional

This can be used cross company codes.

This is for Internal Purpose.

It is not Legal Entity like Co Code.

The transaction entered in Business are, Debit total will not tally with credit total.

Since it is used for segment wise or area wise or line wise this is used for internal report purpose only.

Balance Sheet and P & L stataments can be drawn on segment wise.

Profit Centre: Generally in terms of SAP or Finance the meaning of Profit centre is to know the profitabilty.  In same manner , the managers wants to know the ROI from their investments, obviously we need to use the tool.  This ROI may be geographically or area wise or division wise. P.C provided us profitablity of the particular area 
for internal purpose ( Only for Internal )

Business Area is an optional entry. Whenever company wants financial statements business area wise we can maintain BAs.  And also we can maintain BA as Segment Wise, Product Wise, Geographical Location wise.

Profit center is used to know the profits of companies. PC is also used for to know the profits as a Product wise, Segment wise, geographical location wise.

In summary the main differences are:

A Business Area is a freely definable business unit that can go over a number of Company Codes.

A Profit Center is linked directly to Controlling, however in ERP 6.0 is it set up in Finance as well. Cost Centers are linked to Profit Centers, and Profit Centers are assigned to a single Controlling Area and a Company Code.

The only way they are the same, is that you can use them for reporting.

What is the difference between Functional area and Business area?

Business Area:
A business area is an organizational unit within accounting that represents a separate area of operations or responsibilities in a business organization.  For example if a company is having several branches in bangalore & mumbai then bangalore & mumbai can be treated as seperate business area.

Functional Area:
An organizational unit in Accounting that classifies the expenses of an organization by functions such as: Administration Sales and distribution Marketing Production Research and development Classification takes place to meet the needs of cost-of-sales accounting.

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