In this topic, we described about the below sections -
Cost Center -
A business unit in any company can be classified as profit center, cost center or an investment center. Cost center is a simple and straightforward division in an organization. Cost Center known as a component in an organization where costs are incurred that adds value to the cost and adds profit of the organization.
Cost centers are grouped together into decision, control and responsibility units. Different activity types can be assigned to a cost center and each activity type shows the specific activities in cost center.
Cost center accounting used to differentiate between different activities and controlling of costs arising in an organization. Cost centers are combined as cost center groups that are used to create cost center hierarchies. Cost center hierarchical structure should be defined first to create cost center.
Internal Order -
An internal order monitors the costs parts under certain circumstances, the revenues of the organization.
An internal order can be created to monitor the costs of a time-restricted job or the costs for the activities production. An internal order can be used for the long-term monitoring of costs.
Investment orders monitors investment costs capitalized and settled to fixed assets. Accrual orders monitors period-related accrual calculation between expenses in Financial Accounting and the costs debited in Cost Accounting.
Revenues orders monitors costs and revenues incurred for activities for external partners or for internal activities that do not form part of the core business for the specified organization.
Profit Center -
Profit center is used for handling internal controlling and part of Enterprise Controlling module and is integrated with new General Ledger Accounting. Profit center allows to handle the responsibilities of respective units when the company divided into units (profit centers) and treats the units as separate companies within the company.
Profit center accounting is an organizational unit which reflects organization management-oriented structure for internal control. Profit Center Accounting evaluates the individual, independent areas profit or loss of within an organization.
The profit center key components include profit center name, the controlling area under which it is assigned, time period, person responsible for the profit center, standard hierarchy, etc.
Key Features -
- Analyse fixed assets by profit center.
- Determines profits and losses.
- Determine profit for internal areas of responsibility.