Business Areas in SAP are used to differentiate transactions originating from
different points/lines/locations in business. Let me give some examples to
elucidiate:-
A company (say, ABC) is a huge company and has a variety of businesses under
it. Let us say that it typically operates in 3 different domains like machinery
manufacturing, trading and assembling of machine parts.
There are 2 options here now -
1. Either create different company codes for the 3 business operations (which
would be the easiest and require no creativity)
or
2.) Create each of these business lines into business areas (the better
option).
The advantages of using the second option is:
1. You can use these business areas if other company codes require the same
areas
2. The configuration is simpler as in case of company code, you would require to
go through the entire configuration of creating Chart of Accounts, Fiscal Year
variants, posting periods variants and so on. In the business area option, you
just need to attach it to the company code and the rest of the details in
Business area is attached by default from the company code you are using it in.
3. Using the options in controlling (EC-PCA, Enterprise Controlling, Profit
Centre Accounting), you can even draw up Balance Sheets and PL statements for
your business areas and hence this is used for management accounting in some
companies (like HP, Dell, etc) when it wants to know the operating profits for
different business areas/lines.
The above was an example when the company wanted to separate entries
according to the lines it operates in... the other case could be when it wants
to find out profitability during its operations in cities and differentiates
these cities into Business
Areas...
Business Areas are not much relevant in FI but are much more relevant in CO.
1) You want the B/S and P/L statements of transactions carried out in areas
other than the business areas defined by you? or
2) You only want to view the transactions that were not carried out in any
business area?
Whatever were your doubts, let me clarify.
If your doubt was the first one, then, in that case, the financial statements
will not be available. There are reasons for the same. All transactions in FI
pass through G/L accounts. The data in FI is then passed to CO through primary
cost elements.
According to the settings that you have configured for your controlling area and
operating concern, the costs are distributed to the various cost centers (Cost
Center Accounting & CO-PA). The costs are then apportioned to the various cost
centers (which may or may not be a part of your business areas or may be
independent cost centers). Now, with this data, financial statements of the
business area are drawn up. For transactions not part of business area, they are
transferred to independent cost centers (e.g. like Head Office Salaries, HR,
etc) and hence, cannot be drawn up as a financial statement but just as line
item displays in your reconciliation ledger (if you have activated it in the
CO-OM-CEL {Cost Element Accounting})
Financial statements of Business areas are unbalanced because not always does
the debit and credit entries of a transaction lie in the same business area/cost
center; but for cost accounting purposes, they are reasonably sufficient.
