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This blog article will discuss Account Segmentation in SAP Business One.

Summary: 

Cost accounting versus Account Segmentation

What is mandatory within the SAP Business One Chart of Accounts.

Examples of account segments and tips on setting them up.

       

Cost Accounting vs. Account Segmentation

In the United States, cost accounting is used to track the various cost and profit centers of a business.

Using cost accounting, you can track departments, divisions, or various geographies as if they were separate entities. You can determine how much spending or revenue is being generated for various business purposes. In Europe and other parts of the world, segmented charts of accounts are not

considered Generally Accepted Accounting Practices (GAAP); cost accounting is the prevalent method used.

    

However, account segmentation often serves the same purpose and allows you to analyze profits and expenses by business unit in much the same way. Because of the general acceptance of account segmentation, cost accounting is rarely used by U.S. companies.

Mandatory Settings in the SAP Business One Chart of Accounts

   

You have 3 choices when setting up the chart of accounts in SAP Business One:

  1. Use pre-defined chart of accounts
  2. Import a pre-existing chart of accounts
  3. Create your own chart of accounts

The organization of the chart of accounts follows GAAP in which there is a separate “drawer” for accounts representing assets, liabilities, equity, revenues, cost of sales, expenses, financing, and other revenues and expenses. These drawers, which have been defined by SAP and cannot be changed, organize your accounts by level in a logical fashion appropriate to your financial accounting and reporting processes.

In the Chart of Accounts window, SAP Business One asks you to characterize every G/L account as either a title account or an active account and identify its level. Because only active accounts can be posted to in SAP Business One, it is a good practice to have all your active accounts at the same

In reports, a title account summarizes all the balances of each active account below it.

In the account segmentation shown below, level 4 is the lowest level that contains postings of transactions.  *Thus it is not mandatory to use all levels.
You can have active accounts in level 3 or 2.

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Examples of account segments in SAP Business One and tips on setting them up

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Note that account segmentation enables costing information to be recorded without the need to use a separate field like profit center.

Aether Consulting is an SAP Gold Reseller Partner for SAP Business One.  www.aetherconsulting.com

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