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Former Member

Difference between Segment & Business Area

Hi All,

Could any one please help me in explaining what the difference between Segment & Business Area? And what does it mean by “We can create financial statements at any time for the Segment dimension. For this, you need to set up a zero balance setting for the Segment characteristic” can any one could please help me on this.

And also please explaining what this Document Splitting is? How is it helpful? Please give an example in real time senior. I have already gone through Help document, please don’t suggest me that.

Thanks in Advance to all.

Regards,

Giridhar

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3 Answers

  • Best Answer
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    Former Member
    Apr 02, 2007 at 02:34 AM

    Hi,

    Segment to my knowledge is used as "Profitabilty Segment" in CO-PA (Controlling-> Profitability Analysis). CO-PA uses Characteristics/ Value Fields as elements for reporting.Business Area is more from FI perspective.

    Both faciliate Segment Reporting (in business jargon and not in SAP terms) has its own pros & cons for implementation.

    Document Splitting -> Extract from an SAP document. Please drop in your email id and I will send you the document.

    Document splitting is an appropriate tool for determining

    missing account assignments according to cause in common

    accounting processes in SAP software (invoices, payments, or

    clearing). For each financial-account document, document

    splitting applies account-assignment information to nonassigned

    accounts according to assignment rules set in the

    customizing area. Take the example of a vendor invoice. You

    can assign profit centers to expense accounts manually, derive

    the assignment automatically, or make the assignment using a

    substitute cost center. Document splitting places these profit

    centers in the payables accounts of the invoice document.

    This function can help you create balance sheets for entities

    that extend beyond the scope of the company code. Typical

    examples include balance sheets at the segment or profitcenter

    level or balance sheets based on company-specific or

    industry-specific entities.

    There are also mechanisms to determine all account assignments

    outside of document splitting – in the delivering component

    itself. This determination would include postings from SAP

    human capital management or materials management software.

    The document-splitting function is based on the following

    model. Accounting documents contain accounts with assignments,

    such as revenues or expenses. Such accounts provide

    dependent accounts (accounts payables, accounts receivables,

    and taxes, for example) with account assignments based on

    context (such as invoice or payment). The model is processoriented:

    account assignments from original processes are

    projected into the subsequent processes, thereby enabling

    account assignments according to cause in the subsequent

    processes. Document-splitting information is built at two

    technical points: document creation and the accounting interface.

    Document Splitting at Document Creation->

    A typical example of this instance is the clearing transaction –

    during which cash discount and realized exchange rate differences

    are split according to source. (That is, according to the

    proportions of the account assignments in the expense or

    revenue lines of the original document, such as an invoice.)

    What is special here is the specific reference to the original

    transaction or line item. Controlling functions in the software

    are updated accordingly and reconciled with the general-ledger

    accounting functions. Another example of item-related document

    splitting is foreign-currency valuation of open items. This

    function transfers exchange-rate differences to the controlling

    software.

    It’s important to note that the balance-valuation function

    has no reference to items or transactions. Here, the dimensionspecific

    balance of the account (such as the balance for each

    segment) is used as the basic value.

    Rgds.

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    Former Member
    Apr 02, 2007 at 10:35 AM

    Dear Giridhar

    Earlier in SAP we used to have very limited reporting hierarchies, in which business area is one like Company Code. But obviously in FI or CO either user/ partner/ management always interested in viewing the business on different entities in different forms of reports.

    So, with the newGL SAP has given a provenance to users to create their own reporting entities. So, with the newGL customers can generate balance sheets by almost any dimension by defining a SEGMENT, meaning: cost center, plant, etc even you can define business area as a segment.

    For this purpose was create the SEGMENT entity. So that it helps customer in segment level reporting.

    We Can create financial statements means we can generate balance sheet or profit and loss statement on segment.

    For lay mans terms I can tell Business Area is on example of Segment. Hope it clarifies..

    In order to understand document split you should be familiar with New GL / Ledger accounting...

    Regarding Document Splitting: Consider following realtime example

    Invoice ( Example: Split on profit center)

    Entry View

    Vendor Invoice

    PK Account Pr.Ctr Cost.Ctr Amount

    40 Expense PC01 CC01 400

    40 Expense PC02 CC02 600

    31 Vendor 1000 -

    Say Document number 156123

    General Ledger view above document becomes as follows..

    PK Account Pr.Ctr Cost.Ctr Amount

    40 Expense PC01 CC01 400

    40 Expense PC02 CC02 600

    31 Vendor PC01 400 -

    31 Vendor PC02 600 -

    Suppose you got discount while paying above invoice then

    Vendor Payment (entry view)

    PK Account Pr.Ctr Cost.Ctr Amount

    25 Payable 1000

    50 Bank 970-

    50 Discount 30 -

    the enhanced document of the above will be as follows... discount will be splitted across profit centers ...

    PK Account Pr.Ctr Cost.Ctr Amount

    25 Payable 1000

    50 Bank 970-

    50 Discount PC01 CC01 12 -

    50 Discount PC02 CC02 18-

    For the above document the general ledger view will be as follows..

    PK Account Pr.Ctr Cost.Ctr Amount

    25 Payable PC01 400

    25 Payable PC02 600

    50 Bank PC01 388-

    50 Bank PC02 582-

    50 Discount PC01 CC01 12 -

    50 Discount PC02 CC02 18-

    Basically the document split will distribute the money depending on your split method you have configured in SPRO.

    Don't confuse too much, it is very easy if you go step by step in SPRO -- especially Finanacial Accounting (new) configuaration.

    Hope I tried to answer your query.

    Regards

    Siva

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    • Thanks, this is a very good post.

      One question here for you: what does that mean for cost elements? When posting to the segments, are there CO documents created for B/S accounts?

      Thanks!

      Hein

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    Former Member
    Apr 02, 2007 at 08:32 AM
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