Hi,
Business Areas in SAP are used to differentiate transactions originating from different points/lines/locations in business.
The functions of business area is to create balance sheets and profit and loss statement below the company code level
Examaple:
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.
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 when it wants to know the operating profits for different business areas/lines.
OX03 - Creation of new Business Area
A businees area can be assigned to many compant codes.
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