1

Business Area

Business Area in SAP Hana is an internal organizational unit that

represents separate area of operations for internal financial statements
(Balance Sheet & Profit and Loss) are produced as per company operational
areas product lines, subsidiary, products, geographical areas, etc.

Business Area in SAP Hana – Scenarios

1. Business Area is an optional organizational unit
2. You can use business areas across company codes, even if company codes
uses different chart of accounts.
3. You can generate Balance Sheets, Profit and Loss reports as per business
areas
4. If the business area balance sheet indicator enables for company code,
then the field option of business area for FI-AA enables required.
5. You can create more than one business area as per business requirements

How to define Business Area in SAP S/4Hana

Business areas in SAP S/4Hana can be created by using the following
configuration steps:
 IMG Path: SPRO {Transaction Code} -> SAP Reference IMG -> Enterprise
Structure -> Definition -> Financial Accounting -> Define Business
Area
 Transaction Code: OX03
Step 1: From SAP Easy Access S/4Hana screen, enter tcode “OX03” and enter
to continue

Step 2: In next S/4Hana change view business area overview screen, it

displays lit of business areas that are defined in SAP S/4 Hana System.
To define the new business area in SAP S/4 Hana system, click on new entries
option

1
2

Step 3: On entries of Business Area creation screen, update the following

details
 Business Area: Enter the four characters alphanumerical key that
identifies as Business Area in SAP S/4Hana system
 Description: Enter the description for newly defined business areas.

After maintaining all the required details of business areas, click and save icon
and save the business areas in SAP S/4Hana system.

2
3

Define Functional Area in SAP

The functional Area in SAP is an organizational unit in accounting that

classifies the expenses of an organization by functions such as Sales,
Marketing, Production, etc.

xFunctional Area in SAP- Important Points

1. The Functional area in SAP is used to create P&L A/C in Financial
Accounting using the cost of sales accounting and used to analyze the cost
of sales accounting.
2. You can classify the expenses by these functions
3. You can create functional areas in SAP using T-code OKBD or
FM_FUNCTION

Examples of Functional Areas are:-

 Administration
 sales and distribution
 Manufacture
 Production
 Research and development

Transaction code:- OKBD or FM_FUNCTION.

SAP Menu Path :– SPRO > SAP Reference IMG > Financial Accounting
> Financial Accounting Global Settings > Company Code > Cost of Sales
Accounting > Activate Cost of Sales Accounting for Preparation

Step 1:– Enter SAP T-Code OKBD in the commend filed

Step 2:– In the Next screen Click New Entries

Step 3:- Enter four digits of Functional area code in the Functional Area
column and update the names of the Functional Areas

3
4

Thus Functional Areas ADPR, ADSO are created in SAP.

Definition of Chart of Accounts:-

The chart of accounts in SAP ( COA ) is a list of GL accounts master

records that are used by the organization. The master chart of accounts must
be assigned to each company code. Chart of Accounts is defined at the client
level.

Types of Chart of Accounts:-

 Operating chart of Accounts
 Country-Specific chart of Accounts
 Group Chart of Accounts

Operating chart of accounts:-

The operating chart of accounts in sap contains the G/L accounts that use
for posting in company code for daily activities and used in both financial
accounting and cost accounting. You have to assign an operating chart of
accounts to a company code.

Country-Specific chart of Accounts

The country-specific chart of accounts in sap contains the G/L accounts
needed to meet the country’s legal requirements. Country-specific charts of
accounts are assigned to company codes, and this is optional.

Group Chart of Accounts:-

The Group chart of accounts in sap contains the G/L accounts used by the
entire corporate group, and this COA is used to consolidate the reports for the
entire corporate group.

4
5

we can use the following methods to create a new chart of accounts in

SAP
1. Transaction Code:– OB13
2. SAP Menu Path:- IMG –> Financial Accounting –> General Ledger
Accounting –> G/L Accounts –> Master Data –> Preparations –> Edit Chart
of Accounts List
Chart of Accounts in sap Configuration Steps:-
Step 1:- Enter the Transaction code SPRO in the SAP command field to get
the Implementation Guide.

Step 2:- Click on SAP Reference IMG

Step 3:- Navigate the below Path and click on Edit Chart of Accounts
List to create a new Chart of Accounts.

5
6

Step 4:- The Existing Chart of Accounts that are already created are
displayed below; click on the New Entries button to create a new Chart of
Accounts in SAP.

Step 5:- Update the required data in the new entries screen.

6
7

1. Chart of Accounts:- Enter the 4 digits alphanumeric code of the Chart of

Accounts
2. Description:– Enter the Description of the Chart of Accounts
3. Maintain Language:- Select the language of the Chart of Accounts
4. Length of G/L Account Number:– Update the length of Gl Account
Number. The maximum length of G/L account number that SAP supports is
10.
5. Integration:- We can have controlling Integration Manual creation of cost
of elements or Automatic creation of cost of elements. It is advisable to have
Manual creation of elements in SAP
6. Consolidation:– Enter the Group Chart of accounts for the consolidation of
Reports.
7. Status:- Under status, Deselect the Blocked Check box.
After updating the required data, click on the save icon, and you will get the
message “Data was saved”
Thus Chart of Accounts in SAP ADAR was created.

How to Assign Company Code to Chart of

Accounts in SAP
After the configuration of the chart of accounts, the next step is the assignment
of the chart of accounts to appropriate company codes in SAP. The chart of
accounts must be assigned to each company code in SAP. The assignment of

7
8

company code to the chart of accounts can be configured by using one following
navigation method.

IMG Menu Path :- SPRO > SAP Reference IMG > Implementation Guide –>
Financial accounting –> G/L Accounting –> GL Accounts –> Master Data–>
Preparations –> Assign Company Code to Chart of Account
Transaction Code:- OB62

Scenario: In the SAP tutorial, we are going to assign Company Code AD06 to
the Chart of Accounts ADAR in SAP.

Step 1:– Enter transaction Code SPRO in the SAP command field and press
enter.

Step 2:– Select SAP Reference IMG

Step 3:- Follow the IMG menu path and select Assign Company Code to
Chart of Account.

8
9

Step 4:- Click on position

and update company code, and press enter to continue

Step 5:- Now, the company code “AD06” displays on top of the list. Update
chart of accounts key in the Chrt/Accts field

Ste 6:- Click on the Save icon to save the configured data, and a message will
be displayed ” Data was Saved.”

Thus Company code is successfully assigned to the chart of accounts in the

SAP system.
Now we have successfully assigned company code to the chart of accounts, and
we have configured most of the settings that are required for company code
global parameters. Now learn how to enter parameters for company code
global data in SAP.

G/L Account Group in SAP

Define Account Group:– Chart of accounts contains different types of accounts.
To manage and control a large number of G/L accounts better in SAP, they are
arranged in account groups. Account group must be specified while creating the
G/L account.

9
10

Account Group Determines:-

 The interval in which the GL account number must be defined.
 The creation of the GL codes depends upon the specified number range that
is assigned to the account group in sap
 Which fields are required and optional entries when creating and changing
master records
 Which fields are suppressed when creating and changing master data
Here we are configuring the following account groups
Account From To
COA group Name account account

ADAR SCPL Share Capital 100000 119999

ADAR RSPL Reserves & Surplus 120000 129999

Current Liabilities and

ADAR ACDN Provisions 130000 139999

ADAR SCLN Secured Loans 140000 149999

ADAR UNLN Unsecured loan 150000 159999

ADAR ACDP Accumulated Depreciation 160000 169999

ADAR FAAC Fixed Asset Accounts 170000 179999

ADAR CUAS Current Assets 180000 189999

ADAR LOAD Loans and Advances 190000 199999

ADAR SALE Sales & Operating Revenues 200000 219999

ADAR OTIN Other Income 220000 229999

Increase / Decrease in
ADAR INCR stocks 230000 239999

10
11

ADAR RMCO Raw material consumption 240000 249999

ADAR PREX Personnel Expenditure 250000 259999

ADAR MFEX Manufacturing Expenses 260000 269999

ADAR ADMN Administration Expenses 270000 279999

ADAR INTR Interest 280000 289999

ADAR DEPR Depreciation 290000 299999

ADAR INTX Income Tax Expenses 300000 319999

Steps to Define Accounts group in SAP:-

 T Code for Define Account Group:- OBD4
 IMG Menu Path :- SAP Implementation Guide > Financial accounting –> G/L
Accounting –> GL Accounts –> Master Data–> Preparations –> Define Account
Groups
Step 1:– Enter T Code SPRO in the SAP Command field.

Step 2:- Select SAP Reference IMG

Step 3:- Next Screen, follow the menu path for define account group in SAP.

11
12

Step 4:- Select New entries to create new G/L account groups.

Step 5:- Update the following fields and press enters from Keyboard.
Chrts/Accts:- Enter Charts of Account Key
Acct Group:- Enter the Account group
Name:- Update the account group
From Acct:– Enter from account number, i.e., starting account number of account
group in SAP.
To Account:- Enter to account number, i.e., end of the account number of the
Account group in SAP.

12
13

Step 6:- After Updating the data, save the data by clicking the save icon

Thus Account groups are successfully configured in SAP.

13
14

Define Retained Earnings Account in SAP

Retained Earning Account:– Account balances are carried forwarded from one
fiscal year to the next fiscal year by using the SAP standard carry the forward
program. Retained earnings account is assigned to each P&L account by specifying
a P&L statement account type in the chart of accounts (COA). Each Profit & Loss
account is assigned to a Retained Earnings Accounts by key
To automatically carry forward the balance by the system to the retained earnings
accounts, you can define one or more P&L statement account types per COA and
assign them to retained earnings account.

Retained Earning Account configuration steps:

 T Code for define retained earning account:- OB53
 IMG Menu Path :- IMG > IMG –> Financial Accounting –> General Ledger
Accounting –> GL Accounts –> Master Data–> Preparations –> Define
Retained Earnings Account

Step 1:-
Enter Transaction Code SPRO in the SAP command field and press enter

Step 2:- Select SAP Reference IMG

Step 3:- Follow the IMG menu path to define retained earnings account

14
15

Step 4:-
Next, Enter the Chart of Accounts key that you want to define retained earning
account for COA and press enter

Step 5:-
Update the following data and press enter
P&L Statement acct type:- X
Account:- Enter account 120000

15
16

We get a warning message account 120000 not created in the chart of accounts
ADAR

Step 6:- Ignore the warning the message press enter. Press enter once again and
save the configured retained earnings account.
Thus Retained Earnings Account is successfully configured in SAP.

16