SAP Controlling

Financial Accounting

4.6 Review Answers

Chapter 3 Organizational Structure

1. Define the major organizational hierarchy elements within the Financial Accounting module
and explain the relationship between each of them.
The hierarchy, from the highest organizational unit to the lowest, is the Client, Chart of
Accounts (COA), Company Code and the optional Business Areas (BA). Two other optional
areas include the Dunning Area and the Credit Control Area (CCA). Credit Control Areas
come above the Company Code and Dunning Areas come below the Company Code. There is
only one Client and its values are the same across all Company Codes that are attached to it.
Every Company Code is a legal independent entity. Business Areas can be shared among
Company Codes (many-to-many relationship) and they are used for internal reporting
purposes. Each Company Code is assigned a COA. The COA may be the same for multiple
Company Codes, but each Company Code may only use one COA.
2. What is the highest hierarchy level in SAP? Define this term and explain how it is used in
the SAP system.
The Client is the highest level in the SAP organizational structure. Anything specified for a
Client applies to all Company Codes that are attached to that Client. Clients have a one-tomany relationship with Company Codes. Clients are generally not reported on with balance
sheet and P&Ls, the company codes are the legal entities and serve for this purpose.
However, clients can be reported on as part of consolidation or extended G/L.
3. Explain the relationship between company code, business areas and financial statements.
A Company Code represents an independent legal entity that is required by law to issue
financial statements (Balance Sheet and P&L Statement). Business Areas are defined
independently of Company Codes and can be shared across Company Codes. Internal
Balance Sheets and P&L Statements can be generated by Business Area though they are not
required.
4. Discuss three benefits of the SAP organizational structure.

It gives flexibility to reflect complex organizational structures

It helps to consider future changes in the organizational structure
It is clearly defined into logistical (sales, purchasing) and financial views (cost accounting,
financial accounting).

5. Can you report on business areas across companies? If so, explain how this is accomplished
conceptually in the system.
Yes, because BA's are defined independent of company codes. They can be added to the
detail of a line item in a document, thus enabling the system to keep track of business area
information for reporting and controlling purposes.

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Thi s is P ri cewat erhouseCoopers PROP RIE TA RY M AT ERI AL (hereaf ter, t he M aterial) int ended f or
int ernal us e onl y. Y ou m ay not rent, lease or distribut e t he M aterial to c lients or other third parties ,
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November 16

SAP Controlling
Financial Accounting

4.6 Review Answers

Chapter 3 Organizational Structure

6. What is a credit control area? Describe its relationship to company codes?

A credit control area (CCA) is used to set and control credit limits for customers. They
include one or more company codes. There can only be one CCA per company code in
versions of SAP prior to 4.x. Customers in several company codes can exist under several
CCA's. As part of credit management, an individual customers credit limit is set based on an
individual credit control area or across several credit control areas.
7. The chairman of the P&W Holding Co. wants to link each of his four company codes to three
dunning areas and two credit control areas. P&W Holdings has installed version 3.x of SAP.
Can this be done? Why or why not?
No, an individual company code can only have one credit control area in version 3.x of SAP.
It can have multiple dunning areas.
8. Where does the chart of accounts fall in the FI organizational structure?
Under Client and above company code.
9. How many chart of accounts can be assigned to one company code?
Only one
10. How many company codes can be assigned to one chart of accounts?
Many
11. What is dunning?
The process of automatically notifying and requesting payment from customers with past due
invoices.
12. How many dunning areas can a company code have?
Many
13. How many company codes can a dunning area have?
Many

/var/www/apps/conversion/tmp/scratch_2/338266184.doc
Thi s is P ri cewat erhouseCoopers PROP RIE TA RY M AT ERI AL (hereaf ter, t he M aterial) int ended f or
int ernal us e onl y. Y ou m ay not rent, lease or distribut e t he M aterial to c lients or other third parties ,
but you m ay trans fer the Mat erial t o ot her em ployees of Pric ewaterhous eCoopers.

November 16