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1. COST ELEMENT ACCOUNTING

Cost Element Accounting is the area of cost accounting where you track and structure the
costs incurred during a settlement period. It is thus not an accounting system as such, but
rather a detailed recording of data that forms the basis for cost accounting.
Each external transaction flows directly through the G/L Account (= cost element) to the
corresponding account assignment object (that is Cost Center, Internal Order, WBS, etc)

MASTER DATA:

Primary cost Element

Secondary cost Element
Cost Element Groups

Primary cost Element (PCE): When you create primary cost elements, the SAP System checks
whether a corresponding general ledger (G/L) account exists in Financial Accounting (FI).

Two ways of creating the same:

TR-CODE: KA01

Do Enter!
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Note the cost element name will be derived from GL account.

Choose either “01” for GL accounts with cost criteria and “11” or for revenue GL accounts.

Click save to save the cost element:

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ANOTHER WAY TO CREATE PCE :

TR-CODE: FS00
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Follow the steps as given above.

Secondary cost Element (SCE): Secondary cost elements can only be created and
administrated in cost accounting (CO). They portray internal value flows, such as those found in
internal activity allocation, overhead calculations and settlement transactions.

When you create a secondary cost element, the R/3 System checks whether a corresponding account
already exists in Financial Accounting. If one exists, you cannot create the secondary cost element in
cost accounting. This means that one should take care when we give number to SCE. Normally, we
use number starting with “9xxxxxxxx”, which separates from primary cost elements.

Examples of secondary cost elements include:

Assessment cost elements

Cost elements for Internal Activity Allocation

· Cost elements for Order Settlement

TO CREATE SCE: TR-CODE: KA06

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Note: To change or display PCE or SCE, please use following Tr-codes:

KA02: Change

KA03: Display

Cost Element Groups: You can collect cost elements with similar characteristics in cost element
groups.
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You can also use cost element groups whenever you want to process several cost elements in one
transaction. For example, in cost center planning, distribution or assessment.

Creating Cost Element Group: Tr-code: KAH1

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Save it to create the group.

Note: To change or display Cost Element Group, please use following Tr-codes:

KHA2: Change

KHA3: Display
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