Management Accounting (CO) with SAP ERP 6.

0 (Some Sample Question)

Q1. Cost elements classify an organizations valuated consumption of production factors within a controlling area. A cost element corresponds to a cost-relevant item in the chart of accounts. Which of the following are types of cost elements? (More than one answer is correct) A. B. C. D. Primary cost elements Revenue cost elements Secondary cost elements Personnel cost elements

Answer: A, B, C Cost elements in Controlling (CO) are closely related to the general ledger accounts used in Financial Accounting (FI). This is because the SAP R/3 System is structured as an Integrated Accounting System: Cost elements document which costs (differentiated by category) are incurred within a settlement period, and in which amount. They provide information concerning the value flow and the value consumption within the organization. Cost Element Accounting and Cost Center Accounting/Internal Orders are closely linked in the R/3 System. Each posting to an account that is also a cost element, is assigned either to a cost center or order. This ensures that at period-end the data is subdivided by cost elements and cost centers/internal orders for analysis purposes. Primary Cost/Revenue Elements A primary cost or revenue element is a cost or revenue-relevant item in the chart of accounts, for which a corresponding general ledger (G/L) account exists in Financial Accounting (FI). You can only create the cost or revenue element if you have first defined it as a G/L account in the chart of accounts and created it as an account in Financial Accounting. The R/3 System checks whether a corresponding account exists in Financial Accounting. Examples of primary cost elements include: Material costs

 Personnel costs Energy costs Secondary Cost Elements 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 can not create the secondary cost element in cost accounting. Examples of secondary cost elements include: Assessment cost elements Cost elements for Internal Activity Allocation Cost elements for Order Settlement There are no Personnel cost elements in CO

Q2. With reference to the controlling module (CO), which of the following statements are true? (More than one answer is correct) A. Controlling provides information for management decision-making B. Controlling (CO) and Financial Accounting (FI) are independent components in the SAP system. C. One of the main task of Controlling is planning. D. Controlling can be implemented completely independently of FI Answer: A, B, C Controlling provides you with information for management decision-making. It facilitates coordination, monitoring and optimization of all processes in an organization. This involves recording both the consumption of production factors and the services provided by an organization. As well as documenting actual events, the main task of controlling is planning. You can determine variances by

comparing actual data with plan data. These variance calculations enable you to control business flows. Income statements such as, contribution margin accounting, are used to control the cost efficiency of individual areas of an organization, as well as the entire organization. Controlling (CO) and Financial Accounting (FI) are independent components in the SAP system. The data flow between the two components takes place on a regular basis. Therefore, all data relevant to cost flows automatically to Controlling from Financial Accounting. At the same time, the system assigns the costs and revenues to different CO account assignment objects, such as cost centers, business processes, projects or orders. The relevant accounts in Financial Accounting are managed in Controlling as cost elements or revenue elements. This enables you to compare and reconcile the values from Controlling and Financial Accounting. Although Controlling can be implemented independently of FI, there is some basic configuration that needs to be done in FI. (Note: Watch out for the word completely in the answer choice!)

Q 3. Overhead Cost Controlling component enables you to plan, allocate, control, and monitor overhead costs. Which of the following fall under Overhead Cost Controlling? (More than one answer is correct) A. Cost Element Accounting B. Cost Center Accounting C. Internal Orders D. Activity Based Costing E. Plant based Costing Answer: A, B, C, D The key areas of Overhead Cost Controlling are:

Cost Element Accounting Cost and Revenue Element Accounting details which costs and revenues have been incurred. Accrual is calculated here for valuation differences and additional costs. Cost Accounting and Financial Accounting are also reconciled in Cost Element Accounting. This means that the tasks of Cost and Revenue Element Accounting stretch beyond the bounds of Overhead Cost Controlling. Cost Center Accounting Cost Center Accounting determines where costs are incurred in the organization. To achieve this aim, costs are assigned to the subareas of the organization where they have the most influence. By creating and assigning cost elements to cost centers, you not only make cost controlling possible, but also provide data for other application components in Controlling, such as Cost Object Controlling. You can also use a variety of allocation methods for allocating the collected costs of the given cost center/s to other controlling objects. Internal orders Overhead Orders are internal orders used either to monitor overhead costs for a limited period, or overhead incurred by executing a job, or for the long-term monitoring of specific parts of the overhead. Independently of the cost center structure, internal orders collect the plan and actual costs incurred, enabling you to control the costs continuously. You can also use internal orders to control a cost center in more detail. You can assign budgets to jobs. These budgets are then monitored automatically by the SAP system to ensure that they are kept to. Activity-Based Costing In contrast to the responsibility and function-oriented basis of Cost Center Accounting, Activity-Based Costing provides a transaction-based and cross-functional approach for activity output in which several cost centers are involved. The emphasis is not on cost optimization in individual departments, but the entire organization.

Q 4. You can use different currencies in the Controlling component (CO). Which of the following currencies are valid in Controlling? (More than one answer is correct) A. Controlling area currency B. Object currency C. Exchange rate Currency Answer: A, B The following currencies are valid in Controlling: Controlling area currency The system uses this currency for cost accounting. This currency is set up when you create the controlling area. It is based on the assignment control indicator and the currency type. Object currency Each object in Controlling, such as cost center or internal order, may use a separate currency specified in its master data. When you create an object in CO, the SAP system defaults the currency of the company code to which the object is assigned as the object currency. You can specify a different object currency only if the controlling area currency is the same as the company code currency. There is an object currency for the sender as well as one for the receiver. Transaction currency Documents in Controlling are posted in the transaction currency. The transaction currency can differ from the controlling area currency and the object currency. The system automatically converts the values to the controlling area currency at the exchange rate specified. The system always translates actual data with the average rate (exchange rate type M). You store the exchange rate type for each currency. You can specify a different exchange rate type for planning data in the version. All three currencies are saved in the totals records and the line items. This enables you to

use the different currencies for evaluations in the information system. This is only possible if you specified that all currencies should be updated for the given controlling area.

Q 5. Controlling makes use of two different types of controlling objects, True Controlling Objects & Statistical Controlling Objects. Which of the following are Statistical Controlling Objects? (More than one answer is correct) A. B. C. D. Cost Centers (for account assignment of revenues) Profit Centers Projects Statistical internal Orders

Answer: A, B, D For postings in external accounting that use a cost element as the account, you need to use a special account assignment logic. This enables the system to ensure that data is reconcilable with all the relevant application components. These rules for the account assignment logic always apply for postings in internal accounting (Controlling). Account assignment distinguishes between true and statistical Controlling objects. True Controlling Objects Cost centers (for account assignment of costs) Orders (true) Projects (true) Networks Make-to-order sales orders Cost objects Profitability segments Real Estate Objects Business Processes You can use true Controlling objects as senders or receivers.

Statistical Controlling Objects Cost centers (for account assignment of revenues) Cost centers, if a true account assignment object already exists Statistical Internal Orders Statistical projects Profit centers You can indicate internal orders and projects in each master record as statistical. You can also specify Statistical Controlling objects as account assignment objects in addition to true Controlling objects. You cannot allocate costs on statistical Controlling objects to other objects. Account assignments are for information purposes only.