Lesson 2 of 5
Cost elements as G/L accounts
7 min
One of the most visible consequences of the Universal Journal is in master data. In ECC, controlling had its own master record, the cost element. Primary cost elements mirrored P&L accounts; secondary cost elements existed only in controlling for allocations and settlements. They were created separately (transactions KA01 and KA06) and had to be kept consistent with the G/L.
If the line items now live in one table, the account must be one object too. So in SAP S/4HANA, cost elements are G/L accounts. The old cost element transactions are gone. You create the G/L account in FS00 or the Manage G/L Account Master Data app, and the controlling behavior is part of the account.
Two settings that matter
Two fields on the G/L account carry the controlling meaning:
- G/L account type. Balance sheet account; nonoperating expense or income; primary costs or revenue; secondary costs. Accounts of the last two types are relevant to controlling.
- Cost element category. Set for primary and secondary cost accounts. It tells controlling how the account may be used: for example a primary cost or revenue category for external postings, and secondary categories for internal settlement, assessment or internal activity allocation.
| Contoso account | G/L account type | Cost element category (meaning) | Who posts to it |
|---|---|---|---|
| Finished goods inventory | Balance sheet account | None | Goods receipts and goods issues |
| Revenue, alternators | Primary costs or revenue | Revenue | Billing documents |
| Cost of goods sold | Primary costs or revenue | Primary costs | Goods issues for deliveries |
| Utilities expense | Primary costs or revenue | Primary costs | Supplier invoices, with a cost center |
| IT cost assessment | Secondary costs | Assessment | Period-end assessment from the IT cost center to production cost centers |
| Production labor allocation | Secondary costs | Internal activity allocation | Production confirmations charging work center activity |
G/L account type and cost element category on example accounts.
Why secondary costs now appear in the general ledger
In ECC, an assessment that moved IT costs from one cost center to another stayed inside CO. If the two cost centers belonged to different profit centers, an extra mechanism had to reflect that in the general ledger. In SAP S/4HANA the assessment posts Universal Journal lines on a secondary cost G/L account, with the sender and receiver cost centers and their profit centers. The movement between profit centers is visible in the same journal without any extra step. Secondary cost accounts net to zero overall, because each allocation credits the sender and debits the receiver.
- Create accountFS00 or Manage G/L Account Master Data
- Chart of accounts dataName, G/L account type, for Contoso's chart of accounts
- Controlling dataCost element category for primary or secondary cost accounts, maintained per controlling area
- Company code dataCurrency, open item and posting settings for company code 1710
Effect on master data maintenance
For master data teams this simplifies things: one object, one approval, one place to look. It also raises the stakes. A finance user creating a P&L account must now decide whether it is a primary cost account and pick the right category, because that decision controls whether postings to it require a cost object such as a cost center. Get it wrong and either postings fail ("account assignment required") or costs land in the ledger with no cost center, invisible to cost center managers.
Authorization also follows the account: a user who maintains cost-relevant G/L accounts needs authorization both for G/L account maintenance and for cost element maintenance. Expect this to come up in role testing.
What would you do?
In a Contoso test, a supplier invoice for factory electricity posts successfully, but the cost center manager for Detroit maintenance cannot see the cost. The journal entry shows the expense account with no cost center. The account was created last week. What is the most likely cause?
- In SAP S/4HANA, cost elements are G/L accounts; KA01 and KA06 are gone.
- The G/L account type and cost element category carry the controlling meaning.
- Secondary cost accounts are used for allocations and settlements and appear in the same journal.
- A wrong account type can silently keep costs out of cost center reporting.
Check your understanding · not graded
Lesson check
1. Which transaction creates a G/L account that is also a primary cost element?
2. Which field tells controlling how an account may be used, for example for assessment?
3. What G/L account type does an internal activity allocation account have?
4. Where are default account assignments such as a default cost center maintained in SAP S/4HANA?