Primary and Secondary Cost Elements:Definition
Primary Cost Elements / Revenue Elements:
When creating a primary cost element or revenue element, it must be listed first as a G/L account in the chart of accounts and defined as an account in Financial Accounting. In other words, primary cost elements and revenue cost elements require counterparts in FI. When you create a primary cost/revenue element, the SAP System checks whether a corresponding account exists in FI.
Secondary Cost Elements:
Secondary cost elements are used exclusively in Controlling (CO) and need not be defined in FI. It can be used for internal allocation purpose.
Integration with FI (Financial Accounting):
Cost Elements track the type of costs or spend. They form categories of costs that are independent from external or financial reporting requirements, but help management to track costs according to internal accounting policies. The primary Cost Elements are more or less mirror images (copies) of P&L revenue and expense accounts from the financial chart of accounts. The integrated mass processing moves (and allocates) costs from primary into secondary Cost Elements. Those secondary Cost Elements no longer are tied to the accounts used by financial and tax reporting (chart of accounts).
Leave a ReplyWant to join the discussion?
Feel free to contribute!