SAP Financial Accounting (SAP FI) Practice Exam

What is derived from a cost center?

1. Segment

2. Profit center

3. Asset

4. Internal order

The correct answer is: Profit center

A profit center is derived from a cost center as it represents a unit within an organization that is responsible for generating revenue and controlling costs. In SAP Financial Accounting, a cost center is used to track the expenses associated with a particular department or function within the organization. When an organization wants to assess the profitability of specific segments of its operations, it creates profit centers that build on the information from the cost centers. The relationship between cost centers and profit centers enables organizations to evaluate both costs and revenues together, ensuring a comprehensive performance analysis. This linkage helps in financial reporting and strategic decision-making by providing a clearer view of operational efficiency and profitability. Other concepts like segments, assets, and internal orders, while related to financial accounting, do not directly derive from cost centers in the same manner. Segments focus more on the geographical or operational divisions of a business, assets are items owned by the company that has value, and internal orders serve to track costs associated with specific tasks or projects. Thus, profit centers are distinct in providing a direct correlation to the cost center from which they are derived.