SAP Financial Accounting (SAP FI) Practice Exam

Which account is used for implementing cost of sales reporting based on functional areas?

1. Balance sheet accounts

2. Profit and loss accounts

3. Asset accounts

4. Liability accounts

The correct answer is: Profit and loss accounts

The selection of profit and loss accounts for implementing cost of sales reporting based on functional areas is appropriate because these accounts are specifically designed to capture revenues and expenses over a given period. In the context of cost of sales reporting, profit and loss accounts allow organizations to segment their revenue and costs according to various functions within the business, such as manufacturing, sales, or administration. Functional area reporting provides insights into how different segments of the organization contribute to overall profitability, allowing for better management decision-making. As cost of sales directly relates to how much it costs to produce and sell goods, it is essential to detail these costs within profit and loss accounts to assess the operational effectiveness of various functional areas. The other account types are not suitable for this purpose: balance sheet accounts focus on the company's assets, liabilities, and equity, while asset and liability accounts track specific types of resources and obligations and do not directly provide insights into sales performance or operational costs. Thus, using profit and loss accounts is critical for accurate cost of sales reporting based on functional areas.