What is Business Area in SAP

Business Area:

        Organizational unit of financial accounting that represents a separate area of operations or responsibilities within an organization and to which value changes recorded in Financial Accounting can be allocated. Business areas are used in external segment reporting (over and above company codes) based on the significant areas of operation (for example, product lines) of a business enterprise. A segment is an isolated area of activity.

         All essential balance sheet items, such as fixed assets, receivables, payables, and inventories, and all items of the profit and loss statement can be assigned directly to a business area. The balance sheet items for banks, capital, and taxes, however, cannot be directly assigned to business areas. They need to be assigned manually. This means that business area financial statements cannot be drawn up for commercial and tax law. Business area balance sheets and income statements are used only for internal reporting purposes.

    The system determines the appropriate business area from information such as the material, plant, or cost center we enter in a business transaction like a goods movement. Assignments we make (between cost centers and business areas for example) or the combination of information we specify (a plant and a particular division for example) are the basis on which the system determines the appropriate business area.