Which dimension do you use to produce external financial statements based on cost-of-sales accounting?

Which dimension do you use to produce external financial statements based on cost-of-sales accounting?
A . Functional area
B . Profit center
C . Segment
D . Market segment

Answer: A

Explanation:

For producing external financial statements based on cost-of-sales accounting, the ‘Functional area’ dimension is used. Cost-of-sales accounting is an approach that matches the costs of products sold with the revenues generated from their sale, providing a more accurate representation of the profit for a specific period. The functional area dimension allows for the classification of expenses according to the functions within an organization, such as production, sales, or administration, making it a key dimension for cost-of-sales accounting. This classification helps in the preparation of income statements where expenses are categorized based on their function, which is essential for cost-of-sales accounting.

References:

SAP S/4HANA Cloud documentation on financial reporting and analytics

Financial Accounting standards and practices that discuss the principles of cost-of-sales accounting