For XYZ Company, the Costing Allocation Flexfield structure has three segments: Company, Cost Center, and Account. One of the employees was initially costed to the 3500 cost center and his…

Question

Options

• ADebit: 100.5000.6000, Credit: 100.3500.6000
• BDebit: 100.5000.6000, Credit: 105.1000.7000
• CDebit: 100.3500.6000, Credit: 100.5000.6000
• DDebit: 100.3500.6000, Credit: 105.1000.7000
• ENo entries will be created because the costing process has already been run for the assignment.

• A
  83% (48)
• B
  10% (6)
• C
  3% (2)
• D
  2% (1)
• E
  2% (1)

Explanation

Option A is correct because the RetroCosting process only reverses and corrects the costed side of the original entry - the debit that was allocated to the employee's cost center. It creates a reversal of the old cost center entry (Credit: 100.3500.6000) and a new entry for the corrected cost center (Debit: 100.5000.6000), netting the correction without touching the original credit side.

Why the distractors are wrong:

• B applies the new cost center but keeps the original credit (105.1000.7000), which would leave the old debit of 100.3500.6000 uncorrected on the books.
• C has the debits and credits inverted - this would actually move costs back to the old cost center, the opposite of the intended correction.
• D simply duplicates the original entry rather than correcting it, making no change to the cost center.
• E is wrong because RetroCosting exists precisely to handle this scenario - it creates correcting entries even after the original costing run has completed.

Memory tip: Think of RetroCosting as a "surgical swap" - it only operates on the employee-costed (debit) side of the entry, swapping old cost center out and new cost center in, while leaving the offset/clearing credit account completely untouched.

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