What does the system create automatically when you add a new cost center?

Question

Options

• ASort Code
• BDimension
• CDistribution rule
• DG/L account

• A
  2% (1)
• B
  2% (1)
• C
  90% (44)
• D
  6% (3)

Explanation

When you add a new cost center in systems like SAP Business One, a Distribution Rule is automatically created because the system needs a mechanism to allocate costs across that cost center - the distribution rule defines how expenses are spread and is inseparable from the cost center's function.

Why the distractors are wrong:

• A (Sort Code): Sort codes are banking identifiers used for routing transactions between bank accounts - they have no relationship to cost center setup.
• B (Dimension): A dimension is the parent category that organizes cost centers (e.g., "Department" or "Region"); you define dimensions before creating cost centers, not the other way around.
• D (G/L Account): General Ledger accounts are created and managed independently in the chart of accounts - adding a cost center does not trigger G/L account creation.

Memory tip: Think "Cost Center = Cost Distribution" - a cost center only makes sense if there's a rule governing how costs flow through it, so the system auto-generates that rule the moment you create one.

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