Your company based in France has a permanent establishment in Switzerland where financial statements are required by law. Which organizational unit do you need to create for the permanent…

Question

Options

• ACompany code
• BProfit center
• CBusiness area
• DSegment

• A
  89% (25)
• B
  7% (2)
• D
  4% (1)

Explanation

A company code is the fundamental SAP organizational unit that enables a complete, self-contained set of accounts for external legal reporting - exactly what's required when a permanent establishment must produce financial statements by law. Switzerland's legal requirement triggers the need for a separate company code, which acts as an independent accounting entity within the SAP system.

Why the distractors are wrong:

• B. Profit center - used for internal management reporting only; it cannot produce legally valid financial statements.
• C. Business area - supports cross-company-code reporting but is not a legal entity and cannot fulfill statutory financial statement requirements on its own.
• D. Segment - used for segment reporting under IFRS 8 for investor disclosure, not for creating standalone statutory financial statements.

Memory tip: Whenever the question mentions a legal requirement for financial statements, the answer is almost always company code - it's the only SAP unit that maps 1:1 to a legal accounting entity. Think: "Law = Company Code."

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