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Organization Structure is an important component of the entire system of financial accounting in SAP R/3. SAP R/3 FICO organizational structure not only includes ledgers, accounts and documents, but also consists of factors such as taxation and management requirements. By assigning relevant organizational units using account assignment, ledgers in SAP FICO get updated automatically. In SAP accounting, the organizational structure consists of Company, Company Code, Business Area, Functional area and Profit Center. Here is a short explanation of each of the terms below.

Company - In SAP FICO paralance, a company is a legally independent entity, which comprises of one or more company codes.

Company Code - The company code represents a legal view of the company. This may be on the basis of geography viz. national or international. Fiscal year, taxation requirements and currency all determine the company code.

Business Area - Business area forms an important part of external reporting. Analysis of various segments, product divisions, regions etc is possible using business areas.

Functional Area - Functional area shows profit / loss calculations depending upon the cost of sales accounting. Using different functional area, management can know business expenses by functional areas and where company costs were incurred.

Profit Center - The profit center view shows the various internal areas of responsibilities. Objects such as cost centers, materials, etc can be used for profit center analysis. Profit center can be used to determine the revenues, costs, and profitability for specfic areas of responsibility.

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