Define Company and Company Code

In this Artcile, we we learn on following Topic

1. Introduction of Comany and Company Code
2. Define Company
3. Define Company Code
4. Assign Company Code

In SAP, Company and Company Code are key organizational units within the system, used for financial reporting and accounting purposes:

Company:

• A Company is the highest-level organizational unit in the financial accounting structure of SAP.
• It represents a group of company codes that share a common consolidation structure
• A company is used mainly for external reporting (e.g., consolidated financial statements for legal purposes).
• It serves as a group entity but does not manage day-to-day operations or transactions.
• Example: A holding company that consolidates multiple subsidiaries (e.g., Company A with subsidiaries A1, A2, A3).

Key Features

• Company encompass multiple Company Code
• Acts as a consolidation level in Group Reporting

Company Code:

• A Company Code is the smallest organizational unit for which a complete set of accounts can be prepared.
• It is a legal entity in the system that represents a company or a subsidiary within a group.
• All financial transactions are recorded in the Company Code.
• Mandatory to define at least one Company Code in SAP for posting financial transactions.
• Example: Subsidiary A1 of Company A.

Key Features

• Company used for Statutory reporting (e.g. Profit & Loss Statement, balance sheet).
• Represents operation-level entities, such as subsidiaries or branches.

Relationship:

• One company can have multiple Company Codes.
• A Company Code cannot exist independently of a company in consolidation reporting.

Diagram Representation:

Company (Parent Entity)

|

——————————————-

|                      |                  |

CCode1           CCode2        CCode3

DEFINE COMPANY IN SAP

1. Define Company (Group Company): In SAP, a Company is the highest-level organizational unit in financial accounting used for consolidation purposes.

We can create a company code with two methods:

Step-1

• T Code: OX15

Or we can go through Path

Path: > SPRO>IMG SCREEN>ENTERPRISE STRUCTURE>DEFINING > FINANCIAL ACCOUNTING > DEFINE COMPANY

Step-2 : Click on Reference IMFG or press F5

Step 3) : click on Define Company

.

Step 4): Fill your company Details (like Company Code, company Name, Address, language, currency)

The your request will generate configure as per your requirement by clicking on (Own Request).

And then save. Now our company has been created.

Create Company Code

Creating a Company Code in SAP S/4HANA involves configuring an organizational unit for legal and financial accounting purposes. Below are the steps to create a Company Code in SAP S/4HANA for FICO:

T Code : OX02 (for create Company Code)

Path: >SPRO > IMG > ENTERPRISE STRUCTURE > DEFINING > FINANCIAL ACCOUNTING > EDIT, COPY , CHECK COMPANY CODE

As per navigation click on Edit,Copy,Delete, Check Company Code

Click on Edit Company Code Data

Then click on Create New Entries then fill the Details of the Company Code

And then save. Now our company code has been created.

Assign Company code to Company

To assign a Company Code to a Company in SAP, you need to link these organizational units to enable proper consolidation and reporting. Below are the steps to perform this assignment in SAP S/4HANA:

Steps to Assign a Company Code to a Company 1. Access the Configuration Screen

• Enter SPRO in the command field and press Enter.
• Navigate to:
  SAP Reference IMG → Enterprise Structure → Assignment → Financial Accounting → Assign Company Code to Company.

Then click on Save. Now your assignment to Company is completed

For Interview Question and Answer

1. What is a company in SAP? How is it different from a company code?
2. Why do we define a company in SAP if most transactions occur at the company code level?
3. What is the organizational relationship between a company and a company code?
4. Can one company have multiple company codes? Why or why not?
5. Explain the role of a company code in financial accounting.
6. How do you create a company in SAP? Walk through the process.
7. What fields are mandatory when defining a company in SAP?
8. How do you assign a company code to a company in SAP?
9. What are the critical steps in defining a company code in SAP?
10. What is the significance of the currency field in the company code configuration?
11. If a client operates in multiple countries, how would you configure their company and company codes in SAP?
12. Can two company codes have the same chart of accounts? Explain the advantages or limitations.
13. What happens if you don’t assign a company code to a company?
14. If a company operates in multiple currencies, how do you handle it at the company code level?