Balances Between Cost Type, Cost Center, and Cost Object

When you set up cost accounting, you should make sure that all entries are assigned to a cost type as well as a cost center or a cost object. The means that each cost entry must have a cost type assigned and a cost center code or a cost object assigned. This rule ensures that each cost entry appears in either the cost centers or the cost objects, but never in both places.

By doing this, you create the following accounting equation:

Cost Type Balance= Cost Center Balance + Cost Object Balance

When you print the chart of cost type, the chart of cost centers, and the chart of cost objects reports, you can analyze this relationship.

See Also

Concepts

Set Up Cost Accounting
Terminology in Cost Accounting
About Cost Accounting