Question

You are running an international business and you want to set up separate legal entities to run operations and perform accounting activities.

Which organizational unit do you need to create for each legal entity?

1) Segment
2) Company code
3) Company
4) Controlling area

Answer 1

In an international business, each separate legal entity should be established as a (2) Company Code, allowing for independent legal and financial management.

Step-by-step explanation:

When running an international business and setting up separate legal entities for operations and performing accounting activities, the organizational unit that needs to be created for each legal entity is a Company Code.

This is the fundamental organizational unit in most enterprise resource planning (ERP) systems for which a complete, self-contained set of accounts can be created, serving the purpose of preparing balanced and legally required financial statements. Within these systems, each legal entity must have its own company code to manage its legal and statutory requirements separately.