Functional areas are used to segregate expenses by functions (eg. production and R&D, etc.) instead of showing as lump sum on the P&L statement. Functional areas basically help to create `cost of sales` reporting which is used only in certain countries, like USA.
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To sort expenses according to corporate functions, the system derives the functional area for the following postings:
Primary postings (postings in Financial Accounting) to a profit and loss account
Secondary postings (allocations in Controlling)
The functional area is derived for both objects involved in the allocation.
In the following cases, no functional area is derived:
Postings to balance sheet accounts
Entry of statistical key figures in Controlling
To enable the system to derive the functional area for a posting, cost of sales accounting must be active for the company code in which the posting is performed.
The system derives the functional area during document entry based on the information in the coding block. The functional area appears on the entry screen. It is derived as follows:
1.From the master records of the assigned objects
If an object is assigned during a posting, the system checks whether a functional area has been entered in the master record of the object. The system retains this functional area provisionally.
2.From the master record of the G/L account or the cost element
The system checks whether a functional area is entered in the master record of the cost element or the profit and loss account. This functional area overwrites the functional area derived from the assigned object.
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