Difference betweeen Primary & Secondary Cost Element

Cost elements describe the origin of costs. Cost elements are defined as either
primary and secondary. Primary cost elements arise through the consumption of
production factors that are sourced externally. Secondary cost elements arise
through the consumption of production factors that are provided internally.

The Chart of accounts contains all general ledger (GL) accounts belonging to
Financial Accounting.

Expenses and Revenue accounts in Financial Accounting correspond to
Primary Cost and Revenue Elements respectively.

Secondary Cost Elements are used exclusively in CO to identify internal cost
Flows such as assessments or settlements. They do not have corresponding
General ledger accounts in FI and are defined in CO only.

When you create a cost element, you must assign a cost element category. This
Assignment determines the transactions for which you can use the cost element.

You can create cost elements automatically by making default settings that are used
To specify the cost element, or cost element interval that you wish to create.

You can create cost elements manually in bulk with the help of LSMW or BDC.

Primary Cost Element Categories:

1 - Primary costs / cost-reducing revenues
3 - Accrual / deferral per surcharge
4 - Accrual / deferral per debit = actual
11 - Revenus
12 - Sales Discounts
22 - External Settlement

Secondary Cost Element Categories:

21 - Internal Settlement
31 - Order / Project results analysis
41 - Overhead Rates
42 - Assessment
43 - Internal activity allocation
50 - Project related incoming orders: Sales
51 - Project related incoming orders: Others
52 - Project related incoming orders: Costs
61 - Earned Value