The Allocation Structure is the central configuration object used during settlement to define the accounting treatment. It specifies which costs, identified by the source cost elements on the sender object (like an internal order), are to be settled. Crucially, it also defines the specific settlement cost element (a secondary cost element in classic GL, or a G/L account with type 'Secondary Costs' in S/4HANA) that will be used to post the credit to the sender and the debit to the receiver.

A. Derivation rule: Derivation rules are used in Profitability Analysis (CO-PA) to automatically determine characteristic values, not for defining settlement cost elements.

B. Source structure: A source structure is an optional object used to group debit cost elements on the sender. This allows different groups of costs to be settled according to different rules, but the allocation structure is still required to define the actual settlement cost element for each group.

C. Settlement rule: The settlement rule on the internal order specifies the receivers of the costs (e.g., cost center, WBS element) and the distribution logic (e.g., percentages), not the G/L accounts (cost elements) used for the posting.

1. SAP S/4HANA Help Portal

"Allocation Structure": "An allocation structure defines which costs are to be settled to which settlement receivers. [...] For each settlement assignment

you define which costs (originating from cost element groups) are to be settled to which receiver type [...] You also specify the cost element under which the costs are to be settled." This directly confirms that the allocation structure defines both the source costs and the settlement cost element.

2. SAP S/4HANA Help Portal

"Settlement": "The allocation structure

which is stored in the settlement profile

governs which costs are settled using which settlement cost elements." This statement explicitly links the allocation structure to the determination of the settlement cost element.

3. SAP S/4HANA Help Portal

"Source Structure": "A source structure enables you to settle costs from different cost element groups separately. The source structure divides the debit cost elements according to source assignments." This shows the source structure's role is to group the original debits

which is a preliminary step to the allocation structure's function.