Cost Element and Revenue Element

Cost and revenue elements can be classified into primary and secondary cost elements. What are the differences of the two? Well, let's see through the following discussions and insights:
PRIMARY COST ELEMENTS
Primary cost and revenue elements are the elements that transfer relevant cost flows from Financial Accounting to Controlling. This enables you to reconcile the cost flow data between FI and CO. A pre-requisite in creating a primary cost and revenue elements is that; there should be an existing P&L accounts in FI. Otherwise, the system won't allow you to create such cost elements. All Profit and Loss (P&L) accounts in FI should have cost and revenue elements in CO.

SECONDARY COST ELEMENTS
Secondary cost elements are used only to settle costs accumulated in a cost object e.g. cost center to final cost object receivers e.g. other cost centers. These cost elements can be created only if not existing in GL accounts.