A Cost Center is a part of an organization where costs or income can be charged. In other words it can be used as a Profit Center. Most businesses have multiple activities like different product lines, market segments, areas of business, etc that share some common overheads. They should ideally have their own structure to show whether they are profitable or not. Having a Cost Centre classification helps you to analyze and generate reports accordingly.

Accounting Dimensions: Dimensional accounting means tagging each transaction with appropriate dimensions like Branch, Business Unit, etc. dimensional accounting helps curb the ever-increasing need for real-time detailed information where users are forced to multiply the number of segments in their chart of accounts. Over time, the number of GL Accounts continuously grew and without proper controls. Having Accounting Dimensions allows you to maintain each segment separately, thereby keeping your General Ledger accounts and Chart of Accounts clean and organized. Cost Center and Project are treated as accounting dimensions by default in ERPNext.

In ERPNext, we can configure cost centers and accounting dimensions and link them to other accounting documents like budgets and accounting periods.These in seamless accounting in an organization and make sure that there are clear diversifications and sections for different kinds sectors of revenues and expenses.