Segments are defined in customizing and assigned to what in their master records?

Segments in SAP FICO are used primarily for segment reporting, which is a way for companies to analyze their financial performance across different areas of the business. In the context of the provided question, segments are assigned to profit centers in their master records.

Profit centers are organizational units within a company that represent a specific area of responsibility for generating revenue and managing expenses. By assigning segments to profit centers, organizations can obtain detailed financial information and insights on the performance of different business units or market segments. This setup facilitates internal reporting, segmentation of financial results, and strategic decision-making.

Cost centers primarily focus on tracking costs rather than income generation, so they do not have segments assigned in the same way profit centers do. Similarly, while internal orders can be used to track specific costs or revenues related to projects or activities, they do not play a role in high-level segment reporting. Sales areas pertain to sales organization and distribution channels, which do not directly relate to the concept of segments in the same manner. Thus, aligning segments with profit centers provides a streamlined approach to performance analysis and reporting within an organization.