Chart of Accounts

General Ledger is the central application area of Microsoft Dynamics 365 Business Central that is used to post, summarize and report financial information.

Two main components of the General Ledger application area are the Chart of Accounts and G/L Budgets. The Chart of Accounts provides quick access to G/L accounts and balances, and the budgets feature provides a comparison between actual amounts and budgeted amounts, by using a combination of G/L accounts, periods, and dimensions.

Chart of Accounts Overview The income statement and balance sheet or two important company reports. An account in the income statement and the balance sheet is called a G/L account, and all the G/L accounts make up the Chart of Accounts list. You use G/L account cards to create and edit G/L accounts

G/L Account Categories

We can use this feature to create subcategories in the Chart of Account. As shown in the below screen, here we can create Categories and same can be available in the selection while creating G/L Account Card. This page provides us category wise details for Financial ledgers.

G/L Account Card

In the Chart of Accounts list, all G/L accounts are available and can be viewed at one time. However, there is also a G/L Account Card for each account, and this can be accessed from the Chart of Accounts list.

Create G/L Account

Go to Chart of Accounts à Click on New button

System will open the G/L Account Card

Enter below details in the G/L Account Card.

No. = 8131

Name = Office Expense

Income/Balance = Income Statement

Account Category = Fees Expense

Debit/Credit = Both

Account Type = Posting

General Journals

In Microsoft Dynamics 365 Business Central, general journals are used to post information into the general ledger and other accounts. The general journal is also used to post cost allocations and other adjustments to the accounts and then users can reverse and correct incorrect entries, when you have to:

When users frequently have to enter the same journal postings, Microsoft Dynamics 365 Business Central provides two helpful tools, standard journal and recurring journals. Standard journals can be created and used to enter journal lines automatically. Recurring journals can be created and when they are opened they already contain journal lines that can be reviewed, adjusted and posted on a recurring basis. Additionally, when you use recurring journals that you can post cost allocations by using allocation keys based on amounts or percentages.

Creating and Posting Journal Entries

Users can create and post journal entries for:

• Single entry lines without a separate balancing account line.

• Multiple entry lines by using a balancing account line.

• Entries with Dimensions.

• Single entry lines without a separate balancing account line.

To enter lines in a general journal, follow these steps.

Select Finance Tab à Click on General Journal

Select Batch à Click on Process à Edit Journal

Enter below details on the General Journal Line

In the Posting Date field, enter the date of this entry.

In the Document Type field, click the drop-down list and select the relevant document type for this entry. Typically, for a general journal entry this field is left blank

In the Document No. field, leave the defaulted number, provided by the number series that is set up on the general journal template, or assign a unique number if this field is empty

In the Account Type and Account No. fields, click the drop-down list and select the account this entry will be posted to. Typically, for a general journal entry, general ledger accounts are used

The Description field is automatically populated with the name of the account. Update this field as it is necessary.

In the Amount field, enter the amount for the entry. Positive and negative amounts in general journals are posted to the account specified in the Account No. field as follows:

A positive amount represents a debit to the account.

A negative amount represents a credit to the account.

In the Bal. Account Type and Bal. Account No. fields, click the drop-down list to select the balancing account for this entry. These fields are automatically populated when the controlling general journal batch is set up with a default balancing account type and number.

Click on Function à Preview Posting

System will generate multiple entries, as shown in the below screen. Click on G/L Entry and check all values.

Check all Accounting effects

Click on Post Button and post transaction

• Multiple entry lines by using a balancing account line.

When a journal contains multiple entries that are all applied to the same balancing account, users can enter one final balancing line so that only one complete line is posted to the balancing account. This is helpful, for example, when you are reallocating costs.

To create journal entries with a separate balancing line, follow these steps:

In the Posting Date field, enter the date of this entry.

In the Document Type field, click the drop-down list and select the relevant document type for this entry. Typically, for a general journal entry this field is left blank

In the Document No. field, leave the defaulted number, provided by the number series that is set up on the general journal template, or assign a unique number if this field is empty

In the Account Type and Account No. fields, click the drop-down list and select the account this entry will be posted to. Typically, for a general journal entry, general ledger accounts are used

The Description field is automatically populated with the name of the account. Update this field as it is necessary.

In the Amount field, enter the amount for the entry. Positive and negative amounts in general journals are posted to the account specified in the Account No. field as follows:

A positive amount represents a debit to the account.

A negative amount represents a credit to the account.

Create as many journal lines (with debit and credit amounts) as is necessary for the Total Balance field to be equal to zero.

Check Preview Posting, then Click on Post button.

Standard Journals

Standard journals are useful for transactions that are posted frequently with few or no changes, but do not have a fixed recurrence between two posts. A standard general journal is a general journal that is saved as a default set of lines. It can be accessed at a later stage to automatically fill in general journal lines.

A standard journal is created from a journal, and it can be:

Created only for journals of the type General. • Used only within the same journal template. • Used for the different journal batches from the same journal template.

Create a Standard Journal

Scenario: Mahesh, the Accounting Manager at LFSPL, processes payroll payments every month. Although the amounts are different every time, the G/L accounts are always the same. He decides to create a standard journal for this transaction, with the following criteria:

GENERAL journal template, CASH journal batch

Debit to G/L accounts: 8710, 8720, 8730, 8750, 5830, 8740

A single credit journal line to Bank Account AXIS BANK

Follow below steps:

Create the general journal lines.

As shown in the below screen

Click on Action àFunctions à Save as Standard Journal

Enter Code & Description à Click on OK

Standard Journals can also save the Amounts you have recorded in the journal. Check this field if you want to keep the amounts

Use a Standard Journal

Open General Journal à Click on Action à Functions à Get Standard Journals

Here system will show all standard journal, select the standard journal from the list, then click on OK

System will update all details in the Journal lines as shown below.

Recurring Journals

Recurring journals are useful for transactions that are posted frequently with few or no changes. Some criteria for a recurring journal includes the following:

Contains special fields for managing recurring transactions.                           

You can use it to allocate single entries to multiple general ledger accounts.

• You can create it for:

o Each general journal type (general, assets, cash receipts, payments, intercompany, jobs, sales, and purchase).

o Fixed asset journals

o Item journals

o Resource journals

• Balancing fields will not be available on the journal lines

• The journal lines are preserved after posting.

Recurring Methods

The Recurring Method field determines how the amount on the journal line is treated after posting. The following table shows the various recurring methods.

Recurring Frequency

The Recurring Frequency field contains a formula that determines how frequently the entry on the journal line will be posted. This formula can contain no more than 20 alphanumeric characters that the program recognizes as abbreviations for time specifications.

For example, if the formula 1M is entered with a Posting Date of 01/15/10, after the journal is posted, the date is changed to 02/15/10.

Use one of the following methods to post an entry on the last day of every month after the current month:

Post the first entry on the last day of a month and enter the formula 1D+1M-1D (1 day + 1 month – 1 day). With this formula, the program calculates the date correctly regardless of how many days are in the month.

Post the first entry on any arbitrary day of a month and then enter the formula: 1M+CM. With this formula, the program calculates one full month plus the remaining days of the current month.

If you are posting monthly accruals that must be reversed the following month (Reversing Fixed, Reversing Variable, and Reversing Balance methods), post them on the last day of each month. The first entry must be posted on the last day of the current month and the recurring frequency must be either 1D+1M-1D or 1M+CM. This makes sure the reversal is always posted on the first day of the following month.

Expiration Dates

Recurring journal lines can be set up with expiration dates. Use the Expiration Date field to limit the posting period by specifying the last date that an entry can be repeated.

By using this field, a line can be entered in the journal even though it will only be posted for a limited period. The line will not be posted after the date entered in the field.

The advantage of using this field is that the line will not be deleted from the journal immediately and the present expiration date can be replaced with a later one so that the line can be used additionally into the future.

If the field is blank, the line will be posted during each posting process until it is deleted from the journal.

Recurring Frequency

The Recurring Frequency field contains a formula that determines how frequently the entry on the journal line will be posted. This formula can contain no more than 20 alphanumeric characters that the program recognizes as abbreviations for time specifications.

For example, if the formula 1M is entered with a Posting Date of 01/15/10, after the journal is posted, the date is changed to 02/15/10.

Use one of the following methods to post an entry on the last day of every month after the current month:

Post the first entry on the last day of a month and enter the formula 1D+1M-1D (1 day + 1 month – 1 day). With this formula, the program calculates the date correctly regardless of how many days are in the month.

Post the first entry on any arbitrary day of a month and then enter the formula: 1M+CM. With this formula, the program calculates one full month plus the remaining days of the current month.

If you are posting monthly accruals that must be reversed the following month (Reversing Fixed, Reversing Variable, and Reversing Balance methods), post them on the last day of each month. The first entry must be posted on the last day of the current month and the recurring frequency must be either 1D+1M-1D or 1M+CM. This makes sure the reversal is always posted on the first day of the following month.

Expiration Dates

Recurring journal lines can be set up with expiration dates. Use the Expiration Date field to limit the posting period by specifying the last date that an entry can be repeated.

By using this field, a line can be entered in the journal even though it will only be posted for a limited period. The line will not be posted after the date entered in the field.

The advantage of using this field is that the line will not be deleted from the journal immediately and the present expiration date can be replaced with a later one so that the line can be used additionally into the future.

If the field is blank, the line will be posted during each posting process until it is deleted from the journal.

Allocations

Allocations are used to allocate the amount on the recurring journal line to several G/L accounts and dimensions. Meaning that the allocation is in itself a balancing account line to the recurring journal line because recurring entries do not have balancing accounts.

Just as in a recurring journal, an allocation only has to be entered one time. The allocation remains in the allocation journal after posting. Therefore, you do not have to re-enter amounts and allocations every time that the recurring journal line is posted.

Process a Recurring Journal with Allocations

Scenario: Cassie, the accountant at CRONUS International Ltd., must set up a recurring payments journal for monthly expenses. This includes the following:

• Cleaning: The amount 500.00 LCY, always due on the fifteenth of each month, and allocated between these three departments:

o Administration – 50 percent o Production – 25 percent o Sales – 25 percent

• Advertising Expenses: Variable, but always due on the twenty-fifth of each month and allocated only to the Sales Department.

These expenses must be available for payment selection but do not require an invoice document.

Create a recurring payables journal and batch.

Open Recurring Batch and enter the below details

Enter the line and allocation for the cleaning expense.

In the Recurring Method field, click the drop-down list and select “F Fixed”.

In the Recurring Frequency field enter ‘1M”

Enter posting date – 15/04/2021

In the Document Type field select “Invoice”

Document No – Enter JV00001

In the Account Type field select “Vendor”

Account No. = Select Vendor Code

In Amount field – enter -500

Click on Line à Allocations

In the Account field select 8110, Select Department Code and Allocation %

Click OK to close the Allocations page

Enter the line and Allocations for the Advertising Expenses.

In the Recurring Method field, click the drop-down list and select “Variable”.

In the Recurring Frequency field enter ‘1M”

Enter posting date – 25/04/2021

In the Document Type field select “Invoice”

Document No – Enter JV00002

In the Account Type field select “Vendor”

Account No. = Select Vendor Code

In Amount field – enter -760

Click on Line à Allocations

Click OK to close the Allocations page.

Post the recurring journal. a. Change your work date to 15/02/2021 to post the cleaning expense

Click on Post Preview button and check all Accounting Effects

Click on Post button

System will post the journal lines

System posted the lines, and also line is not deleted from the journal, but Date is changed to next month i.e. 15/05/2021

Follow the same steps to post second entry, change work date to 25/04/2021 then post entry.

System posted entry, but not deleted from the line. Date changed to next month i.e. 25/05/2021 and Amount field is cleared.

Review the posted recurring journal entries. Go to General ledger entries and check.

Reversals and Corrections

Occasionally, users will have to reverse or correct journal entry lines because changes or entries were booked incorrectly. Reversing journal entry lines helps users reverse entries easily and correctly.

Reversing Journal Entries

In Microsoft Dynamics 365 Business Central, when an incorrect general journal is posted, the posted ledger entries can be reversed in the corresponding registers. However, to reverse an entry, the following must be true of the original entry:

The Journal Batch Name field must not be blank in the G/L Register. • Customer Ledger Entries must not be applied. • Vendor Ledger Entries must not be applied. • Bank Ledger Entries must not be closed by reconciliation. • The total amount of the G/L Entries must equal zero. • The entry must not include any Item Ledger Entries. • The ledger entries cannot be created by a reversal.

After you reverse the entries, you can then post them in the same register.

To reverse posted ledger entries from a register, follow these steps

Search G/L Register à Click on Reverse à Reverse Register.

Click on Reverse

Click on Yes