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Chapter 2: Chart of Accounts Setup

CHAPTER 2: CHART OF ACCOUNTS SETUPObjectivesThe objectives are: Create, edit, close, or delete Main account categories. Create a new account in the Chart of Accounts (COA). Define main account information. Define administration information for the main chart of accounts. Define setup information for the main chart of accounts. Set up account structures. Set up advanced rules. Create a ledger. Set up accounts for automatic transactions. View inquiries and reports related to the Chart of Accounts.

IntroductionA Chart of Accounts is a set of main accounts tracked by Microsoft Dynamics AX. It captures financial information to make good financial decisions. Each account is assigned an account number as a unique identifier. Each main account contains the account structures used by the chart of accounts to define the valid combinations of main accounts and financial dimension values. The chart of accounts is shared and is a list of main accounts and account structures that define a chart of accounts in use by one or more ledgers. Additionally, different allocation terms can be set up for an account to distribute the amount to several accounts and account-dimension combinations, and system accounts help users handle automatic postings. The Chart of Accounts Setup course also shows all the reports and inquiries related to the Chart of Accounts.

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Financials I in Microsoft Dynamics AX 2012

Main Account CategoriesMain account categories can be used to better classify a general ledger account. Use main account categories primarily for grouping or selection of ledger accounts for Cubes and Key Performance Indicators (KPI's). By default, over fifty ledger account categories are provided.

ScenarioPhyllis, the Accounting Manager, wants to include the Current Ratio on the Short-term solvency KPI report. Current Ratio is calculated by dividing a companys current assets by current liabilities. Current assets typically consist of cash, cash equivalents, accounts receivable, inventory, and marketable securities. Current Liabilities consist of any liabilities that are payable within one year. The following table shows the types of accounts defined in Contoso Entertainment USA: Ledger account 110100 130000 140000 170000 Account name Cash Accounts receivable Inventory Fixed Assets

To derive the Current Asset value, Phyllis must sum the values of the Cash, Accounts receivable, and Inventory accounts. Fixed Assets are not considered current assets. To perform this calculation, Phyllis uses the Main account category field. Main accounts later added to the chart of accounts will also use the Main account category to automatically be included in existing calculations.

Procedure: Create Main Account CategoriesPerform the following steps to create a General Ledger Main Account category: 1. To access the Main account categories form, click General Ledger, click Setup, click Main accounts, and then click Main account categories. 2. Click the New button to create a new record. 3. Enter a unique name for the Main account category and a Description.

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Chapter 2: Chart of Accounts Setup4. Select a Main account type to associate with the account category. The purpose of selecting a Main account type is to reduce the lookup of available Main account categories when you create a new Main account within the Chart of accounts form. 5. To link an account category to a main account, click the Link main accounts button. Or, link a Main account category to an account from the Main account details form. For more information, refer to "Create a New Account - Main Account Category."

FIGURE 2.1 MAIN ACCOUNT CATEGORIES FORM

Edit Main Account CategoriesThe Main account category, Description, and Main account Type assignment values can be changed at any time for user-defined and default Main Account Categories.

Close Main Account CategoriesTo inactivate a main account category, including any of the default main account categories, select the Closed check box in the Main account categories form. If you try to close a Main account category that is already linked to a main account, a warning message listing the linked main accounts is displayed. Select to continue or cancel. After a Main account category is closed, it cannot be linked to main accounts.

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Financials I in Microsoft Dynamics AX 2012Delete Main Account CategoriesA user-defined Main account category can be deleted, as long as it is not assigned for use with Purchase Requisitions in the Accounts Payable Parameters form. None of the default Ledger account categories can be deleted.

Chart of AccountsThe Chart of Accounts (COA) is the structured list of an organization's general ledger accounts. The COA will provide the main accounts for the COA plus the account structures in use for the COA. These structures determine the valid main account and financial dimension value combinations for the chart. Use the COA to do the following: Create and maintain main accounts Set standard parameters Define the terms of allocation

Plan the Chart of AccountsTo create the COA, users should list accounts that group well together and group kinds of revenues, costs, and balance accounts. Before you create a company's Chart of Accounts, consider the following: What degree of specification is needed How the Chart of Accounts must be structured If external accountants offered any suggestions about the structure of the Chart of Accounts

Make sure that there is sufficient space so that in the future, additional main accounts can be created between the existing main accounts. Decide whether operating accounts must come before balance accounts or the other way around.

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Chapter 2: Chart of Accounts SetupMultiple Chart of AccountsIt is common for large organizations to have the same chart of accounts used across multiple companies. It is possible to define company specific data, such as the default sales tax code on the main account. Also, the ability to inactivate financial dimension values for a specific company. The following entities/objects will have company specific data: Main account Dimension values

The following elements make up the shared chart of accounts: Chart of accounts Main accounts Account structures Advanced rules Financial dimensions Financial dimension values

Chart of Accounts FormThe Chart of Accounts form is where where the list of main accounts can be viewed as well as the account structures in use by the chart of accounts.

FIGURE 2.2 CHART OF ACCOUNTS FORM

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Financials I in Microsoft Dynamics AX 2012Procedure: Create a Chart of AccountsUse the Chart of accounts form to create, manage, and view the organizations chart of accounts. The chart of accounts also provides the main account and financial dimension value combination rules. The main accounts contain the financial data about the activity of the legal entity. 1. Click General ledger, then click Setup, then click Chart of accounts, and then click Chart of accounts. 2. Click the New button. 3. Enter the name and description in the Chart of Accounts and Description fields, respectively. 4. In the Main account mask field, enter the structure that main accounts must adhere to when they are created. This field is optional.

Procedure: Create Main AccountsTo create main accounts associated with a specific chart of accounts, click on the Main accounts FastTab and perform the following steps: 1. Click New to create a new line, click the New from template to use a template set up in the Main account templates form. 2. Enter an account number in the Main account field and enter an account Name. 3. Select either Chart of accounts or Companies in the Select the level of main account to display field. Chart of accounts: Selecting this provides setup for the main account for the chart. It will be the shared setup. Companies: Selecting this provides the means to override specific data at the company level, such as active from/active to dates. Also to set up company specific data such as default sales tax codes, default dimensions and financial statement formatting. It does NOT select which company can use the main account.

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Chapter 2: Chart of Accounts SetupNOTE: Depending on the selection of the Select the level of the main account to display, specific fields in the Main accounts form are available.

FIGURE 2.3 MAIN ACCOUNTS

Main Account InformationSelect information specific to the main account, such as the main account category, debit and credit controls, and related accounts.

Procedure: Select Main Account TypeAfter the Main accounts header information has been established, click the General FastTab to enter detail information. The first level of detail consists of selecting a Main account type. The following main account types determine how the account is used in the chart of accounts. You must select a main account type when creating the main account in the Main accounts form. Select one of the following options to enter as the Main account type: Profit and loss, Revenue, and Expense used as posting accounts. The profit and loss account is used for recording revenue and expenses. The sum of all operating accounts determines the year-end results. The revenue and the expense accounts have the same function as the profit and loss account. The balances for these main accounts are rolled into the year end result account during the Opening transactions process. Expense accounts are used by budgetary control.

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Financials I in Microsoft Dynamics AX 2012 Balance sheet, Asset, Liability, and Equity used as transaction accounts that record the amounts that a company owns or owes. If you use asset, liability, and equity accounts, the accou