Even though you are part of Finance team or not, you always heard this word “Chart of Accounts” (CAO). So let’s see what exactly Chart of Account is and How we can Implement or use it in Dynamics 365 Finance.
What is Chart of Accounts?
A chart of accounts (COA) is an index of all the financial accounts in the general ledger of a company. In short, it is an organizational tool that provides a digestible breakdown of all the financial transactions that a company conducted during a specific accounting period, broken down into subcategories.
- A chart of accounts (COA) is a financial organizational tool that provides a complete listing of every account in the general ledger of a company, broken down into subcategories.
- It is used to organize finances and give interested parties, such as investors and shareholders, a clearer insight into a company’s financial health.
- To make it easier for readers to locate specific accounts, each chart of accounts typically contains a name, brief description, and an identification code.
Source : Investopedia.com
A chart of accounts can be shared and used by any legal entity in an organization. However, main accounts must be unique to a legal entity. Select the chart of accounts that can be used by a legal entity in the Ledger form.
You must consider several factors when you make decisions about how to structure the chart of accounts for your organization, including the following:
- The reporting requirements of the country/region where your organization is based
- The reporting requirements of your legal entity
- The degree of specification needed, for both external organizations and for your organization
Source : MS Docs
As we have seen that COA is nothing but “List of Main Accounts / General Ledger”.
Most Important part of Chart of Accounts is It should be properly planned as it’s the core of Finance system.
Where to find COA in Dynamics 365 Finance:
Path : General Ledger > Chart of Accounts > Accounts > Chart of Accounts
As you can see that we can have more than one Chart of accounts in Dynamics 365 Finance. It’s important to note that it’s always not possible to have same Chart of Accounts for all legal entity.
In this world of Globalization (Global as a Small village) we always have requirement to implement Dynamics 365 Finance for multi country. And as each country have their own legal as well as operation requirement which may not allow them to change Chart of Accounts as other legal entity.
Dynamics 365 Finance provide flexibility to use more than one chart of accounts instead of only one static Chart of Accounts.
We will explore the Main Accounts and all relevant fields in next part.
CA Gaurangkumar Jani