Heart of Dynamics 365 Finance : Main Accounts (Part – 1)

Hi Folks,

I hope you enjoyed my last blog on Chart of accounts. As we know Main account is key part of chart of accounts I have tried my best to provide the explanation on Key fields on Main Account form.

Now, Let’s understand the important filed and parameters of Main Account form.

TAB : General

A. IDENTIFICATION

In this section you have to provide “Main Account” ID & “Name”, which can be number or Text. But be careful as it’s your core function of Finance make sure you have done proper analysis and planning while designing Chart of Accounts (COA).

B. LEDGER

In this section you have to update following details.

Main Account Type :

1. Profit & Loss : If you are not aware of nature of main account but curtain that It’s for short term.
2. Revenue : If account is belong to Sales / Income Transactions (Upper part of Income Statement)
3. Expense : If account is belong to Expense Transactions (Lower part of Income Statement)
4. Balance Sheet : If you are not aware of nature of main account but curtain that It’s for Long term.
5. Assets : If Account is belong to Property / Assets Transactions
6. Liability : If Account is belong to Liability / Loan Transactions
7. Equity : If Account is belong to Owner’s Transactions
8. Total : If you want to use this account as Sum / Total of multiple Main Accounts. When you use this type system will enable “Σ Totals” filed. This allow you to select Main account which you want to Total.
9. Reporting :  If you want to use any Account as a Header or Empty Header or Page Header you can use this type. It’s only for reporting requirement not for Accounting.
10. Common : These main accounts are for accounts that are used in banks or financial institutions in China. Accounts that have a Common main account type are recorded as assets if the balance is positive and as liabilities if the balance is negative. An example of an account that has the Common main account type is a currency hedging account. (So it’s only used in China)

Reporting Type : If you selected Reporting in the Main account type field, select how the account is used for reporting: Header (print account information at the top of the financial statement), Empty header (print an empty row at the top of the financial statement), or Page header (print account information at the top of each page of the financial statement).

1. Header
2. Empty header
3. Page header

Main account category : This is one of the Most Important component of Main account. As per best practices followed in industry we always recommend to Use Main Account categories for reporting. Even now specially with embedded PowerBI dash board, all standard report is also using “Accounting Categories” to generate Financial Statement in BI. There are approx. 70+ Main accounting categories already available in Standard system.

DB/CR default : This will select the transaction nature by default. e.g. if Main Account is belong to Assets, normally it’s require transaction nature as “Debit” by default by we can override if required.

DB/CR requirement : Select whether the account is used only for debit transactions or credit transactions. If an account is limited to debit or credit transactions, this requirement is verified when journal lines are validated and posted. e.g. Audit Fees expense is always get Debit and never Credited, In this scenario we can use “Debit” as requirement. This will prevent user to post Credit transaction in this main account.

Balance control : This is special balance control which will restrict the user to post any transaction which is violating the control. e.g. Cash Account balance will always “Debit”. This control will make sure your main account balance as Zero or Positive (Debit).

C. RELATED ACCOUNTS

In this section you have to update following details.

Offset account : In this you can provide default offset account so you do not have to choose while creating journal line. This normally required in control accounts.

Opening account : Enter the account to which the opening balance should be transferred. When you select an account and then run the Opening transactions periodic job for a new fiscal year, the balance of the current account is transferred to the account that is specified in this field. You should select only asset or liability accounts in this field, because profit and loss, revenue, and expense accounts are set to 0 (zero) when you create opening transactions.

D. ADMINISTRATION

As the name suggest it’s important part to control the behavior of main account.

Do not allow manual entry : Self explanatory, It will not allow user to enter manual entry just selecting main account from journal. We normally use this control on all Control accounts which are linked to subledgers. e.g. Main account linked on Bank Master should not allowed to post manual entries in the ledger as it will create significant mismatch between Bank balance as per Bank master and Bank ledger. Same control also require on Accounts Receivable, Accounts Payable, Inventory etc..

Active From / Active to : This field will control the entries of the ledger for specific period or till specific period. We can use each field individually. e.g. User want’s stop main account from next year, we can provide Active to date as Current year end date which will suspend the main account for entries after Active to date.

Suspended : As self explanatory nature, it will suspend this main account. This will restrict all users to post transactions in this account.

Field to transfer balance on closing sheet : This is feature which will allow you to transfer balance of this account to Result, Balance or Capital while performing closing adjustment. (What is closing sheet? – ummm.. Let’s have detailed blog on this in future)

Close type : I have done some research but unable to find way to enable it. It seems Public Sector field. If you know anything about this field please provide details in comment section.

E. Consolidation

Default consolidation Account : This account will map main account to Chart of Accounts of Consolidation company. It means while processing Consolidation, system will transfer balance / transactions of main account to Consolidation main account available in consolidation company.

F. Currency

Default Currency : This will chose default currency while processing transaction in this main account. e.g. Currency in Transaction of foreign currency loan account should be GBP by defaults. User can override the default if required.

Validate currency Code :

1. Optional : the Currency field does not have to contain a value in journal line.
2. Required : the Currency field must contain a value for each journal voucher in the general journal; the value itself is not verified.
3. Specify the single valid option : the Currency field must contain a value for each journal voucher in the general journal; the value must correspond to the value that is specified for the main account (i.e. default currency).
4. Specify multiple valid option : the Currency field must contain a value for each journal voucher in the general journal; the value must be a currency code that is defined in the Validate currency codes page (i.e. K. Currency code validation)

Foreign currency revaluation : By selecting yes, we can provide instruction to system that this account should be revalued while running currency revaluation for ledger accounts.

Exchange rate type : Here we have to provide which exchange rate type system should use while processing foreign currency revaluation for ledger accounts.

Reporting Currency exchange rate : Here we have to provide which exchange rate type system should use while processing foreign currency revaluation of transactions in reporting currency of ledger accounts.

G. Standard Ledger Journal Account

Standard Account : This is Norway localization filed to map system’s main accounts with standard ledger accounts as per local requirement.

H. Totals

This button will be activated when your main account type is “Total”. We normally use this function for management reporter. This will allow use to provide total balance of multiple main accounts.

I. Assign Template

We can create multiple main accounts and store in the system. While creating new main account, we can assign predefined template instead of creation of entire new account.

J. Additional Consolidation accounts

This feature allow us to map main account with additional consolidation account group. This feature will be helpful if you need to do multiple consolidation with different consolidation chart of accounts.

K. Currency code validation

This feature will only available if you have multiple currency validation. Using this you can restrict the posting to specific currencies and no other currency transaction will be allowed.

This is not an end, this is just beginning. Let’s meet soon for rest of the interesting details of main accounts. Hasta luego..

Thank you,

CA Gaurangkumar Jani