Happy New Year and Welcome to 2023.
Accounting software is all about control in Accounting Transaction. When we talk about control it is obviously important to make sure that system is allowing to post transaction after validating rules defined in system. We can configure the accounting rules in system by configuring proper accounting structure in Dynamics 365 Finance.
If you are working or worked with AX 2012 or Dynamics 365 Finance & Operation you must have heard the word “Accounting Structure as well as Advance Rule”. Do you know what is the “Accounting Structure & Advance Rule” means? and what is the use and features related to it in Dynamics 365 Finance & Operation? Let’s understand the practical application of Accounting Structure in Business scenario.
Accounting Structure & Advance Rule (Accounting Rules)
What is “Accounting Structure”?
If I have to explain in layman’s language Accounting Structure is Rule defined in Dynamics 365 Finance / AX 2012 for regulate the Accounting Transactions as required by business.
In Dynamics 365 Finance accounting we define the structure of accounting for each specific Main Account or group of Main Accounts with condition that what financial dimensions (We already learn about “Financial Dimension” in my last post.) are required against transactions in specific main accounts.
Example: Business Reporting team require to generate Profit and Loss statement by business unit & cost center from system. To fulfill this requirement, we have to make sure that transactions in main accounts (which are belong to Profit and Loss) must require Business Unit and Cost Center (Both are Financial Dimension) selected and if it is not system should throw error and ask user to provide dimension.
Now the question is how to configure all this complex requirement into the system.
First of all, let’s make it clear that, if you need any Financial Dimensions in Accounting Transaction, it must be the part of Accounting Structure (exception Advance Rule). Any Financial Dimension which is not part of Accounting Structure even though it is active it will not be part of any transaction in Dynamics 365 Finance.
How to configure “Accounting Structure”?
We can create multiple Accounting Structure in General Ledger module. Each structure can be mapped to one or more than one legal entity.
Path: General Ledger > Chart of accounts > Structure > Configure accounting structure
Following are key component Accounting Structure:
- Main Accounts / Range of Main Account
- Financial Dimension / Range of Dimensions
- Advance Rules
Let’s see how this component work together:
Above image is example of one of the accounting structures I have in my demo environment for Profit and Loss accounts. Let’s try to understand how it is working.
The Grid / Matrix: (Point 1, 2 & 3)
This grid defines the rule by applying cross application of each raw and column.
In this example we can see that first raw define that
- where main account is between and include 400000 till 999999
- where Business Unit can be blank or any value (defined as “” as blank / null and * as any value – also see point 3 to allow blank value)
- where Department can be blank or “022”
- than cost center can be blank or “007” or “008”
- and Item group can be blank or anything.
As per this condition, if user is trying to post transaction in in any account between 400000 till 999999 with any Business Unit or without Business unit with Department as “002” or without Department, system will only allow below cost center value:
- Blank (No Cost Center) or
- 007 or
If user will try to use any other value, system will throw the error saying that dimensions are not matching with accounting structure.
This grid / matrix can be as complex as require. This is if and then condition for posting transactions in system.
Add Segment (Point 4)
By adding Segment, we can provide additional condition for dimensions.
Whenever we add dimension in structure it is applicable to all rows of structure. It means we have to provide applicability of that dimension against each row of main accounts.
Segment Action (Point 5)
Using segment action, we can move dimension to left or right as well as delete the dimension from structure.
Advance Rule (Point 6)
If we already have advance rule in system, we can map that Advance rule to Accounting structure.
By Adding Advance Rule, we can provide additional control based on condition and enable dimensions entry which is not part of main accounting structure.
In above example we have added Financial Dimension Project as required dimension if user is making transaction for main account between 606000 till 606800.
I hope this make sense to you all. As we understood how accounting structure works, let’s try to understand how to create Advance Rules which we can map in Accounting Structure.
What is “Advance Rule”?
Advance rule is extension of Accounting Structure. As we know that if we add dimension in accounting structure it will be available / active for all applicable main accounts of that accounting Structure.
But sometimes we found additional requirement which require financial dimension only for specific condition and we do not need to create separate accounting structure.
In that scenario we can link advance rule in Accounting Structure (Point 6 in above picture).
How to configure / create “Advance Rule”?
Path: General Ledger > Chart of accounts >Structure > Advance rule structure
We can create Advance rule same as Accounting Structure with all required financial dimensions:
In this form we can select which dimensions are require and we can also provide range of applicable values of each dimension.
Now once we know all components, we have to link Accounting Structure to main Ledger configuration.
How to Link Accounting Structure to Ledger setup?
We can link one or more accounting structure to Ledger setup as below:
By Adding Accounting Structure to Ledger setup, we enable system to put validation on each financial transaction.
I hope this will help you to understand the application of accounting structure and advance rule in Dynamics 365 Finance. We will continue the journey of exploring Dynamics 365 Finance soon.
CA Gaurangkumar Jani