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Introduction
A 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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Scenario
Phyllis, 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.
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Chart of Accounts
The 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
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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The following elements make up the shared chart of accounts: Chart of accounts Main accounts Account structures Advanced rules Financial dimensions Financial dimension values
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Allocation Terms
Allocated transactions redistribute account balances from one account to one or more destination accounts or account-dimension combinations. The allocation feature is valuable when centrally administrated expenses must be distributed to, for example, individual cost centers. Use allocation for realized and budget transactions. During allocation to the given accounts, the net amount is totaled. After allocation, any remainder relative to the journal line is posted to the original account with the original dimensions.
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Validation settings can be based on the following: Optional - the field is not validated at the time of posting. This is the default setting. To be filled in - the system verifies that the field is completed for posting. The value is not checked. Table - the system verifies that the field is completed for posting and that the value corresponds with the value specified in the account. List - the system verifies that the field is completed with one of the values that are defined on the Validation list button.
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Advanced Rules
Advanced rules link a financial dimension or multiple financial dimensions to an account number or range of account numbers so additional information can be gathered for reporting and analysis. Advance rule structures provide the financial dimension combinations that are valid for the advanced rule. For example, you want to track the travel expense account by the airlines. You could set up "Travel Expense" as the main account and create another financial dimension called "Airlines" and set criteria for that financial dimension such as "Airline 1", "Airline 2", and "Airline 3". Now, you can easily track travel expense by each airline defined.
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Ledger Setup
The term ledger is used as a system for classifying transactions for the general ledger using a chart of accounts, a fiscal calendar, and one or more currencies. Creating multiple ledgers will provide a ledger for each legal entity which provides the chart of accounts, accounting currency, reporting currency and fiscal calendar for the legal entity. The ledger also provides the means for sharing the chart of accounts, currencies and fiscal calendar by multiple legal entities. Each legal entity will have a separate ledger and it is possible to have multiple ledgers for each legal entity.
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5. She enters the main accounts for posting. 6. She closes the form.
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Recalculate Calendars
Use the Recalculate ledger periods form to validate the ledger period in the general journal. If the ledger period has been modified for the ledger, the reference to the ledger period will be updated in the general journal. A message will be displayed and you will need to update the closing transactions using the Close form. To recalculate ledger periods follow these steps: 1. Click General ledger > Setup > Ledger. 2. Click the Recalculate ledger periods button.
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Challenge Yourself!
Use the table information to create a new Main account.
Step by Step
1. Click General Ledger, click Common, and then click Main accounts. 2. In the New group on the Action Pane, click Main account. 3. In the Main account field, enter 131150. 4. In the Name field, enter Prepaid rent. 5. In the Main Account type field, use the arrow to select Balance sheet. 6. In the Main account category field, use the arrow to select PREPAIDEXP for Prepaid Expenses. 7. Expand the Setup FastTab. 8. In the Currency field, click the arrow to select USD. 9. Click Close to close the form.
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Challenge Yourself!
Use the information in the scenario to enter the allocation terms for account 600200.
Step by Step
1. On the Navigation Pane, click General Ledger, click Common, and then click Main accounts. 2. Double-click on the Main account 600200 in the Main accounts list page. 3. Click the Edit button. 4. In the Select level of main accounts to display field, select Companies. 5. Click the Legal entity icon and select CEU. 6. Expand the General FastTab and select the Allocation check box. 7. Click the Allocation terms button. 8. In the Percentage field enter 50.00 9. On the Source Dimension FastTab, In the Department field, select Specific, and then use the arrow to select OU_4569 (Administration). 10. In the To account field select 600200. 11. On the Destination ledger account FastTab, In the Department drop down list, use the arrow to select OU_2562 (Professional Services). 12. Close the Allocation form.
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Order invoice rounding Purchase invoice rounding-off Purchase, fixed receipt price profit
NOTE: The Error Account, Penny Difference, and Year-end Result accounts for automatic transactions are mandatory. The other accounts for automatic transaction are set up depending on whether that functionality is used. If a service pack is installed, new accounts for automatic transactions may be introduced. Click the Create button after you install a service pack to make sure you have all the latest default account types. 3. Click New to create a new account for automatic transactions, if accounts are already created. 4. Attach the relevant main account for each account for automatic transactions in the Main account field. The name of the main account is automatically inserted in the Name field. NOTE: To interrupt updates with an error message when the error account is used in the posting process, select the Interrupt in case of error account check box in the General ledger parameters form.
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The information in the fields in the ledger transactions cannot be modified. To correct an entry, make a transfer which then appears in the form.
To open the Account Transactions form, click General Ledger, click Reports, click Transactions, and then click Ledger transaction List.
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Summary
This course, Chart of Accounts Setup, covers the basic information about the Chart of Accounts, Advanced Rules, Account Allocation Terms, Accounts for Automatic Transactions, and inquiries and reports related to these topics. The Chart of Accounts, the central collection location for daily financial transactions, is the base of the General Ledger module. It provides information about a company's financial state. Allocated transactions redistribute main account balances from one main account to another destination main account. This is practical and can be used to set up automatic posting of, for example, percentage allocation of main account postings.
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3. Is the purpose of account allocation to use for realized transactions and budget transactions? ( ) Yes ( ) No 4. Can using posting types reduce the risk of selecting a wrong account when you set up posting profiles? ( ) Yes ( ) No
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Solutions
Test Your Knowledge
1. Is it possible to have the same chart of accounts used across multiple companies? () Yes ( ) No 2. Before creating a company's Chart of Accounts, what considerations should be discussed? MODEL ANSWER: -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 3. Is the purpose of account allocation to use for realized transactions and budget transactions? () Yes ( ) No 4. Can using posting types reduce the risk of selecting a wrong account when you set up posting profiles? () Yes ( ) No 5. Which of the following system accounts are required to be set up? (Select all that apply) () Error account ( ) Cash difference () Year-end result () Penny difference 6. Which tasks are completed from the Chart of Accounts in Microsoft Dynamics AX? (Select all that apply) () Create accounts () Set standard parameters () Access transactions () View a company's financial state
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