Introduction to setting up G/L accounts

Completed

The income statement and balance sheet are two important company financial reports. In Business Central, an account in the income statement and the balance sheet is called a G/L account, and all the G/L accounts make up the Chart of Accounts list.

In the Chart of Accounts list, all G/L accounts are available and can be viewed at one time. However, there is also a G/L Account Card for each account, and this can be accessed from the Chart of Accounts list.

You can use G/L account cards to create and edit G/L accounts. The G/L account card has the following five FastTabs:

• General

• Posting

• Consolidation

• Reporting

• Cost Accounting

In this scenario, let's say that you need to create a new G/L account for telephone expenses. To create the account, follow these steps:

1. Select the Search for Page icon in the top-right corner of the page, enter chart of accounts, and then select the related link.

2. Select New.

3. Expand the General FastTab. The following table provides descriptions of the fields on the General FastTab and the data to enter for this demonstration.

   Field	Description	Demonstration data
   No.	The number of the G/L account.	613500
   Name	The name or description.	Telephone expenses
   Income/Balance	Indicates whether the account is classified as an income statement of a balance sheet account. This field is important to determine whether an account must be closed in the fiscal year-end.	Income Statement
   Account Category	Specifies the category of the G/L account, like assets, equity, and so on. This field is used for creating financial statements.	Expense
   Account Subcategory	Specifies the subcategory of the account category of the G/L account. This field is used for creating financial statements.	Utilities Expense
   Debit/Credit	Indicates the type of entries that will be posted to this account. The selection that is made does not restrict the type of transaction that is posted to the account.	Both
   Account Type	Indicates the purpose for the account in the different lists, journals, and reports. The available options are: Posting - The only account type where entries can be posted. Heading - Used for description and reporting purposes only. Total - Used to total the accounts that are nominated in the Totaling field. Begin-Total - Marks the beginning of an account range in the Totaling field. End-Total - Marks the end of an account range in the Totaling field.	Posting
   Totaling	Specifies an account interval or a list of account numbers. The program will total the entries of the accounts that are displayed in this field. Totaling formulas are possible for G/L accounts of the Total and End-Total account types.	<blank>
   Balance	Displays the current balance of the account. Select the balance amount to access the General Ledger Entries list.
   Reconciliation Account	Determines whether the G/L account is included in the Reconciliation list in the general journals. Use the Reconciliation list before posting to review the effect of posting the accounts in the journal.	No
   Automatic Ext. Texts	If this field is selected, extended text that is set up on the accounts is automatically added to the sales and purchase documentation in the Description field. If this field isn't selected, extended text can still be set up on the account and added to documents manually. To create the extended text, select Extended Text on the Navigate tab.	No
   Direct Posting	Indicates whether posting can move directly into this account from a journal line. This field is automatically selected when new accounts are created. G/L accounts, such as the receivables (trade debtors) account, that are posted based on posting groups are usually only set up for indirect posting.	Yes
   Blocked	If you select this field, it prevents entries from posting to this account. Accounts can be blocked and reopened as needed.
   Last Date Modified	System-generated field that displays the date that the G/L account was last changed.	System generated
   Omit Default Descr. in Jnl.	Specifies if the default description is automatically inserted in the Description field on journal lines that are created for this general ledger account.
   Review Policy	Specifies how to allow reviews of G/L entries in the Review Policy field.

4. Expand the Posting FastTab. The following table provides descriptions of the fields on the Posting FastTab and the data to enter for this demonstration.

   Field	Description	Demonstration data
   Gen. Posting Type	Defines whether the account is used only for a Sale or Purchase transaction or with both types of transactions. This field is used with the VAT Bus. Posting Group and VAT Prod. Posting Group fields to determine where the system will post VAT. The following options are available: <Blank>, Purchase, and Sale.	Purchase
   Gen. Bus. Posting Group	Identifies the default general business posting group for the account. This field is used together with the Gen. Prod. Posting Group and Gen. Posting Type fields to find the G/L accounts to post to for sales, purchases, discount amounts, Cost of Goods Sold (COGS), and inventory adjustments. Because the general business posting group indicates whom you sell to or buy from, the customer’s or vendor’s general business posting group takes priority over the G/L account’s general business posting group. When no customer or vendor is involved in a transaction, the program will use the G/L account’s general business posting group.	DOMESTIC
   Gen Prod. Posting Group	Identifies the default general product posting group for the account. This field is used with the Gen. Bus. Posting Group and Gen. Posting Type fields to find the G/L accounts to post to for sales, purchases, discount amounts, COGS, and inventory adjustments. The general product posting group of an item takes priority over the G/L account’s general product posting group.	SERVICES
   VAT Bus. Posting Group	Identifies the default VAT Business Posting Group for the account. This field is used with the VAT Prod. Posting Group and Gen. Posting Type fields to determine the VAT percentage and the VAT calculation type and to find the G/L accounts where the program posts VAT. Because the VAT business posting group indicates whom you sell to or buy from, the customer’s or vendor’s VAT business posting group takes priority over the G/L account’s VAT business posting group. When no customer or vendor is involved in a transaction, the program will use the G/L account’s VAT business posting group.	DOMESTIC
   VAT Prod. Posting Group	Identifies the default VAT Product Posting Group for the account. This field is used with the VAT Bus. Posting Group and Gen. Posting Type fields to determine the VAT percent and the VAT calculation type and to find the G/L accounts where the program posts VAT. The VAT product posting group of an item takes priority over the G/L account’s VAT product posting group.	VAT25
   Default IC Partner G/L Acc. No	Identifies the default Intercompany (IC) G/L account number for this G/L account. When you enter this G/L account in an intercompany general journal, the IC G/L account that is specified in this field is used as the default balancing account number.	<blank>
   Default Deferral Template	Specifies the default deferral template that governs how to defer revenues and expenses to the periods when they occurred.	<blank>

Review Policy on the General FastTab has a few options that weren't discussed above. The following options are available:

• None: You can't mark entries for the account as reviewed. For example, use this option for accounts such as payables, receivables, and bank accounts where there are other ways to review their amounts.

• Review allowed: You don't have to include entries in a review, and the amounts of the debit and credit entries don't have to balance. You remove a review, for example, if you've made a mistake.

• Review allowed and match balance: The total amounts of the debit and credit entries in the review must match. The Debit and Credit fields show those amounts, and the Balance field shows the total. This setting also lets you remove a review. When you remove a review from one or more entries, the debit and credit entries must still balance.

Refer to the Review general ledger entries unit in this module for information on reviewing journal entries.

On the Consolidation FastTab, you can enter the debit and credit account of the consolidation company to map with. When running the consolidation from the consolidation company, the program creates general journal lines for each business unit, based on the mapping entered here. When the company has a different local currency than the consolidation company, you can select a consolidation translation method for the G/L account. This specifies the currency translation rate to be applied to the account.

On the Reporting FastTab, you can specify if you want to process exchange rate adjustments between the local currency and the additional reporting currency for this account.

The Cost Accounting FastTab shows the cost type the G/L account is mapped to.

For this example, you don't need to enter the Consolidation, Reporting, and Cost Accounting FastTabs.

If you completed the steps in the scenario, when you close the G/L account card, you should see the new G/L account you set up for telephone expenses appearing in the chart of accounts.