Understanding the General Ledger and Chart of Accounts

The general ledger (G/L) stores your financial data, and the chart of accounts (COA) shows the accounts all general ledger entries are posted to. Business Central includes a standard chart of accounts that is ready to support your business.

General ledger setup and general posting setup

The setup of the general ledger is at the core of financial processes because it defines how you post data. Two pages in particular play an important part in configuring your finance processes:

  • The General Ledger Setup page

    On the General Ledger Setup page, you specify how to handle certain accounting issues in your company, such as:

    • Invoice rounding details
    • Address formats
    • Financial reporting

    Tip

    The General Ledger Setup page includes generic fields and fields that are particular to your country or region. If you are unsure of the meaning of a field, we suggest you work with your accountant to determine whether it is relevant to your organization. Hover over a field to read a short description.

    Open the page here.

  • The General Posting Setup page

    Similarly, on the General Posting Setup page, you specify how you want to set up combinations of general business and general product posting groups. Posting groups map entities such as customers, vendors, items, resources, and sales and purchase documents to general ledger accounts. You fill in a line for each combination of business posting group and product posting group. But you can also open each line in its own posting setup card. Learn more at Posting Group Setups.

    Tip

    If you can't see the fields you're looking for in the General Posting Setup page, use the horizontal scroll bar at the bottom of the page to scroll to the right.

    Open the page here.

The chart of accounts

The chart of accounts shows all general ledger accounts. From the chart of accounts, you can do things like:

  • View reports that show general ledger entries and balances.
  • Close your income statement.
  • Open the general ledger (G/L) account card to add or change settings.
  • See a list of posting groups for that account.
  • View separate debit and credit balances for a single account.

You can add, change, or delete general ledger accounts. However, to prevent discrepancies, you can't delete a general ledger account if its data is used in the chart of accounts. Also, starting with 2022 release wave 2, you can also block the accidental deletion of accounts in sensitive periods. Learn more in the Deleting accounts section.

Account categories

You can personalize the structure of your financial statements by mapping general ledger accounts to account categories.

The G/L Account Categories page shows your categories and subcategories, and the general ledger accounts assigned to them. You can create new subcategories and assign those categories to existing accounts.

You can create a category group by indenting other subcategories under a line on the G/L Account Categories page. Category groups make it easy to get an overview because each grouping shows a total balance. For example, you can create subcategories for different types of assets, then create category groups for fixed assets versus current assets.

You can define whether specific types of reports must include the accounts in each subcategory. The account categories help define the layout of your financial statements.

Example

For example, the default balance statement has a subcategory for Cash under Current Assets. If you want the balance statement to consider petty cash and checking, you need to take the following steps:

  1. Choose the Lightbulb that opens the Tell Me feature. icon, enter G/L Account Categories, then choose the related link.
    1. Alternatively, open the page here.
  2. Choose the Edit List action.
  3. Add two new subcategories: One for petty cash, and one for your checking account:
    1. Select the Current Assets category.
    2. Choose the New action.
    3. Enter the subcategory name on the Description field.
    4. On the G/L Accounts in Category field, select the appropriate G/L account.
    5. On the Additional Report Definition field, select the Cash Accounts option.
  4. Indent them under the Cash subcategory.
    1. Select the subcategory created in step 3.
    2. Choose the Indent action.
    3. Choose the Move Down action.
    4. Choose the Indent action to indent under the Cash subcategory.

When you choose the Generate Financial Reports action—or the next time the report is generated—your balance statement will show the following lines:

  • Total balance for cash.
  • Lines with balances for petty cash and the checking account.

Note

If you create a G/L account without assigning an account category, when you assign the account to a posting group Business Central automatically assigns the account category from the G/L account immediately above the account in your chart of accounts. However, to include the new account in your financial reports, you must choose the Generate Financial Reports action on the G/L Account Categories page. Alternatively, you can open the G/L account card page, specify the account category, and then regenerate your financial report.

Get a quick overview

The Chart of Accounts page displays accounts in a hierarchical list that offers fast access to the key information for each account. However, the list is static, and if you have many accounts, you might have to scroll to view different accounts. If you just want a quick overview of the basics, such as net changes and balances, the Chart of Accounts Overview page is a useful alternative. The column layout on the page is now the same as you'll find on the Chart of Accounts page (though with fewer columns), so you won't have to reorient yourself. You can expand or collapse the hierarchical levels to condense the view. To make it easy to switch between the pages, the Chart of Accounts Overview page is available from the Chart of Accounts page.

Access to create and edit accounts and account categories

In a small organization, such as the CRONUS demonstration company, most users can edit the chart of accounts, except those users with a TEAM MEMBER license. However, larger organizations typically use roles and permissions to limit access to editing the chart of accounts. If you're an administrator, or have the Business Manager or Accountant role, you can control user permissions to give the right people access to the relevant tables. Learn more in the Get an overview of a user's permissions section.

See also

Set Up or Changing the Chart of Accounts
Assign Permissions to Users and Groups
Business Intelligence
Finance

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