Chapter 2: Working with General Ledger Accounts

CHAPTER 2: WORKING WITH GENERAL LEDGER

ACCOUNTS
Objectives
The objectives are:

• Identify different posting groups and outline their purpose.

• Explain the use of G/L account cards.
• Outline the purpose and functions of the Chart of Accounts window.

Introduction
The core of a company is its chart of accounts, a list of the general ledger (G/L)
accounts where G/L entries accumulate during a fiscal period. General Ledger
entries are created as a result of business transactions posted on different business
documents, such as purchase invoices. During posting, transaction figures are
routed to the relevant G/L accounts by means of posting group combinations
assigned to the customer, vendor, or item on the business document.

As one of the central elements of a financial management system, the purpose

and functions of the chart of accounts is prerequisite knowledge for anyone
training to work with Microsoft Dynamics® NAV 2009 at any level.

For introductory training on assigning posting groups to business documents,

refer to the "Process Purchases" chapter in this course. For detailed information
about how and why to set up posting groups, refer to the "Application Setup in
Microsoft Dynamics® NAV 2009" course. For training in financial management
functionality, refer to the "Finance in Microsoft Dynamics® NAV 2009" course,
which is intended for the bookkeeper role.

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Posting Groups
Posting groups help users create links between master data records in the
different application areas and the G/L accounts in the chart of accounts. When
sales, purchases, and other transactions are recorded and posted for these master
data records, posting groups route the derived transaction figures to the correct
G/L accounts. You can use three types of posting groups when selling inventory
and resources to customers and buying inventory from vendors:

• Specific posting groups

• General posting groups
• VAT posting groups

Specific Posting Groups

The primary purpose of specific posting groups is to identify the balance sheet
account for each subledger. (The term subledger refers to transaction entries in
application areas, such as Inventory, Sales, Purchases, and Resources).

Specific posting groups are assigned to the following master data records:

• Customers
• Vendors
• Items
• Fixed Assets
• Bank Accounts

These posting groups create the direct link to the primary balance sheet account
for each master data record.

NOTE: Posting groups are not necessary in companies that only use the General
Ledger application area and only record regular journal entries to G/L accounts.

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To view Customer Posting Groups, go to: Departments > Financial

Management > Administration > Posting Groups > Customer Posting
Groups

FIGURE 2.1 CUSTOMER POSTING GROUPS IN CRONUS

To view Vendor Posting Groups, go to: Departments > Financial

Management > Administration > Posting Groups > Vendor Posting Groups

FIGURE 2.2 VENDOR POSTING GROUPS IN CRONUS

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The following table briefly describes the purpose of each type of specific posting
group.

Specific Posting Description

Group
Customer Posting Maps the accounts receivable accounts, payment
Group discount accounts, invoice and application rounding
accounts, and interest and fee accounts relating to
customers.
Vendor Posting Group Maps the accounts payable account, payment
discount accounts, invoice and application rounding
accounts, and interest and fee accounts relating to
vendors.
Inventory Posting Inventory posting groups specify the type of
Groups/Inventory inventory and are then combined with location codes
Posting Setup in the Inventory Posting Setup window. Each
combination is then mapped to the inventory
accounts, WIP account, and other variance accounts
relating to inventory in the chart of accounts.
Fixed Asset Posting Specifies the accounts to which transactions
Group involving fixed assets are posted.
Bank Account Posting Maps a bank account to a bank G/L account.
Group

Inventory Posting Setup

Inventory posting groups are specific posting groups that are used to group items
for statistical purposes. Reports, such as the Inventory Valuation, and batch jobs,
such as the Post Inventory Cost to G/L, use inventory posting groups to list the
results.

The inventory posting group setup is slightly different than the setup of customer
and vendor posting groups because two windows are used:

• Inventory Posting Groups

• Inventory Posting Setup

In the Inventory Posting Group window, item group codes such as RAW MAT
can be specified. This setup allows users to link G/L accounts to item groups
rather than to specific items.

The Inventory Posting Setup window defines the posting links between
inventory locations, item groups (see Inventory Posting Group Code field in
figure 3.2), and G/L accounts relating to inventory.

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To view Inventory Posting Setup, go to: Departments > Financial

Management > Administration > Inventory Posting Setup

FIGURE 2.3 INVENTORY POSTING SETUP WINDOW REFLECTING THE

POSTING LINKS BETWEEN INVENTORY AND G/L

General Posting Groups

The primary purpose for general posting groups is to identify the income
statement account that represents each subledger. General posting groups are
added to customers, vendors, items, and resources to link the following to the
general ledger:

• Item and/or resource transactions from purchases and sales

documents
• Item journals and job journals

There are two types of general posting groups, shown in the following table.

General Posting Group Description

General Business Specifies who is sold to (customers) and who is
Posting Group purchased from (vendors).
General Product Posting Specifies what is being sold (items and resources)
Group and what is being purchased (items).

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General Business Posting Groups

To go to General Business Posting Groups, go to: Departments > Financial

Management > Administration > Posting Groups > Gen. Business Posting
Groups

FIGURE 2.4 GENERAL BUSINESS POSTING GROUPS LINKING

TRANSACTIONS TO G/L BY BUSINESS TYPE

General business posting groups are assigned to:

• Customers
• Vendors
• G/L accounts

When setting up general business posting groups, you must consider how many
groups are needed for breaking down:

• Sales by customers
• Purchases by vendor

For example, general business posting groups can be divided by:

• Geographical area
• Type of business
• Type of industry

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General Product Posting Groups

General product posting groups are assigned to:

• Items
• Resources
• G/L accounts

When setting up general product posting groups, you must consider how many
groups are needed for breaking down:

• Sales by products (items and resources)

• Purchases by items

For example, general product posting groups can be divided by:

• Raw material items

• Retail items
• Resources
• Capacities

General product posting groups provide the major product groups reflected in the
chart of accounts. Each inventory item and resource is assigned a general product
posting group.

General Posting Setup Window

The General Posting Setup window is a matrix that combines business and
product posting groups.

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To view the General Posting Setup, go to: Departments > Financial

Management > Administration > Posting Groups > Gen. Posting Setup.

FIGURE 2.5 GENERAL POSTING SETUP WINDOW REFLECTING THE

POSTING LINKS BETWEEN GENERAL POSTING GROUPS AND G/L

Each combination determines the accounts that the program uses to post the
following:

• Sales and purchases

• Sales and purchase credit memos
• Sales and purchase invoice discounts and payment discounts
• Cost of goods sold (COGS) and inventory adjustments
• Direct cost applied and overhead applied
• Purchase variances

For each combination of business and product posting groups, a different set of
G/L accounts can be assigned. As a result, it is possible to post the sale of the
same item to different sales accounts in the general ledger since customers are
assigned different general business posting groups.

VAT Posting Groups

Value-added tax (VAT) is a transaction tax paid by the end consumer and
businesses.

VAT posting groups define how VAT is calculated and posted according to:

• Who is sold to or purchased from (customers and vendors)

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• What is sold or purchased (items and resources)

The principles for setting up VAT posting groups are similar to those for setting
up general posting groups:

• VAT business posting groups are set up and assigned to customers

and vendors.
• VAT product posting groups are set up and assigned to items and
resources.
• Combinations of VAT business and product posting groups are
specified in the VAT Posting Setup window.

VAT Posting Setup Window

The VAT Posting Setup window is a matrix that combines VAT business and
product posting groups, similar to the General Posting Setup window. However,
the VAT Posting Setup window contains additional fields specific to VAT
recording and posting.

To view the VAT Posting Setup, go to: Departments > Financial

Management > Administration > VAT Posting Group > VAT Posting Setup

FIGURE 2.6 VAT POSTING SETUP WINDOW REFLECTING THE POSTING

LINKS BETWEEN VAT POSTING GROUPS AND G/L

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G/L Account Cards

Each line in the chart of accounts is represented by a G/L account card where you
define how the related G/L entries for that account are managed.

For running companies where a posting setup is in place and a chart of accounts
already exists, you will need to create additional G/L accounts from time to time,
for example, for transactions from a new type of revenue. To learn how to create
new G/L accounts, refer to the "Finance" course.

This lesson merely explains the most important fields and buttons in the G/L
Account Card window. G/L account cards are accessed from the Chart of
Accounts window, which is explained in the next lesson.

To open a G/L account card, follow these steps:

1. Click Departments > Financial Management > General Ledger >

Lists > Chart of Accounts.
2. Double-click or press Enter on a G/L account to view it.

FIGURE 2.7 THE G/L ACCOUNT CARD WINDOW FOR THE FIRST POSTING
ACCOUNT TYPE IN CRONUS, THE LAND AND BUILDINGS G/L ACCOUNT

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General FastTabs
The General FastTabs contains various fields that define what and how G/L
entries are handled in the G/L account.

Field Description
No. The number of the G/L account. Note that number series are
not used for G/L accounts so this number is entered
manually.
Name A short description of the G/L account.
Income/Balance Indicates whether the account is an income or balance sheet
account. This field is important in determining what accounts
are closed at the fiscal year end.
Debit/Credit Indicates the type of entries that will normally be posted to
this account. The selection made does not restrict the type of
transactions posted to the account; it only enhances the
reporting capabilities.
Account Type This field identifies the purpose of the account. The options
are:
• Posting - Used to accumulate transactions.
• Heading - Used for descriptive purposes only.
• Total - Used to total a range of accounts, as specified in
the Totaling field. (This option is useful for totaling
groups of accounts that are not in the same classification,
such as gross income.)
• Begin-Total - is used to mark the beginning of an
account range.
• End-Total is used to mark the end of the range.
Each End-Total account has an account range in the
Totaling field. The range can be calculated or entered
manually.
Totaling Determines which accounts go into a Total or an End-Total
account type.
No. of Blank Lines Determines the number of blank lines before the account is
displayed in a report.
New Page Determines if a new report page is printed after the account is
displayed in the report.
Search Name Search for a particular account when the account number
cannot be recalled.
Balance Displays the current balance of the account. Look up from
this field to access the General Ledger Entries window.

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Field Description
Reconciliation Determines whether the G/L account is included in the
Account Reconciliation window in the general journals. The
Reconciliation window is used prior to posting to review the
effect of posting the accounts in the journal.
Automatic Ext. If selected, extended text set up on the account is
Texts automatically added to sales and purchase documents in the
Description field. If not selected, extended text can still be
set up on the account and added to documents manually. To
create the extended text, click Related Information >
Account >Extended Texts.
Direct Posting Indicate whether posting is allowed directly into this account
from a journal line. Note that this field is automatically
checked when new accounts are created.
Blocked If selected, prevents entries from posting to this account. G/L
accounts can be blocked and reopened as needed.
Last Date Modified System generated field, displays the date when the G/L
account was last modified.

Posting FastTabs
The Posting FastTabs contains the fields that determine how the G/L and VAT
entries are recorded.

The following table briefly describes the purpose of each field.

Field Description
Gen. Posting Type Defines whether the account is used only in connection with
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 find the
account that the program posts VAT to. It is only filled in for
revenue and expense accounts where VAT is involved.
Gen. Bus. Posting Identifies the default general business posting group for the
Group account. This field indicates whom you sell to or buy from. It
is used 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, COGS (cost of goods
sold), and inventory adjustments.
Gen Prod. Posting Identifies the default general product posting group for the
Group account. This field indicates the type of item sold or
purchased. It 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.

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Field Description
VAT Bus. Posting Identifies the default VAT business posting group for the
Group account. This field is used with the VAT Prod. Posting
Group and Gen. Posting Type fields to:
Determine VAT percent and VAT calculation type.
Find the G/L accounts where the program posts VAT.
VAT Prod. Posting Identifies the default VAT product posting group for the
Group account. This field is used with the VAT Bus. Posting
Group and Gen. Posting Type fields to:
Determine VAT percent and VAT calculation type.
Find the G/L accounts where the program posts VAT.
Default IC Partner Identifies the default intercompany G/L account number for
G/L Acc. No. this G/L account. When entering this G/L account in the
intercompany general journal, the IC G/L account specified
in this field is used as the default balancing account number.

After the posting types and the posting group codes are assigned to a G/L
account, these codes are automatically inserted in a journal, sales, or purchase
line when the G/L account is selected.

Account Button
The Account button in the G/L Account Card window contains the options
shown in the following table.

Option Description
Ledger Entries Displays all ledger entries for the account.
(Ctrl+Shift+N)
Comments Displays or enters comments relating to the account.
Dimensions Displays or enters default dimensions for the account.
(Ctrl+Shift+D)
Extended Texts Displays or enters extended text for the account.

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Option Description
Receivables-Payables Provides a summary of:
• Expected net operational cash flow from customers
and vendors over time.
• Open customer and vendor ledger entries sorted by
their Due Date instead of Posting Date.
View this summary by the:
• Period, such as daily, monthly, or quarterly.
• Expected cash flow movement for a period by
clicking the Net Change option.
• Expected net balance of outstanding customer and
vendor balances at any date by clicking the Balance
at Date option.
Where-Used List Displays a list of tables where this G/L account is used.

To view the options, open an account card and go to: Related Information >
Account.

For detailed information about dimensions, refer to the "Add and View
Dimensions" chapter in this course.

Balance Button
Use the Balance button to display information about the balances and transaction
amounts for the account. Each window accessed from this button contains filters
to assist in viewing the information more specifically. The Balance button
contains the options shown in the following table.

Option Description
G/L Account Balance Displays the balance or net change for the G/L account
over time.
G/L Balance Displays the balance or net change for all G/L accounts
for a specific time period.
G/L Balance by Displays balance or net change information for all
Dimensions accounts. The information displayed in columns and lines
can be set to one of the following views:
• G/L account
• Period
• Global Dimensions 1 and 2

To view the options, open an account card and go to: Related Information >
Balance.

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These options are described in more detail in the "Business Intelligence for
Information Workers" course.

Functions Button
On the Functions button, you can accesses the Apply Template function. This
function is available when master templates are prepared during the Rapid
Implementation Methodology (RIM) process.

Master templates for G/L accounts provide the ability to:

• Create multiple default G/L account setups for accounts that are
often created, such as expenses.
• Use these templates as a basis when creating accounts of this type.
• Eliminate the need for repetitive data entry for similar account
creation.

Go to Actions > Functions to select the options available.

For more information about using master templates to structure new master data,
refer to the "Application Setup" course.

When a new G/L account is created in the G/L Account Card window, the
Indent Chart of Accounts function must be run. This function is explained in
the "The Chart of Accounts" Lesson.

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Chart of Accounts Window

The Chart of Accounts window contains the same fields as in the G/L Account
Card window - only displayed in table format. In addition to the information on
the individual account cards, the Chart of Accounts window displays current net
change and balance figures for each G/L account. In this way, the window
provides direct insight to the status of company finances at all times.

To view the chart of accounts, go to Departments > Financial Management >

General Ledger > Lists > Chart of Accounts.

FIGURE 2.8 PARTS OF THE CHART OF ACCOUNTS IN CRONUS

The Chart of Accounts window contains buttons similar to the G/L Account
Card window, but with slightly different menu options.

Account Button
The Account button contains the options shown in the following table.

Options Description
Dimensions - Single The same functions as the dimensions function on the
account card.
Dimensions - Multiple Assign the same default dimensions to multiple accounts.
Since the Chart of Accounts window is a list of
accounts, it is possible to assign the same default
dimensions to several accounts by selecting the relevant
account lines, thus reducing the entry time needed for
setting up default dimensions.

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Options Description
Ledger Entries, Same functions as described in the G/L Account Cards
Comments, Extended lesson.
Texts, Receivables-
Payables, Where-Used List

To view these options, go to the Chart of Accounts Window and go to: Related
Information > Account.

Balance Button
The Balance button contains the options shown in the following table.

Options Description
G/L Account Balance, G/L Same functions as described in the G/L Account Cards
Balance, G/L Balance by lesson.
Dimension
G/L Account Displays the actual and budgeted balance or net change
Balance/Budget for the G/L account over time.
G/L Balance/Budget Displays the actual and budgeted balances or net change
for all G/L accounts for a specific time period.
Chart of Accounts Displays the chart of accounts with different levels of
Overview detail. Use the Expand and Collapse feature to view only
header and footer accounts or all of the accounts in
between.

To view the options, go to the Chart of Accounts Window and go to: Related
Information > Balance.

Functions Button
The Functions button contains one function: Indent Chart of Accounts. This
function is used to:

• Format the Total, Begin-Total and End-Total fields.

• Indent accounts according to a defined hierarchy.

Establish the hierarchy by using the account types Begin-Total and End-Total.
Account numbers within this range are included in the End-Total range in the
Totaling field.

Every time you create a new G/L account, run the Indent Chart of Accounts
function to indent it according to a hierarchy and recalculate the totals.

To access this function, go to Actions > Functions > Indent Chart of Accounts
and click Yes.

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Summary
Posting groups route posted business transactions to the relevant G/L accounts
according to specific, general, or VAT posting groups as set up in a posting setup
matrix.

Posted business transactions are routed by the posting setup to G/L accounts
where they accumulate as G/L entries and contribute to the annual accounts of
the company. Each G/L account can be managed in a G/L Account Card
window that holds the setup information and links to related entry details. The
list of all existing G/L accounts is displayed in the Chart of Accounts window,
which is the central interface to the company's financial records.

As one of the central elements of a financial management system, the purpose

and functions of the chart of accounts is prerequisite knowledge for anyone
training to work with Microsoft Dynamics® NAV 2009 at any level.

For hands-on training in the financial management functionality that surrounds

the chart of accounts, refer to the training manuals titled "Finance in Microsoft
Dynamics® NAV 2009," aimed at the bookkeeper role, and "Business
Intelligence for Information Workers," aimed at controllers, accountants,
managers and others roles involved in reporting financial information .

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Test Your Knowledge

1. Outline the purpose of posting groups.

2. Which type of posting group is used to identify balance sheet accounts for
each subledger?
( ) All posting groups
( ) Specific posting groups
( ) General posting groups
( ) VAT posting groups

3. Which type of posting group is used to identify income statement accounts

for each subledger?
( ) All posting groups
( ) Specific posting groups
( ) General posting groups
( ) VAT posting groups

4. Which of the following are assigned specific posting groups?

( ) Item
( ) Customer
( ) Resource
( ) Fixed asset

5. Which of the following are assigned general posting groups?

( ) Fixed asset
( ) Resource
( ) Customer
( ) Item

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6. Which three types of posting information are combined in the Inventory

Posting Setup window? (Select all that apply)
( ) Location codes
( ) Inventory posting group codes
( ) Item category codes
( ) G/L accounts

7. On which tab in the G/L Account Card window do you define which
transaction figures to accumulate in the account?
( ) Reporting
( ) General
( ) Posting
( ) Transaction

8. A G/L account can be one of which of the following account types? (Choose
one)
( ) Posting
( ) Balance
( ) Total
( ) Heading

9. Which menu option in the Chart of Accounts window is used to recalculate

the totals and to place G/L accounts in the right structure?
( ) Refresh Chart of Accounts
( ) Recalculate Chart of Accounts
( ) Indent Chart of Accounts
( ) Chart of Account Overview

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Quick Interaction: Lessons Learned

Take a moment and write down three key points you have learned from this
chapter

1.

2.

3.

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Solutions
Test Your Knowledge
1. Outline the purpose of posting groups.

MODEL ANSWER:

Posting groups are used to create links between master data records in the
different application areas and the G/L accounts in the chart of accounts.
When sales, purchases, and other transactions are recorded and posted for
these master data records, posting groups route the derived transaction
figures to the correct G/L accounts.

2. Which type of posting group is used to identify balance sheet accounts for
each subledger?
( ) All posting groups
(•) Specific posting groups
( ) General posting groups
( ) VAT posting groups

3. Which type of posting group is used to identify income statement accounts

for each subledger?
( ) All posting groups
( ) Specific posting groups
(•) General posting groups
( ) VAT posting groups

4. Which of the following are assigned specific posting groups?

(√) Item
(√) Customer
( ) Resource
(√) Fixed asset

5. Which of the following are assigned general posting groups?

( ) Fixed asset
(√) Resource
(√) Customer
(√) Item

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6. Which three types of posting information are combined in the Inventory

Posting Setup window? (Select all that apply)
(√) Location codes
(√) Inventory posting group codes
( ) Item category codes
(√) G/L accounts

7. On which tab in the G/L Account Card window do you define which
transaction figures to accumulate in the account?
( ) Reporting
( ) General
(•) Posting
( ) Transaction

8. A G/L account can be one of which of the following account types? (Choose
one)
(√) Posting
( ) Balance
(√) Total
(√) Heading

9. Which menu option in the Chart of Accounts window is used to recalculate

the totals and to place G/L accounts in the right structure?
( ) Refresh Chart of Accounts
( ) Recalculate Chart of Accounts
(•) Indent Chart of Accounts
( ) Chart of Account Overview

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