General ledger in general:
General ledger is a master repository of all the financial transactions of the business. This includes the transactions recording in different subledgers like Accounts payable, Accounts receivable, Fixed assets, Project management etc.
General Ledger module in D365 finance?
General ledger in D365 finance is beyond just recording the financial transactions. General ledger in D365 finance provides great deal for managing accruals, allocations, consolidation, year closing to comprehensive reporting framework which is key for any ERP implementation.
Let me explain key configurations\terminologies, key functionalities and reporting capabilities within general ledger module in D365 Finance.
Key configurations:
Chart of accounts and main accounts:
Chart of accounts is a master list of all the main accounts used by the business from profit & loss to balance sheet accounts. The main accounts are used to post financial transactions in the system to further track and report the financial performance of the company.
Please click here to know more about chart of accounts and main accounts
Financial dimensions and derived dimensions:
Financial dimensions are extension of the main account to post financial transactions in the system in more organized manner through which the financial information can be slice and diced for reporting and analysis.
For example: The IT and finance department in an organization can be configured as two different financial dimensions and only one expense main account can be used to book the transaction with dimension combination. This way we can limit creating the number of main accounts.
There are two types of financial dimensions,
Entity backed dimensions : Entity backed dimensions are defined and maintained through the other master list in the system like customers, vendors, operating units.
Custom dimensions: Custom dimensions are added as new list of dimension values from the financial dimension form
Click here to know benefits of using financial dimensions.
Derived dimensions are useful when multiple financial dimensions are configured and requires to default the dimension value based on the other dimension value automatically. For example, you can configure If the department IT is entered by the user and the cost center ‘Administration’ financial dimension should get automatically default.
Accounts structure and advanced rules:
Account structure helps in defining the valid combination of ledger accounts and financial dimensions and validates if the financial transactions are being entered as defined in the account structure. This avoids incorrect financial postings in the system and helps in accurate reporting.
Advanced rules can be used to define additional segment if an account needs to tracked with additional dimension apart from combination defined in the accounts structure . For example if P&L account structure for the expense accounts range has combination of Main account and department but one of the accounts in the range needs additional tracking at the cost center level.
Advanced rules can be also used when there is a need to add more than 10 financial dimensions segments for account structure. But it recommended from Microsoft to thoroughly evaluate if more than 10 financial dimension segments is necessary as it will impact the user experience
Click here to know about account structure and advanced rules.
Financial dimension sets:
Financial dimension sets are created for reporting purposes with dynamic selection of different financial dimension combination along with main account. Financial dimension sets are used calculate the balances of posted financial transactions for inquiry and reporting, mainly trial balance.
Click here to know more.
Key functionalities
Accruals and Allocations
Accruals is an accounting method to accrue expenses as it occurs in a particular period similarly for the revenue to accrue in the period the revenue earned in, this is regardless of the when the cash transactions occur. Accrual accounting is one of the matching principles which helps in accurate financial reporting time to time.
Accrual schemes within D365 finance helps to configure accrual accounts, calendar, period frequency and, occurrence. The ledger accruals helps to distribute the expenses and revenues in the appropriate period based on accrual scheme setup.
Below are some of the useful blogs on how create and apply accrual schemes,
Allocations are used to allocate the expenses or revenues from one main account or dimension to one or more main account and dimensions automatically based on the allocation rules. And, below are allocation methods which can be used in allocation rules
- Basis – This method is used when the allocation depends on the actual ledger balance. For example, advertising expenses can be allocated based on each department’s sales in proportion to the total departmental sales.
- Fixed percentage and Fixed weight – For these methods, the allocation percentage or weight is defined directly for the rule. For example, advertising expenses can be allocated so that Department A receives 70 percent of the advertising expense and Department B receives 30 percent.
- Equally – This method distributes the amount equally to each defined destination. For example, if destinations are defined for Department A and Department B, advertising expenses can be allocated so that both Department A and Department B receive 50 percent of the advertising expense.
Click here to know more about allocations
Periodic journals and Global general journals
Periodic journals are used as templates to create the recurring journals entries in the system. Periodic journals stores the ledger account, text, offset account, period intervals etc. The periodic journals can be retrieved to copy or move into general journals to auto populate all the fields once setup in the periodic journals. The copy functional will help to create recurring journal entries periodically whereas move function will move details and delete the periodic journal from the list.
There are more innovative ways to create recurring journals using power platforms and allocations. Click on the links to know more
Global general journals is new functionality that helps create the general journal entries for multiple entities from a single screen.
Fiscal year closing:
Fiscal year close is a significant challenge for most organizations. Too many manual processes make business team slog extra hours during the closing cycle. D365 finance provides substantial benefits in terms saving cost, time and make the financial close hassle free. Here are some of the functionalities
Predefined closing templates : Configure a checklist of all the tasks that should be part of a closing process and define criteria who and when it should be finished.
Manage dependencies : Define dependency for the tasks that needs to be completed by other business area first.
Global workspace : Central planning, execution and monitoring of all closing activities in all areas.
Task links : Task links helps business users to quick access to the form from where the closing activity needs to be performed in the
system.
Click here to more about configuring year end workspace
Key Reporting
Financial reporting:
Financial reporting is a dynamic reporting tool within D365 finance which helps business users configure their own rows and columns to generate a report from posted financial transactions. Financial reporting also provides the ability to use organization hierarchy or create a new hierarchy for tree based reporting.
Ledger transactions list
Ledger transaction list report provides detailed list of all the posted ledger transactions grouped by main account for filtered range of ledger accounts and dates. The ledger transaction list report is widely used by the clients for reconciliation purposes and audits.
Dimension statement report:
Dimension statement report is also used for extract financial information from general ledger. However, the financial dimension sets can be used in this report to generate data on required combination of main accounts and financial dimensions.
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