How to configure General Ledger module

Flowchart: Configuring the General ledger module

Dynamics AX 4.0

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General ledger is the core financial module.

In this module, you define:

• Company currencies
• The ledger accounts within the chart of accounts
• Fiscal periods and fiscal years
• Sales taxes (for both sales and purchases)
• Journals for posting to ledger accounts
• System accounts for automatic posting
• Parameters, defaults, and number sequences that apply to ledger accounts and ledger transactions.
• Dimensions, dimension sets and hierarchies, and financial statements
• Optional features related to journals and posting
• Sales tax specific to countries/regions
• Vendor withholding tax
• Ledger budgets and period allocation keys
• Fixed assets

The following steps are performed per company:

Prerequisites

• Set up the Administration and Basic modules.
• Select the company default currency in the Currency field in the Company information form.

Flowchart

See General ledger module flowchart for print version.

The main setup forms of the General ledger module

The forms that a company must set up to be able to use the basic functionality of the General ledger module are listed in the recommended order that you should set them up.

1. Currency

Review the foreign currencies that have been created in the Exchange rates form. If necessary, create the currencies that you want to use for particular ledger accounts, for example, a bank account or foreign trade accounts.

Note
If you are creating a consolidated company, create the currencies that are the company currencies of foreign subsidiaries.

For complete guidelines for setting up the Exchange rates form, see Exchange rates (Currency) Form.

2. Chart of accounts

Create the company’s general ledger accounts in a structured list in the Chart of accounts form. The general ledger accounts contain the financial data about the company's activities.

To create an account, you must enter at least an account number and account type. Later on, you can enter other account details.

For complete guidelines for setting up the Chart of accounts form, see Chart of accounts (LedgerTable) Form.

3. Periods

1. Create the fiscal periods and determine which user groups can update each module during each period in the Periodsform. For complete guidelines for setting up the Periods form, see Periods (LedgerPeriod) Form.
2. Define the date intervals in the Date intervals form that you can use in reports in the General ledger and other modules.
   For complete guidelines for setting up the Date intervals form, see Date intervals (LedgerPeriodCode) Form.

4. Set up sales tax

To ensure that every transaction that needs to be included in the sales tax calculations for sales tax authorities has an appropriate sales tax code, you must:

• Create at least one sales tax group and one item sales tax group
• Enter default values for each sales tax group on appropriate ledger accounts.

1. Set up the ledger posting groups in the Ledger posting groups form that define how sales taxes are posted in the Chart of accounts form. You must attach a ledger posting group to each sales tax code.
   For complete guidelines for setting up the Ledger posting groups form, see Account group (TaxAccountGroup) Form.
2. Set up the governmental bodies to which sales taxes are paid in the Sales tax authorities form.
   For complete guidelines for setting up the Sales tax authorities form, see Authority (TaxAuthority) Form.
3. Create the periods that the company uses when reporting sales tax and link them to the sales tax authorities in the Sales tax settlement periods form.
   For complete guidelines for setting up the Sales tax settlement periods form, see Sales tax settlement periods (TaxPeriod) Form.
4. Create the sales tax codes that contain all information about a particular sales tax in the Sales tax codes form, including the tax base, the percentage or amount, the ledger posting group, settlement period, and reporting details.
   For complete guidelines for setting up the Sales tax codes form, see Sales tax codes (TaxTable) Form.

   Note
   If the company files U.S. sales taxes, you must also set up sales tax jurisdictions, which are used in the setup of Sales tax groups. See United States sales tax.

5. Create the sales tax groups that contain sales tax codes and that are attached to ledger accounts, customers, and vendors in the Sales tax groups form. The sales tax on a transaction is determined by the sales tax codes that are common to the sales tax group on the transaction account and the item sales tax group on the transaction item.
   For complete guidelines for setting up the Sales tax groups form, see Sales tax groups (TaxGroup) Form.
6. Create the item sales tax groups that contain sales tax codes and that are attached to items in the Item sales tax groupsform. The sales tax on a transaction is determined by the sales tax codes that are common to the sales tax group on the transaction account and the item sales tax group on the transaction item. If a transaction does not contain items with item sales tax groups, for example, a free text invoice, the item sales tax group that you attach to a ledger account can function as the default item sales tax group for the transaction.
   For complete guidelines for setting up the Item sales tax groups form, see Item sales tax groups (TaxItemGroup) Form.
7. For each ledger account that could receive transactions that must be reported to the sales tax authorities, select default values for the sales tax group and item sales tax group in the Setup tab of the Chart of accounts form.

5. Journals and automatic posting

1. Define the templates that you use for journals in all modules, not just the General ledger module, in the Journal namesform. This includes setting up the number sequences for journals.
   For complete guidelines for setting up the Journal names form, see Journal names (LedgerJournalSetup) Form.
2. Create system accounts for automatic transactions that are not set up elsewhere in the program System accounts form.
   For complete guidelines for setting up the System accounts form, see System accounts (LedgerSystemAccounts) Form.

6. Parameters, defaults, and number sequences

Set up default settings that are applied if a more specific setting is not specified, parameters for various kinds of functionality, and various number sequences for the General ledger module in the Parameters form.

For complete guidelines for setting up the Parameters form, see General ledger parameters (LedgerParameters) Form.

Note

Enable or disable functionality by selecting or clearing check boxes; select from system options in drop-down lists (characterized by a downward-pointing arrow); and select from options that are particular to your company in lookup fields (characterized by a small, curved, downward-pointing arrow). If the lookup fields have no options, set up the options for your company: With your cursor in the field, right-click and select Go to the Main Table Form. Create the values that are agreed on for your company in the form that you have opened.

The optional setup forms of the General ledger module

The setup of the General ledger module includes a number of other steps beyond the basic functionality.

The additional setup forms are organized by functionality and are not required to be completed in a specific order.

Dimensions

Create dimension values for the dimensions that are available in the company in the Dimensions form. Dimension values can be placed on accounts and transactions to allow a different kind of analysis of company data than is possible with ledger accounts alone. Also see Dimensions.

For complete guidelines, see Dimensions (LedgerDimensions) Form.

Note
This form may already have values because the values were created in the Dimensions form when the Basic module was set up. See Dimension (Form).

Dimension sets and dimension hierarchies

• Create dimension sets and relations between dimension sets, and attach hierarchies to a dimension set in the Dimension sets form. Use the Structure designer form to build the hierarchies. This same designer is used to build a financial statement.
  For complete guidelines, see Dimension sets (Form).
• Dimension set rules control dimension value combinations at entry time on application objects such as forms, journal lines, and ledger accounts in the Dimension set rules form.
  For example, you can make sure that the accountant can only select between specific cost centers for the administration department when you make general ledger entries, whereas the order processor can select between other cost centers for the sales department. Also see Dimension hierarchies.
  For complete guidelines, see Dimension set rules (Form).

Financial statements

• Create dimension focuses containing dimension type combinations in the Dimension focuses form, including the ledger account in order to report on financial transactions by selecting a primary and eventually secondary focus to be considered when presenting the results.
  For complete guidelines, see Dimension focuses (Form).
• Set up financial statements based on main and secondary focuses, and define row and column structures in the Financial statement form.
  For complete guidelines, see Financial statement (Form).
• Create and manage row structure definitions for financial statements in the Row definition form.
  For complete guidelines, see Row definition (Form).

Journals

• Create transaction texts that you can select on journal lines in the Journal texts form.
  For complete guidelines, see Ledger journal texts (Form).
• Create posting journals for sales, purchases, and journals to group ledger transactions by voucher series in the Posting journals form.
  For complete guidelines, see Posting journals (Form).
• Enter the ledger accounts that are displayed when you make an inquiry on balance control in a journal, such as petty cash account, in the Balance control accounts form.
  For complete guidelines, see Balance control accounts (Form).
• Set up the methods that is used to import an account statement from a file into the general journal in the Methods of importing account statements form.
  For complete guidelines, see Import methods for account statements (Form).

Posting

• Create accrual schemes to post expenses or income in the Accrual schemes form in the period in which they occur, regardless of when the related payment is made or received.
  For complete guidelines, see Accrual schemes (form).
• Select and update the database tables to be inspected in an inquiry to find the tables that contain a reference to a specific ledger account in the Account reference form.
  For example, you can find the tables that contain references from automatic transactions to a ledger account if you set up the most likely tables for the reference inquiry in this form.
  For complete guidelines, see Ledger account references (Form).

  Note
  To make such an inquiry, click General ledger > Chart of accounts, select a ledger account, and then click Inquiry >References.

• Set up the first characters of account numbers for automatic account type selection in the setup of the chart of accounts in the Automatic account type selection form.
  For complete guidelines, see Automatic account type selection (Form).
• Select the accounts that are used to calculate cash flow forecasts and currency requirements in the Liquidity form.
  For complete guidelines, see Liquidity (Form).
• Select other company accounts in the database to which the current company can make direct postings in theIntercompany accounting form.
  For complete guidelines, see Intercompany accounting (Form).
• Create a purchase duty abbreviation to use in the sales tax report, and select posting accounts and sales tax authority in the Purchase duty form. Purchase duty is a tax on incoming sales tax and is calculated as a percentage of the paid sales tax.
  For complete guidelines, see Purchase duty (Form).
• Set up taxonomies for XBRL (eXtensible Business Reporting Language) reporting in the   form. XBRL is a powerful and flexible version of XML that is defined to meet the requirements of business and financial information. With it, you can apply unique identifying tags to items of financial data, such as ledger accounts.
  For complete guidelines, see XBRL taxonomy (Form).

Sales tax

• Create sales tax reporting codes to implement pre-formatted sales tax reports for specific countries/regions in the Sales tax reporting codes form.
  For complete guidelines, see Sales tax reporting codes (Form).
• Create tax exempt numbers that are printed on external documents, such as invoices, in the Tax exempt numbers form.
  For complete guidelines, see Tax exempt numbers (Form).

Sales tax specific to country/region

• For European Union countries only - Create sales tax exempt codes to be printed on external documents, such as invoices that must meet the requirements in the EU 115 directive, in the Sales tax exempt codes form.
  For complete guidelines, see Sales tax exempt code (Form).
• For United States only - Create the sales tax jurisdictions for which the company must collect sales tax in the Sales tax jurisdictions form.
  For complete guidelines, see Sales tax jurisdictions Form.
• For Australia only - Specify the ledger account to use for posting sales tax amounts in the   form that are entered manually, rather than calculated by the system, when reporting. This is used in Australia for the Business Activity Statement.
  For complete guidelines, see Additional BAS reconciliation account (Form).
• For Australia only - Enter the Pay As You Go reason codes in the Office   form, as stated in the information paper from the Australian Taxation.
  For complete guidelines, see BAS PAYG reason codes (Form).
• For Australia only - Enter the BAS (Business Activity Statement) fringe benefit reason codes in the   form as stated in the information paper from the Australian Taxation Office.
  For complete guidelines, see BAS fringe benefit reason codes (Form).
• For Italy only - Create sales tax books for all sales and purchase transactions in the Italian sales tax books form.
  For complete guidelines, see Italian sales tax books (Form).
• For Italy only - Create the sales tax book sections for all sales and purchase transactions in the Italian sales tax book sections form.
  For complete guidelines, see Sales tax book sections (Form).
• For Spain only - Set up value-added tax books in the Spanish VAT books form.
  For complete guidelines, see (TaxBookTable) Form.
• For Belgium only - Create the syntax (segments and elements) that is used for electronic sales tax declarations in the EDIVAT software format in the EDIVAT setup form.
  For complete guidelines, see (TaxEdivatConfiguration) Form.
• For Belgium only - Set up error identifiers for the EDIVAT format for electronic sales tax declaration in the EDIVAT errors form.
  For complete guidelines, see (TaxEdivatErrors) Form.
• For Belgium only - Set up an XML file with the INTERVAT format for electronic sales tax declaration in the INTERVAT setup form.
  For complete guidelines, see (TaxIntervatConfiguration) Form.
• For the Netherlands only - Set up the parameters that define an electronic tax declaration in the Netherlands in theElectronic tax declaration parameters form.
  For complete guidelines, see (TaxEvatParameters_NL) Form.
• For the Netherlands only - Set up the electronic tax error messages that are used in electronic tax declarations in the Netherlands in the Electronic tax error messages form.
  For complete guidelines, see (TaxEvatError_NL) Form.

Vendor withholding tax

• Create codes and values for withholding tax on non-inventory deliveries (often services) from a supplier that is not a company employee in the Withholding tax codes form. The buying company withholds a percentage of the invoice amount at the time of payment.
  For complete guidelines, see Withholding tax codes (Form).
• Create withholding tax groups, and attach one or more withholding tax codes to the groups in the Withholding tax groups form.
  For complete guidelines, see Withholding tax groups (Form).

Budgets

• Create budget models and submodels by which you define the structure of your ledger budgets in the Budget modelform.
  For complete guidelines, see Budget model (form).
• Create and maintain ledger budgets in the Ledger budget form.
  For complete guidelines, see Ledger budget (Form).

Periods

Create period allocation keys that distribute amounts in future periods (for example, budget transactions in the months or quarters of a fiscal year) in the Period allocation keys form.

For complete guidelines, see Period allocation key (Form).

Fixed assets

For complete guidelines for setting up the Fixed assets module, see Flowchart: Configuring Fixed assets. Although Fixed Assets is a separate module, the forms for the module are located in the General ledger section.