chapter 1: general ledger setup -...

Chapter 1: General Ledger Setup

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CHAPTER 1: GENERAL LEDGER SETUP Objectives

The objectives are:

• Set up Currencies and Exchange Rates. • Create Periods in a new fiscal year. • Create Date intervals. • Create, modify, and delete reason codes. • Create a Financial dimension value. • Create a Dimension Set. • Set up allocation rules. • Contrast the various allocation methods.

Introduction A general ledger is a formal ledger that contains a company’s accounting records. To make the General ledger functional, setup the chart of accounts, fiscal calendars, legal entities, and currencies. The chart of accounts is a list of main accounts and financial dimensions that are allowed by one or more account structures.

Fiscal calendars specify what time period financial data is posted, while currency setup determines which currencies are available for business transactions.

This course explains how to work with the chart of accounts and its multiple dimensions. These dimensions may be used to track profits, cost centers, and other important financial information.

Allocation rules and methods are also defined in this course.

Microsoft Official Training Materials for Microsoft Dynamics®

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Financials I in Microsoft Dynamics® AX 2012

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Currency and Exchange Rate Setup Currency setup is a mandatory step in Microsoft Dynamics AX® and is used to record financial transactions.

Multi-currency functionality may be used if your company does business in more than one currency. If your organization has multiple legal entities and transacts in multiple currencies, then maintaining currencies and their corresponding exchange rate is essential.

Currency Setup

In Microsoft Dynamics AX, all currencies are provided by default. The currencies are loaded the first time a user opens the General ledger parameters form.

To view currencies click General ledger, click Setup, click Currency, and then click Currencies.

FIGURE 1.1 CURRENCIES FORM

Only one currency can represent the Triangulation currency. By default, the EUR currency is selected as the Triangulation currency. To change the Triangulation currency, you must first clear the Reference currency for triangulation check box on the EUR record in the Currencies form. Then, you can select the Reference currency for triangulation on the desired currency.




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Currency Names and Symbols

Each currency may have specific attributes associated with it. The name, symbol and currency code are specific to each currency. The following illustrates currencies:

• $ - U. S. dollar • € - Euro

Field Description Currency

The unique identifier – a code of up to three characters – for the selected currency. Examples: • USD- U.S dollar • EUR - Euro • CAD - Canadian dollar

Name A description of the currency. This is typically printed on checks and other documents. Examples: • U.S dollar • Euro • Canadian dollar

Symbol Typically used on reports Example: $

Currency Code

The standard code of the currency as defined by the International Organization for Standardization (ISO).

Accounting and Reporting Currencies

Microsoft Dynamics AX uses the concept of Accounting currency and Reporting currency.

• Accounting Currency: The customary monetary unit of measure used to record the converted monetary value of economic transactions in ledger accounts. In previous releases of Microsoft Dynamics AX, this was called the company currency.

• Reporting Currency: The monetary unit of measure used to record the converted monetary value of economic transactions in ledger accounts for financial and management reporting purposes.




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An example of this would be if you had a subsidiary company in Canada, your primary company is in the United States. When running reports you want to see the results of the business operations in Canadian dollars (CAD). To accomplish this, you must convert your U.S. dollars (USD) to CAD, the system uses the exchange rate defined on the Exchange rates form to convert the amounts for reporting purposes.

Procedure: Enable a Currency for Currency Conversion

The Currency Converter setup allows numeric conversions for online transactions. If the Conversion box is selected, the system will automatically convert transaction amounts in grids using the exchange rates in the lower pane.

This setup allows the display of financial information in a currency other than the default company currency in forms and reports. This conversion is completed by double-clicking the Currency converter in the Status bar in these forms.

Perform the following steps to convert to another currency.

1. Click General ledger, click Setup, click Currency, and then click Currencies.

2. Select a currency. 3. Select the Conversion check box to enable a currency for

conversion. 4. Specify the currency's symbol before or after an amount, in the

Prefix or Suffix fields.

HINT: Enter a space before the currency symbol to separate the currency amount and the symbol.

Changing the Display Currency

After a currency is enabled for currency conversion, you can display financial information in a form or report using a currency other than the ledger accounting currency. Do this by performing the following steps:

1. On the status bar, click the Currency field to open the Currency converter form.

2. Select any of the currencies that have been set up for conversion in the Currency converter form.

3. Enter the date used for the conversion in the Date of rate field. 4. Click a currency to select the new currency.




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The Currency converter form will automatically close, and the Currency field on the status bar displays the new currency. All the forms, inquiries, and reports that originally displayed amounts in the company's currency now display the currency selected.

Perform the following steps to return to the default company currency:

1. Open the Currency converter form. 2. Click the Reset button to return to the ledger accounting currency.

Procedure: Set Rounding Options

Perform the following steps to set the Rounding options for each currency.

1. From the Currencies form, select a currency. 2. Tab to the Rounding Rules section. 3. Round the sums according to a fixed unit for general transaction

amounts For example, amounts on transactions are rounded to the nearest unit to 0.01. Specify the general unit for rounding in the General round-off field.

4. Round sums for Sales orders, Purchase orders, and Prices. These have a Rounding option as well as a Rounding method.

Rounding Option - Enter the unit for rounding amounts, such as 0.10 or 1.00.

Rounding Method - Select the rounding convention that applies to the number to the right of the round-off unit that is entered in the Rounding rule text box:

• Normal – round up numbers 5 and higher and round down numbers 4 and lower.

• Downward – round down all numbers. • Rounding-up – round up all numbers.

NOTE: The value in the General round-off field affects all values in all modules.




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Rounding Option Considerations

All posting amounts are rounded off to the nearest factor of the specified unit, regardless of whether they are calculated and posted automatically or entered manually by the user.

In the General ledger parameters form:

• Specify the maximum rounding amount for a voucher in the default currency, in the Maximum penny difference field.

• Set up the rounding for secondary currencies in the Maximum penny-rounding in secondary currency field.

FIGURE 1.2 GENERAL LEDGER PARAMETERS

Currency Gender

Currency Gender is used for Spanish speaking countries to define the gender printed on checks and reports. Select Feminine if the selected currency has a feminine gender and the gender is used on checks and reports.

The default value for this field is Masculine, which, in effect, means no gender.

Procedure: Create Exchange Rate Types

Exchange rates types are shared data across the entire system and only need to be setup once. Exchange rate types are a grouping that allows different exchange rates for two currencies. Examples include Buy, Sell, Spot, and Budget.




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Perform the following steps to set up an exchange rate:

1. To access the Exchange rates types form, click General ledger, click Setup, click Currency, and then click Exchange rate types.

2. Click on the New button to create a new record. 3. Enter the identification of the exchange rate type in the Exchange

rate type field and a description in the Name field. 4. Save the record and close the form.

FIGURE 1.3 EXCHANGE RATE TYPES

Procedure: Create Currency Exchange Rates

If a company trades with multiple currencies, and uses multiple exchange rate conversions. Perform the following steps to set up the additional exchange rates:

1. To access the Currency Exchange rates form, click General ledger, click Setup, click Currency, and then click Currency exchange rates or navigate from the Exchange rate type form.

2. Select a Exchange rate type from the drop-down list. 3. Click the New button. 4. Define the necessary exchange rates between a currency pair by

selecting a currency in the From currency and the To currency drop-down list.




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NOTE: A currency pair can only exist once and entering a reciprocal pair is not supported in the the system. Therefore, if you already have USD to EUR set up, you cannot create a EUR to USD currency pair for the same exchange rate type. The system will calculate the reciprocal rate automatically if it cannot find the exact currency pair during the translation conversion. If you only have USD to EUR set up and you are entering a transaction amount in EUR in a legal entity where USD is the accounting currency, the system will first look for the exact currency pair in the rate type used by the ledger: EUR to USD. If not found, the system will then look for USD to EUR and calculate the reciprocal rate.

5. Define the Quotation unit. Typically the system is based on either one unit or one hundred units. If the field is set to one hundred units, the exchange rate should specify the equivalent of one hundred units of the foreign currency. For example, if the "From" currency is U.S. dollars and the "To" currency is Euro, the exchange rate should specify how many U.S. dollars equal one hundred Euros.

6. Select the date range in by entering the From date and a To Date in the appropriate fields. This date range is used to filter the display of the exchange rates in the grid. By default, this range is set to 30 days prior to and 30 days after the current date

7. It is possible to add multiple exchange rate dates for a single currency pair by clicking the Add button.

8. It is also possible to remove exchange rate dates for a single currency pair by clicking the Remove button.

9. Save the record and close the form




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NOTE: Because the same currency can have several rates, the posting date determines the rate applied.

For example:

An exchange rate is entered on January 1, and another exchange rate is entered on February 1. If a sales order is invoiced on January 15, the exchange rate from January 1 is used to calculate the invoice amount. If an exchange adjustment is run on February 2, the rate from February is used as an adjustment.

FIGURE 1.4 CURRENCY EXCHANGE RATES

Procedure: Create Revaluation Accounts

When running currency revaluation, exchange rate differences may occur due to the change in exchange rates. This is also used in the customer/vendor settlement of payments and invoices. Revaluation processes will generate unrealized gain/loss amounts where the settlement process will generate realized gain/loss amounts.

For each ledger, define main accounts to account for changes in exchange rate loss or gain. Perform the following steps to set up ledger and currency specific exchange rate loss/gain accounts:

1. Open General ledger, select Setup, select Currency, and then select Currency revaluation accounts.

2. Select the ledger in the Ledger field. 3. Select a Currency and define the main accounts that will be posted

to for any unrealized and realized gains/losses for the currency in that ledger.

4. Repeat the same steps for each ledger/currency. 5. Save the record and close the form.




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NOTE: This setup can also be completed from the General ledger Setup > Ledger form if different gain/loss accounts are not required for each currency.

FIGURE 1.5 CURRENCY VALUATION ACCOUNTS FORM

Denomination Currencies

Add the currencies that are denominated as the triangulation currency and should be triangulated through the triangulation currency during the currency conversion process.

FIGURE 1.6 DENOMINATION CURRENCIES FORM




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Accounting and Reporting Currencies

Microsoft Dynamics AX allows Accounting and Reporting currencies.

Accounting Currency: This is the monetary unit of measure that is used to record the converted monetary value of economic transactions in ledger accounts. It may also be referred to as the "company" or ledger currency.

Reporting Currency: This is the monetary unit of measure used to record the converted monetary value of economic transactions in ledger accounts for financial and management reporting purposes.

For example:

A primary company entity is located in the United States, and a subsidiary entity is located in Canada. To see financial reports in the Canadian (CAD ) currency, the system uses the exchange rates defined in the Exchange rates form to convert USD to CAD amounts.

Procedure: Change the Display Currency

After a currency has been enabled for currency conversion, perform the following steps to display financial information in a currency other than the default company currency:

1. On the status bar, click the Currency field to open the Currency converter form.

2. Select any of the currencies that have been set up for conversion in the Currency converter form.

3. Enter the date used for the conversion in the Date of rate field. 4. Click a currency to select the new currency.

The Currency converter form automatically closes, and the Currency field on the status bar displays the new currency. All the screens, inquiries, and reports that originally showed amounts in the company's currency display the new currency.

Perform the following steps to return to the default company currency.

1. Open the Currency converter form. 2. Click the Reset button to return to the default company currency.

NOTE: When you change the display currency, the default currency of a company does not change. Also, this is not a global change; it does not affect any other users in the company, nor does it change the original transaction. It is also meant to be an estimate of the amount in the selected currency.




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Lab 1.1 - Set up a Currency Exchange Rate Scenario

Ken is the Controller for Contoso Entertainment USA (CEU). CEU uses US dollars as the company's default currency. CEU recently gained a new customer located in South Africa and uses the South African Rand (ZAR). Transactions for this currency should be tracked to two decimal places. As of April 1, 2011, 12.35 USD equals 100 ZAR.

After some research, Ken has found that the following posting accounts should be set for the new currency.

Field Value

Realized Loss 801300

Realized Profit 801500

Unrealized Loss 801400

Unrealized Profit 801600

Challenge Yourself!

1. Set up the South African Rand (ZAR) posting accounts and rounding options.

2. Set up the exchange rate. 3. Convert the ZAR Quotation unit to 100.

Need a Little Help?

1. To set up the currency and specify the posting accounts and rounding options, follow these steps: o Open the Currencies form and enter a general rounding rule. o Open the Currency revaluation accounts form, and set

appropriate main accounts.

2. Set up the exchange rate for the ZAR currency. 3. To set up ZAR for currency conversion, select 100 in the Quotation

unit field

Step by Step

Perform the following steps to set up the currency rounding options:

1. Click General ledger, click Setup, click Currency, and then click Currencies.

2. Highlight the Currency ZAR.




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3. Click the Rounding rules FastTab and in the General rounding rule field, enter .01.

4. Click Close to close the form.

Perform the following steps to set up the currency posting accounts:

1. Click General ledger, click Setup, click Currency, and then click Currency revaluation accounts.

2. Select ceu as the Ledger. 3. Highlight the Currency ZAR. 4. In the Realized gain line, enter 801500 in the Main account field. 5. In the Realized loss line, enter 801300 in the Main account field. 6. In the Unrealized gain line, enter 801600 in the Main account field. 7. In the Unrealized loss line, enter 801400 in the Main account field. 8. Click Close to close the form.

Perform the following steps to set up the exchange rate. Every currency requires one exchange rate entry with a blank date.

1. Click General ledger, click Setup, click Currency, and then click Currency exchange rates.

2. In the Exchange rate type field, select Default in the drop down list. 3. Click the Add button. 4. In the Start Date field, click the calendar icon. 5. Select 04/01/11. 6. In the Exchange rate field, enter 12.3500

Perform the following steps to set up ZAR for currency conversion.

1. Select 100 in the Quotation unit field. 2. Click Close to close the form.




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Periods and Fiscal Year Setup The fiscal year in Microsoft Dynamics AX can be:

• Set to any length • Divided into any number of periods • Shared across multiple legal entities

Both fiscal year and periods can be set up by the following measurements of time:

• Years • Months • Days

Each period (at the ledger level) can be:

• Closed completely or put On Hold to block transaction postings • Set to enable selected users to continue an update of one or more

modules

The periods and fiscal year feature is very useful for the preparation and reconciliation of periodic and yearly accounts

Set Up Periods and Fiscal Year

Fiscal calendars are shared across multiple legal entities. The benefits of sharing fiscal calendars include:

• Supporting multiple fiscal calendars for each legal entity.

For example: Fixed assets may require two calendars one for auditing purposes and one for tax purposes. Having multiple calendars allows you to run parallel depreciations.

• Reduces the amount of setup required for each legal entity as it is possible to use the same fiscal calendar for multiple legal entities.

Before posting transactions, a new fiscal year must be divided into periods as transactions cannot post unless a period is created for the posting date.

NOTE: Microsoft Dynamics AX posts transactions according to dates as opposed to periods. Accounting periods are used for reporting. Closing of accounting periods allows the user to close the sub-ledger to make sure that no additional transactions are recorded.




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Scenario

Phyllis, the Accounting Manager, wants to define calendars for different purposes and share them across different ledgers without having to create them in each legal entity.

Procedure: Create Shared Fiscal Calendar

Perform the following steps to create a new fiscal calendar:

1. Click General ledger, click Setup, and then click Fiscal Calendar. 2. Click the New fiscal calendar button. 3. Enter the name of the calendar to be created in the Calendar field. 4. Enter a description of the fiscal calendar in the Description field.

This description may print on reports. 5. Enter the Start and End dates of the initial fiscal year in the

appropriate fields. 6. Enter a Fiscal year name of the initial fiscal year to be associated

with this fiscal calendar. 7. Enter the Length of the period and the Unit of the periods. These

fields work together to determine how many periods will be created. 8. Click the Create button.

NOTE: There will always be an Open and Closing period created along with the number parameters specified in the Length of the Period and the Unit fields.




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Example:

Length of period entered in setup

Unit entered in setup

Number of Periods Created

1 Days 367

1 Months 14

1 Year 3

FIGURE 1.7 FISCAL CALENDAR YEAR FORM

Review New Periods

When you create a new fiscal year, the system creates the following:

• An opening period with the Type of Opening • A number of periods (or period) with the Type of Operating • A closing period with the Type of Closing




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NOTE: There is no Period status control on the Fiscal Calendar form. This is because when you are sharing a calendar across multiple legal entities, all legal entities may not be ready to be closed at the same time. Therefore, you control the period status on a per-legal entity basis, in their ledger (General ledger > Setup > Ledger > Ledger calendar).

The period types are defined as follows:

• Opening – the period can be used to record opening balances from the previous period.

• Operating – the period can be used to record accounting transactions.

• Closing – the period can be used to record general ledger transactions for closing a fiscal period.

Modifying Fiscal Calendar

Once the Fiscal Calendar is created, it is possible to Divide, Delete, or Create closing period in the Fiscal calendar form by clicking the appropriate button.

• To divide an existing period into two periods, click the Divide period button. Enter the start date of the new period, and then click OK to create the new period and return to the Periods form.

• To create a closing period for a fiscal period, click the Create Closing period button. The system automatically creates an opening and closing period for the fiscal year, but not for each individual period.

NOTE: It is also possible to create multiple closing periods. This provides the ability to track internal button external audit adjustments (for example) in separate periods.

• To delete period with an Operating status click the Delete button. The Delete button is not available if the selected fiscal period has a status of Opening. No warning or error message appears when an open period with transaction history is deleted. The transactions are not deleted, and the end date of the period prior to the deleted period changes to coincide with the beginning date of the next period.

• After making changes to periods, it is recommend to run the Recalculate ledger period functionality.




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Lab 1.2 - Create Periods in a New Fiscal Year Scenario

Ken, the Controller for Contoso Entertainment USA (CEU), must create a new fiscal year. CEU has a fiscal year that begins on July 1, and is divided into one-month periods.

Challenge Yourself!

Create the fiscal year calendar for 2012, which begins on July 1, 2011.

Need a Little Help?

1. In the Fiscal calendars form, click the New fiscal calendar button to create the fiscal year for 2012.

2. Select the period length of one month.

Step by Step

1. Click General ledger, click Setup, and then click Fiscal Calendar. 2. Click the New fiscal calendar button. 3. Enter FIS-2012 in the Calendar field. 4. Enter Fiscal Year 2012 in the Description field. 5. In the Start of fiscal year field, enter 7/1/2011. 6. In the End of fiscal year field, enter 6/30/2012. 7. Enter 2012 in the Fiscal year name field. 8. In the Length of period field, enter 1. 9. In the Unit field, click the arrow to select Months. 10. Click the Create button to create the year. 11. Click Close to close the form.




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Date Intervals Create and manage date intervals that can be used in financial statements and reports. Date intervals allow you to create dynamic dates. When you use date intervals, you can set up predefined periods when you run financial statements. Date intervals can also be used when setting up an allocation rule.

Scenario

Ken, the Controller at Contoso Entertainment USA (CEU), runs a dimension statement every month. Instead of entering the dates every time he runs the report, he selects a date interval.

The date interval automatically fills in the start date and the end date. Therefore, Ken does not have to specify the start date and the end date when he runs the dimension statement.

Procedure: Create Date Intervals

Perform the following steps to create date intervals:

1. To access the Date intervals form, click General Ledger, click Setup, click Periods, and then click Date Intervals.

2. Click the New button to create a new record. 3. Enter a date interval code in the Date interval code field. Use a code

that is easy to identify when you set up date intervals on statements and reports, such as CP for the Current period.




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4. Enter a short description of the date interval, in the Description field.

FIGURE 1.8 DATE INTERVALS FORM

Procedure: Create Date Intervals - Start/End

Perform the following steps to further define the date interval start and end dates.

1. From the Date intervals form, click the General tab. 2. Select the time unit that is the basis of the calculation in the Before

list. 3. Specify the starting point of the interval in the Start/End field. This

data is used with the value in the Before list to set the starting point of the date interval. The following examples are for Before and Start/End fields:

Field name Value

Before Fiscal year

Start/End Start

Calculation date 3/13/2012

Starting point 1/1/2012

Field name Value

Before Quarter

Start/End End






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NOTE: The Calculation date field is equal to the system date. Changing the system date, (File > Tools > Session Date), will change all the values in the Date calculation area of the form accordingly.

Procedure: Create Date Intervals - Future or Past

Perform the following steps to set whether a date interval moves into the future or the past

1. From the Date intervals form, click the General tab. 2. Indicate whether the interval should move into the future or into the

past, by selecting + for future or - for past in the +/- field. The +/- field is based on the Before field. The number is multiplied by the time units in the Days, months, years or periods field.

3. Select the unit for change of start date in the interval in the Days, Months, Years or periods field. The number of units is displayed in the +/- field. The choices are reflected in the After adjustments field. The following examples are of the +/- field and the Days, months, years and period fields:

Field Value

Before Year

Start/End Start

+/- 1

Days, months, years and periods Years



After adjustment 1/1/2012

Field Value

Before Year

Start/End Start

+/- - 1

Days, months, years and periods Years



After adjustment 1/1/2012




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NOTE: If the +/- field and Days, Months, Years or periods field is empty, the After adjustments field equals the starting point value.

Procedure: Create Date Intervals - After

Follow these steps to select the basis for adjustment of the date in the After adjustments field.

1. From the Date intervals form, click the General tab. 2. Select a time unit to determine the start date or the end date of the

From date field in the After field. The From date field is based on the value in the After adjustments field. The From date is used as the basis of calculation in financial statement columns, and can be the start or the end date of a time unit selected in the After field

3. Select whether the time unit in the After field should be set in the beginning or the end of the time unit in the Start/End field. The following examples are of the After field and the Start/End field.

Field Value

After adjustments 4/17/2012

After Fiscal year

Start/End Start

From date 1/1/2012

Field Value

After adjustments 4/17/2012

After Quarter

Start/End End

From date 6/30/2012

Procedure: Create Date Intervals - Locked Start

Perform the following steps to use a specific date.

1. From the Date intervals form, click the General tab. 2. Enter a fixed start date, in the Locked start field. All other values

are overwritten, and the value is transferred to the From date field.




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Reason Codes Reason codes are standardized codes that can be used in various transaction types or changes to field values to provide background data about the transaction. For example, auditors or managers frequently want to see reasons recorded for various transactions such as reversals.

When you use standard reason codes instead of transaction text, you have guidelines for which codes to select from. Standard reason codes also allow management and auditors to analyze transaction history by specific reason. Reason codes can be used with the following:

• General ledger • Accounts payable • Accounts receivable • Bank

Procedure: Create a Reason Code

A reason code can be selected in the following General ledger entry processes:

• General journal entry • Process allocation requests • Elimination proposal • Consolidation, Online periodic

Perform the following steps to create a General ledger reason code:

1. To access the Reasons form, click General Ledger, click Setup, and then click Ledger reasons.

2. Click the New button to create a new reason. 3. Enter a unique Reason Code as identification.




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4. Enter a Default Comment for the reason code. The comment entered here is displayed as the default comment when you select this reason in transactions. You can change the default reason comment.

FIGURE 1.9 LEDGER REASONS FORM

Procedure: Modify a Reason Code

Reason codes can be modified at any time. The Default comment and Account types can be changed.

Perform the following steps to modify a reason code:


2. Select the Reason Code to modify. 3. Modify the Default Comment for the reason code. 4. Clear the Ledger check box. As soon as the Ledger check box is

cleared, the reason code is no longer displayed in the General ledger transaction entry forms, and is unable to be used.

Procedure: Delete a Reason Code

Perform the following steps to delete a reason code.


2. Select the Reason Code to be deleted.




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3. Clear the Ledger check box. You can delete a Reason code only if no account types are associated with it. If the Reason code has been selected for use from another module, clear the other Account type check boxes or view the Reasons form from Basic to clear all Account type check boxes.

4. Click the delete icon. 5. Click Yes in the Confirm deletion dialog box.

Financial Dimensions Financial dimensions have the following characteristics:

• Provide a more detailed description of a transaction. • Simplify the accounting process when you enable detailed analysis

without the creation of a detailed Chart of Accounts. • Are defined to analyze and classify financial transactions as follows:

o Financial transactions usually are organized according to voucher and account number.

o Additional grouping and classification options are available when you assign several dimensions to transactions.

• Enable you to view the data file from different perspectives to

improve the effectiveness in tracking figures across accounts. • Can be used throughout the system. • Add dimensions to base data such as:

o Ledger accounts o Customers o Vendors

• Are copied to transactions automatically.

Scenario

Ken, the Controller at Contoso Entertainment USA, must analyze company figures from a perspective other than only ledger accounts. Ken wants to make reports and sales statistics inquiries based on cost centers and departments. Therefore, he decides to set up dimensions as a supplement to voucher and account numbers.




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Procedure: Create a Financial Dimension

Perform the following steps to create a new financial dimension.

1. To access the Financial Dimensions form, click General ledger, click Setup, click Financial dimensions, and then click Financial dimensions.

2. Click the New button. 3. In the Use values from field, select a system-defined entity to base

the financial dimension on. Financial dimension values will be created from this selection. For example, to create dimension values for projects, select Projects. A dimension value will be created for each project name.

4. Enter the name of the financial dimension in the Dimension name field.

5. In the Report column name field, enter the name of the financial dimension to be displayed as a column name on reports.

6. In the Dimension value mask field, enter a format mask to use for creating financial dimension values. A format mask limits the amount and type of information that you can enter for dimension values. For example, if the dimension value should be 3 characters, you could enter XXX.

7. This field is available only when you select < Custom dimension > in the Use values from field.

8. Click the Financial dimension values button to enter more details about the financial dimension.




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9. Click the Translations button to open the Text translation form, in which you can enter text to be displayed in different languages for the selected financial dimension.

10. Click Main account translation to open the Text translation form, in which you can enter text to be displayed in different languages for the main account.

FIGURE 1.10 FINANCIAL DIMENSIONS

Financial Dimension Value Details

Use the Dimension Values Detail form to set up the details for financial dimension values. You can set options for dimension values that can be shared between a chart of accounts and a legal entity. You also can set specific options for dimension values based on the chart of accounts or legal entity specified.

Click the Financial dimension values button in the Financial dimensions form to enter detailed values.

NOTE: Depending on your selection in the Select the level of dimension value to display field, some fields will not be available

Field Description

Dimension Value

Displays the financial dimension value for the dimension selected in the Dimension details form

Description The description for the financial dimension value.




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Field Description

Select the level of dimension value to display

Select the level of the financial dimension value to display. If you select Shared value, fields that can be shared between a chart of accounts and a company are displayed. You can the values for a specific chart of accounts or legal entity by selecting Chart of accounts or Companies. If you select Chart of accounts, some fields will not be available and you can override the shared information for the selected chart of accounts. If you select Companies, some fields will not be available, you can override the shared information for the selected company, and additional fields specific to the selected company will be displayed.

Financial Dimension Value Details General

Expand the General tab to enter general parameters detail for the dimension.

Field Description Active from Enter or select the date that the financial dimension value

is active from. If you leave it blank then it uses the beginning of time.

Active to Enter or select the date that the financial dimension value is active to. If it is left blank, it uses the end of time.

Suspended Select this check box to prevent all postings to the selected financial dimension value. You cannot suspend a financial dimension value that is assigned as a budget group account on another account.

Owner Select the employee number for the employee who is responsible for this financial dimension value.

Group Dimension

Enter a group dimension name. This can be used to group specific financial dimension values into the same dimension value when you consolidate legal entities. This field is available only when Shared value is selected in the Select the level of dimension value to display field.

Calculate total from multiple dimension values

Select this check box to sum up amounts from one or more dimension values. This field is available only when Shared value is selected in the Select the level of dimension value to display field.




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Field Description

Do not allow manual entry

Select this check box to prevent a user from manually entering a value for this financial dimension in journals. This field is available only when Shared value is selected in the Select the level of dimension value to display field.

Companies

If Companies is selected in the Select the level of dimension value to display field, Financial Statement Formatting and Cost accounting tabs become available.

The following describes how to use each of the fields in the expanded Financial Statement Formatting tab:

Field Description

Invert sign Select this check box to hide the minus sign on the financial statement report when this financial dimension is represented. Typically, revenue and expenses are displayed in both credit and debit balances so that credit balances have a minus sign and debit balances have no sign. When this check box is selected, the minus sign in front of revenue on the report is not displayed.

Column Select the column number that the financial dimension is printed to when the financial statement is printed. You can define how many columns will be used to print a single column definition. For example, if you enter a 2 in the Number of columns field in the Financial statement form, for a definition that shows the current balance, the balance for this financial dimension will be printed in 2 columns.

Bold Select to print the selected financial dimension in bold type on the financial statement.

Italics Select to print the selected financial dimension in italic type on the financial statement.

Line above Select to precede the selected financial dimension with a blank line on the printout of the financial statement.

Line below Select to follow the selected financial dimension with a blank line on the printout of the financial statement.

Underline text Select to underline the text when the selected financial dimension is printed on the financial statement.

Underline amount

Select to underline the amounts when the selected financial dimension is printed on the financial statement.




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The following table describes how to use each of the fields in the expanded Cost accounting tab:

Field Description

Blocked for cost transactions

Select this check box to prevent a user from entering a cost transaction in Cost accounting for this financial dimension.

Blocked for service transactions

Select this check box to prevent a user from entering a service transaction in Cost accounting for this financial dimension.

Blocked for distribution

Select this check box to prevent a user from entering a distribution in Cost accounting for this financial dimension.

Blocked for allocation

Select this check box to prevent a user from entering an allocation in Cost accounting for this financial dimension.

Financial Dimension Templates

Dimension templates may be used for common patterns used to distribute source document amounts. Use the Financial dimension default templates form to create a template of percentage and financial dimension value combinations. The information in the template will be used to display default financial dimension values when you distribute source document amounts.

Select General Ledger, click on Setup, then Financial dimensions, then Financial dimension default templates. Use the following table to enter the appropriate information:

Field Description

Template ID Enter an identification for the template.

Template percentages and dimension values

Enter the percentage to apply to the distribution.

Financial dimensions Select the dimension to use with the percentage to apply to the distribution.




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Financial Dimension Entry

After dimension values are set up, you can assign them to the following:

• Ledger accounts • General ledger transactions • Accounts Receivable transactions • Customers • Accounts Payable transactions • Vendors

For example, customer 4037 may be set up by department and cost center dimensions. When a sales order is created for customer 4037, the defined dimensions are populated on the sales order automatically, but the values can be changed.

Throughout Microsoft Dynamic AX, you can separate data in different ways by using dimensions. For example, you can attach a department number to each transaction and then run a query that shows balances by department code.




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Lab 1.3 - Assign Ledger Account Dimension Values Scenario

Phyllis, the Accounting Manager, at Contoso Entertainment USA (CEU) has been asked by Charlie, the President and CEO, for monthly financial reports by department, cost center, and purpose. Phyllis has determined that cleaning expenses for the building should always be recorded to the Building maintenance cost center.

Challenge Yourself!

Help Phyllis enter the necessary dimension validation options for account 605110.

Need a Little Help?

To guarantee the accuracy of the financial reports, make sure that transactions posted to the cleaning expense account (605110) always specify:

1. Cost center dimension - Building maintenance

Step by Step

1. Click General ledger, click Common, and then click Main accounts.

2. Select account 605110, Cleaning expense, and click the Edit button. 3. Select Companies in the Select the level of main account to display

field. 4. Select CEU in the Companies field. You may have to click on the

green cross icon to select the company. 5. Expand the Financial Dimensions FastTab. 6. In the Cost center field, click the arrow to select the Building

maintenance account. 7. Close the form.




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Financial Dimension Sets Financial dimension sets have several purposes. Financial dimension sets are used to determine how reports and inquiries related to the general ledger are rendered.

Financial dimension sets are used to calculate balances during the posting process. Balances can also be scheduled for calculation or manually updated.

Balances are stored based on the financial dimension set and are calculated based on the option to calculate with posting or batch schedule. Financial dimension sets also drive the data displayed in the Trial balance list page.

The order in which financial dimension sets are considered in reporting effect how transactions are sorted and fields are presented. For example, the set Department and Cost center indicates that the Department dimension type is first and Cost center second. Therefore, the considered financial set is the composite of Department and Cost center. Department amounts are presented first and Cost center amounts are presented second.

The defined financial dimension set can be used alone or in pairs when inquiring or reporting on financial transactions. The selection of a primary and secondary financial dimension set is considered when presenting the results. The secondary financial dimension set details the figures of the primary dimension set. The selection of a secondary financial dimension set is limited to focuses that do not share a dimension type with a primary dimension set. Therefore, if the primary dimension set is the composite of Main account and Department, these cannot be select in the secondary financial set.

Scenario

Sara, the Chief Financial Officer (CFO) at Contoso Entertainment USA (CEU), must:

• Analyze financial transactions based on dimensions and ledger accounts combined. For example, Sara views sales revenue for each department or country.

• Determine how financial transactions should be organized when users run reports and make inquiries.

To view the sales revenue for all departments in CEU, Sara decides to create a dimension set that consists of ledger accounts and departments dimensions.




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Procedure: Create a Financial Dimension Set

Perform the following steps to create a dimension set:

1. To access the Financial dimension set form, click General Ledger, click Setup, click Financial dimensions, and then click Financial dimension sets.

2. Enter a unique identifier to name the new dimension set in the Financial dimension set field.

3. Enter a descriptive name in the Name field. 4. Expand the Financial dimension FastTab. 5. Select one or more dimensions in the Available dimensions pane

that should be included in the financial dimension set. Click the arrows to add the dimensions to the Selected dimensions pane. At least one dimension must be selected for each financial dimension set. The financial dimension that is the primary row pattern (primary financial set) must be listed first, and the dimension shown within each primary row must be listed second (secondary financial set). For example, to print a report that displays sales revenue per department, the department dimension should be selected first and ledger accounts selected second.

FIGURE 1.11 DIMENSION SETS FORM

Period Allocations Allocation is the process of distributing monetary amounts to one or more accounts or account and dimension combinations.

Microsoft Dynamics AX has the ability to use predefined allocation rules to perform generated allocations. Generated allocation is the distribution of posted or fixed amounts to combinations of destination accounts and dimensions at any time, which generate new journal entries.




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Allocation rules have numerous calculation methods, including:

• Basis • Fixed percentage • Fixed weight • Spread even

Allocations also provide the ability to allocate across multiple companies, also known as Intercompany allocations.

Scenario

Phyllis, the Accounting Manager at Contoso Entertainment USA (CEU), creates a new Intercompany allocation rule for Electric Utilities to distribute overhead utility expense to each department based on fixed percentages. The rule is for the new fiscal year that begins on January 1, 2012. Because Phyllis does not want the new rule to be used until then, she enters 01/01/2012 as the start date for the rule. Because CEU typically reviews its allocation rules every fiscal year, Phyllis enters 12/31/2012 as the end date for the rule.

Phyllis enters detailed notes about the basis and reasons for the allocation rule. Phyllis then selects the Microsoft® Word template that was implemented when CEU experienced an audit review to document the allocation rule completely. When Phyllis has finished writing the document, she attaches a copy of it to the rule. Anyone who wants additional information about the rule can open the document or print an Allocation rules definition report.

Ledger Allocation Rules

Ledger allocation rules allow you to define the results you want in the allocation business process.

Each ledger allocation rule has the four primary components:

• The General settings dictate which fields are available in the rule tabs.

• The Source data for the allocation is also known as the allocation pool.

• The Destination defines how the results of the allocation calculation must be distributed to the destination distribution lines.

• Offset entries balance the destination distribution lines.




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Procedure: Create a Ledger Allocation Rule

Perform the following steps to create an allocation rule:

1. Click General ledger, click Setup, click Posting, and then click Ledger allocation rule.

2. Click the New button to create a new rule. 3. Enter the Rule as identification. 4. Enter a Description of the rule. 5. Optionally select the Effective start date and Effective end date for

the rule. 6. Select the Active check box, if the allocation rule is available to be

processed.

FIGURE 1.12 LEDGER ALLOCATION RULE FORM

Procedure: Create a Ledger Allocation Rule - General

Perform the following steps to complete the setup of allocation rule general settings. These dictate what fields are available in the rule tabs.

1. From the Ledger allocation rule form, select the General tab. 2. Review or change settings from the Overview tab in the

Identification and Administration sections. 3. View the Date last run, which displays the date when a user last

processed the allocation rule and created distributions.




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4. Select the Intercompany rule check box if the allocation rule involves being processed among multiple companies.

5. Select the Allocation method: o Basis: Defines how and in what proportion the source amounts

are distributed to the various destination lines. For example, allocation based on revenue dollars, in which the cost of corporate advertising expense is shared across all departments, is based on each department's sales in proportion to total departmental sales.

o Fixed percentage: Takes criteria defined in the allocation source and uses a fixed percentage amount that the user entered, to determine the allocation amount for the destination.

o Fixed weight: Takes criteria defined in the allocation source and uses a fixed weight amount that the user entered, to determine the allocation amount for the destination.

o Spread even: Takes criteria defined in the allocation source and disperses the amount evenly across the destination distribution lines.

FIGURE 1.13 LEDGER ALLOCATION RULE FORM, GENERAL TAB

6. In the Data source field, select the source of the amount to allocate: o Ledger o Fixed value

7. If Fixed value is selected in the Data source field, enter a value in

the Fixed value field. 8. If Ledger is selected in the Data source field, select an arithmetic

operation to apply to the source value in the Mathematical operation field.




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9. If Ledger is selected in the Data source field and either Multiply or Divide is selected in the Mathematical operation field, enter the Amount by which to multiply or divide the source value.

10. If Ledger is selected in the Data source field, select a date interval to determine the account periods used for the allocation rule source. If a date interval is not selected, all balanced for the chosen account or account-dimension combination will be selected for source allocation.

11. Select an allocation Journal name. The Description displays the allocation journal description.

12. If the Spread even Allocation method is selected, select from the Keep account from list to use the source account.

13. If the Spread even Allocation method is selected, select from the Keep dimension form list to indicate if you want to use the source destination account and dimension or a user-specified destination account and dimension.

Procedure: Create a Ledger Allocation Rule - Source

Perform the following steps to complete the setup of settings for the allocation rule source, also known as the allocation pool.

1. From the Ledger allocation rule form, select the Source button. 2. Click New to create a new record. 3. From the Field setting list select to allocate from an Account or

account Dimension combination. 4. If Financial dimension is selected in the Field setting field, select a

Financial dimension.




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5. In the Source criteria field enter the account or dimension information from which to allocate. You can use wildcard characters to specify accounts or dimension codes. For example, if the selected Financial dimension is Department and the source criteria = Admin,", the system displays information that includes the department dimension equal to Admin or a department dimension has not been specified.

FIGURE 1.14 LEDGER ALLOCATION RULE SOURCE FORM

Procedure: Create a Ledger Allocation Rule - Destination

Perform the following steps to complete the setup of allocation rule destination settings, which define how the results of the allocation calculation must be distributed to the destination distribution lines.

1. From the Ledger allocation rule form, select the Destination button.

2. Click the New button to create a new record. 3. The Company field displays the company in which the allocation

rule was created. If the allocation rule is an inter-company rule, users can change this field.

4. Select the account to allocate to in the To Account field. 5. Select the Dimension you want to allocate to.




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6. Select the Purpose dimension you want to allocate. 7. If the Allocation method is Basis, select the Basis ID with which to

associate the destination line.

FIGURE 1.15 LEDGER ALLOCATION RULE DESTINATION FORM

Procedure: Create a Ledger Allocation Rule - Offset

Perform the following steps to complete the setup of allocation rule Offset settings. These define the offset entries that balance the destination distribution lines.

1. From the Ledger allocation rule form, select the Offset tab. 2. In the Offset account from field, select where to find the offset

account. o Source: The allocation process will use the respective account

defined in source. o User specified: The allocation process will use the offset

account value specified. 3. If the Offset account from is set to User specified, select the Offset

account. 4. In the Offset dimension from field, select where to find the offset

account. o Source: The allocation process will use the respective dimension

value that was defined in source. o User specified: The allocation process will use the specified

offset dimension value.




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5. If the Offset dimension from field is set to User specified, select the dimension to associate to the allocation rule.

FIGURE 1.16 LEDGER ALLOCATION RULE FORM, OFFSET TAB

Scenario

Phyllis runs the Allocation rules definition report that details the allocation rules for the current year. The report contains details about each rule including the rule ID, description, From/To account number and dimension combinations, effective start and end dates, calculation method details, usage information, and other setup information.

Procedure: Print the Ledger Allocation Rules Definition Report

Perform the following steps to print the Allocation Rules Definition report:

1. To access the Allocation Rules Definition report, click General Ledger, click Reports, click Base data, click Various, and then click Allocation rules definition.

2. Select criteria such as Ledger allocation rule.




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3. Click OK to print.

FIGURE 1.17 ALLOCATION RULES DEFINITION REPORT

Scenario

Phyllis runs an allocation proposal without posting it to review the allocation results and the detailed distributions that will be created based on the allocation rule used. If the results are accurate, Phyllis posts the entry.

Procedure: Process a Ledger Allocation Request

As soon as an allocation rule is created, you can process it and either preview or post an allocation journal. To set up an allocation journal, select General ledger, click Setup, click Journals, and then click Journal names.

Perform the following steps to use the Process allocation request form to create an allocation journal.

1. Click General ledger, click Periodic, and then click Process allocation request.

2. Select an allocation rule. 3. Select the date to include ledger amounts for allocation in the As of

date field. This date corresponds with the Date interval on the allocation rule.

4. Select the date to post the allocation journal to the general ledger in the GL posting date field.

5. Select the action to occur if the allocation process generates a zero source amount. o Select Process to create destination distributions, where

applicable. o Select Stop to create an error that indicates when a zero source

amount is selected and stops the allocation process.




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6. In the Proposal options field, select a posting preference. o Select Proposal only to review allocation results without

posting. o Select Post only to post the allocation results directly to the

general ledger. 7. Click OK.

NOTE: The Date last run field displays the last date a user processed an allocation rule and created distribution lines.

FIGURE 1.18 PROCESS ALLOCATION REQUEST FORM




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Summary The General ledger setup course describes the initial setup to start working with Microsoft Dynamics AX financials. The course provides basic introductions to set up:

• Currencies and exchange rates • Fiscal calendars • Financial dimensions and financial dimension sets • Period allocations




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Test Your Knowledge Test your knowledge with the following questions.

1. What effect does the value in the General round-off field have on the values in Microsoft Dynamics AX 2012?

2. When you change the display currency, it affects all users.

( ) True ( ) False

3. Is it possible to post activity that uses a date for which a period has not been created?

( ) Yes ( ) No

4. What are reason codes?




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5. What are the parts of an allocation rule?

( ) General ( ) Source ( ) Destination ( ) Offset

6. Which allocation method defines how and in what proportion the source amounts are distributed to the various destination lines, by referring to balances in other account-dimensions?

( ) Basis ( ) Fixed percentage ( ) Fixed weight ( ) Spread even




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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 1. What effect does the value in the General round-off field have on the values

in Microsoft Dynamics AX 2012?

MODEL ANSWER:

The value are used to round all amounts in all modules.

2. When you change the display currency, it affects all users.

( ) True (•) False

3. Is it possible to post activity that uses a date for which a period has not been created?

( ) Yes (•) No

4. What are reason codes?

MODEL ANSWER:

Reason codes are standardized codes that can be used in various transaction types or changes to field values to provide background data about the transaction.

5. What are the parts of an allocation rule?

(√) General (√) Source (√) Destination (√) Offset

6. Which allocation method defines how and in what proportion the source amounts are distributed to the various destination lines, by referring to balances in other account-dimensions?

(•) Basis ( ) Fixed percentage ( ) Fixed weight ( ) Spread even



chapter 1: general ledger setup -...

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