General Ledger

Dynamics 365 Business Central – Exploring the Different Options when running the “Close Income Statement” Routine

Gavin WhittakerLeave a comment

Introduction

In this post, we’ll explore the various options available when running the “Close Income Statement” routine in Business Central, and we’ll also look at the outcomes of running each option.

This routine is used to close the income statement General Ledger accounts and transfer the balances to the retained earnings account as part of the General Ledger year end routine.

Depending on your needs, Business Central offers several ways to customise how these accounts are closed, and in this post, we’ll walk through each of these options, showing the results when the routine is run using the different settings.

Please note this post assumes you have followed any year end processes such as ensuring all General Ledger accounts are correctly set as either Income Statement or Balance Sheet and the Financial Year has been closed via the “Accounting Periods” page.

Option 1 – Post to Retained Earnings in Summary with no Dimensions

With option 1 we select the following options in the “Close Income Statement” page

  1. Post to Retained Earnings Acc. = Balance
  2. Dimensions = None Selected

Using the options above the system closes each income statement at GL account level, without any breakdown by dimension. Therefore is I were to have multiple postings to an income statement GL account, and each posting had different dimension analysis, I’d just get one entry in my closing journal for the total balance of the income statement account, rather than a posting per dimension combination.

Additionally, as we have selected “Balance”, the system will make a single entry to the retained earnings account, consolidating all income and expense balances into one summarised posting.

The outcome of using these options in my demo data is shown below.

Option 2 – Post in Detail to the Retained Earnings but no Dimension Analysis

With option 2 we select the following options in the “Close Income Statement” page

  1. Post to Retained Earnings Acc. = Detail
  2. Dimensions = None Selected

When you run the “Close Income Statement” process in Business Central and select “Detail” rather than “Balance,” the system posts an entry to the Retained Earnings account for each individual income statement GL account its closing. I’ll therefore get multiple entries (“Detail”) to the retained earnings account rather than a “Balance”.

However, as I’ve still not selected “Dimension”, I’d still only get one posting per income statement account, regardless of any dimension postings.

The outcome of using these options in my demo data is shown below.

To highlight the additional “detail” posting to the Retained Earnings account, if I preview post this journal I can see the 5 posting to the Retained Earnings account rather than one entry.

Option 3 – Post in Summary to Retained Earnings and close by Dimension

With option 3 we select the following options in the “Close Income Statement” page

  1. Post to Retained Earnings Acc. = Summary
  2. Dimensions = All Selected

With “Balance” and dimensions enabled as per the above screen shot, we are now back to posting a summarised entry to retained earnings account, however we will now have breakdown of the GL posting by dimension for each income statement, creating separate entries per dimension.

The outcome of using these options in my demo data is shown below.

There are now multiple entries to the GL accounts per dimension combination all balanced to one entry to the Retained Earnings account

Option 4 – Post in Detail to Retained Earnings and close by Dimension

With option 4 we select the following options in the “Close Income Statement” page

  1. Post to Retained Earnings Acc. = Detail
  2. Dimensions = All Selected

The final option we’ll look at when running the “Close Income Statement” process is to select “Detail” and tick “Dimension” as per the screen show above.

Having these options selected will post a separate entry to the retained earnings account for each income statement GL account (Detail) and further breaks down for each entry by dimension. (as we have ticked the Dimensions). This provides the highest level of detail.

The outcome of using these options in my demo data is shown below.

Conclusion

As we can see the “Close Income Statement” routine in Business Central offers several options to customise how income statement balances are posted to retained earnings.

Whether you choose to post a single summarised entry to the Retained Earnings account, or want more detailed posting, each method allows for different levels of analysis and reporting.

Thanks for reading!

Dynamics 365 Business Central – How to quickly split the balance of a General Ledger account across Dimensions using a Recurring General Journal

Gavin WhittakerLeave a comment

Introduction

At the end of a period it maybe necessary to split the balance of an General Ledger account across dimensions. This might be useful if you accumulate costs in a General Ledger account and only split those across cost centres at the period end.

In this post I’ll go through how this can be achieved quickly and easily using the Recurring Journal.

Recurring Journal

The recurring journal in Business Central provides the means of handling repetitive journals that occur on a regular basis.

One example might be a monthly depreciation journal or recurring revenue and expenses. (although I’d hope anyone would be using the Fixed Assets module for monthly depreciation 😊). Typically you’d be using the same or very similar amounts so would use a “Recurring Method” of “Fixed” or “Variable” for those journals.

However there is a “Recurring Method” of “Balance” that provides the ability to transfer the balance of an General Ledger account to another General Ledger account, or more interestingly, split the balance of an account across dimension values.

For example, let’s say I’ve been accumulating “Office Supplies” expenses under one General Ledger code and at the end of the month I want to split this by departmental cost centres.

This see how this works with a Recurring General Journal.

Worked Example

Through the month I’ve accumulated £1000 worth of costs in the “Office Supplies” account.

If I look at a “G/L Balance by Dimension” you can see I have no Dimensional analysis.

At month end I now want to split these costs across my departments. To do this I open the “Recurring General Journal” page, select the “Balance” recurring method, and pickup the “Office Supplies” account. (Note I don’t enter any amount in the journal)

Next we’ll allocate the balance across the “Department” dimension. I want to allocate 20% to the Sales department, 50% to Production and 30% to Admin.

To do this click “Allocations” in the ribbon and pickup the Office Supplies General Ledger account and enter 20% percentage and click “Dimensions”

I then select “Department” as the Dimension Code and “SALES” as the Dimension Value.

I repeat this for Dimension Values “ADM” and “PRODUCTION”, each time entering the Office Supplies General Ledger account, then clicking “Dimension” in the ribbon, and picking up the relevant dimension value.

I now have the allocations I require as per below.

Now when I preview post the journal I can see how this will now be split over the various departments

Finally when I view the “G/L Balance by Dimension” I can see the split across my Department dimension

Conclusion

Although I could have used a normal “General Journal” for this entry, this method shows how you can utilise the “Recurring General Journal” to split costs across dimensions, without needing to know the actual balance of the account therefore reducing errors and saving time.

Thanks for reading!

Dynamics 365 Business Central – How I post opening balances for the General Ledger in Business Central

Gavin WhittakerLeave a comment

Introduction

In previous posts I’ve looked at how I post opening balances for various modules in Business Central. Links to these articles can be found below:

How I post opening balances for Fixed Assets

How I post opening balances for Bank Accounts

How I post opening balancing for Goods Receiving Not Invoiced (Expected Costs)

How I post opening balances for Sales and Purchase Ledger.

Today I wanted to discuss how I post opening balances for the General Ledger. (I perhaps should have started with this one 😀)

I use a couple of approaches when posting opening balances for the General Ledger, choosing the method based on the level of transactional detail required. In this post I’ll discuss all three methods including which one I commonly recommend and why.

Please note in all the methods described below, right after posting the opening balance journal, I print and save a copy of the General Ledger Trial Balance. I also make a note of the G/L Register from the “G/L Register” page in Business Central. (although I name the batch OPENBAL-GL so its easy to spot anyway)

Preparation

For all the methods, I use a predefined configuration package that I export to Excel, ask the client to populate with data, and then import back into Business Central.

This includes key fields like the Posting Date, Account Number, Dimensions, and Amounts. A copy of the configuration package can be found here along with other free stuff 😊

A screen shot of Excel Spreadsheet is below:

Example of Excel Template for Opening Balances

Method 1 – Post Total Opening Balances as of Go Live Date

This method involves posting the balance of each General Ledger code in one journal, using one document number, on the required go live date.

Therefore if you were going LIVE with Business Central on the 31st of May 2024 you’d collect your General Ledger balances as of this date from your existing system and populate the Excel Spreadsheet with this data.

Important considerations should be given to the control accounts such as the Sales and Purchase control account to ensure these balance to any imported Sales and Purchase Ledger transactions.

Once the journal has been imported, and you are happy with the balances, you can post the journal to record the opening balances.

This is the quickest and easiest way to post opening balances for the General Ledger, but it has limitations. The primary drawback is the lack of historical financial reporting in Business Central. In contrast, Method 2, while more time-consuming, provides greater detail.

Method 2 – Post Total Opening Balances and Period Balances

This method involves posting opening balances for a set period prior to your go-live date and then posting additional period balances up to the go-live date, resulting in a final go-live balance.

For example, if you plan to go live with Business Central on 31st of May 2024, and want 12 months’ worth of summary information prior to this, you would post an opening position as of 31st of May 2023, using a document number like “OPENBAL-GL-MAY23.” Then, you would post balances for each of the 12 monthly periods from June 2023 through May 2024 using different document numbers, such as “PERIODBAL-GL-JUN23” and “PERIODBAL-GL-JUL23.” all building up to a total balance as of May 2024.

This approach allows you to report month-on-month using only Business Central data as soon as you start using the system. For instance, after being live with Business Central for June 2024, you could compare June 2023 data to the live data for June 2024.

Method 3 – Posting Opening Balances and Detailed Information

The final method can only realistically be used when the company is very small and doesn’t have lots of transactions.

This method involves posting an opening position followed by the detail information for a set period of time.

For example if your year end is 31st of December 2023 and you wanted to go live with Business Central as of 31st of May 2024 you could post the opening balance from your existing system as of the 31st of December 2023 and then enter each transaction manually from 31st of December 2023 to the 31st of May 2024. (in this scenario it doesn’t really matter when you go live as you are entering detailed information from the 31st of December 2023)

As you can imagine this is the most labour intensive method so is generally only used on companies with few transactions.

** You also have to post opening balances for the sub ledgers as of 31st of December 2023 and then enter detail information. This can be very labour intensive if there are lots of transactions.

Conclusion

All methods provide a solution for posting opening balances into Business Central. I prefer to use Method 2 because, although it requires a bit more effort, it allows for comparison reporting as soon as you go live with Business Central.

Thanks for reading!

Want further help with Business Central?

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