[How to] Configure Account Structure and link with Ledger, booking entries in MSD365 FO

Dear Dynamics 365 Lovers

By god’s grace, today I wrote a blog on Account Structure concept, configuration and its process in Microsoft Dynamics 365.

This blog will help a Consultant/Analyst to setup “Configure Account Structure” in Microsoft Dynamics 365 Finance and Operations.

Lets explore

So, What is Account Structure?

Account structure is used when any accounting entry is booked with ledger account (main account) and company wants to setup rules, how they want to use financial dimensions/Segment with the main accounts.

Example- A company called USMF wants to book their travel expense with the Cost Centres and for revenue entry with Business unit

Note - Without setting up account structure, transactions cannot be booked in MSD365, The account structures are assigned to a company’s ledger setup, so they can be used and this is shared across the particular legal entity

Configurations

Best practice- Before you create account structure, a thorough understanding of the accounting is required for the company, because each company has their own accounting rules.

We will take example of the below structure where 10000 to 10500 accounts are asset accounts, 10501 to 10800 are Expense accounts, 10951 to 11000 are liability accounts and 10801 to 10950 are Revenue accounts.

For Asset, Liability and Revenue accounts, company want use BU financial dimensions and for Expense accounts, company wants to use CC nd BU both financial dimensions.  

Based on this we shall create the account structure

Navigate to General ledger- Chart of Accounts- Structures- Configure Account Structure

Create new – Create for “Asset Structure”

Once the new is created, "Asset Structure" will be ready to be configured 

Since our requirement is 10000 to 10500 will be here and Financial Dimension "BU" will be used in 'Asset Structure', we will add the same value here

In Main Account - Include 10000..10500 

Add Segment BU-> Include * and ""

* = any value can be used in this Financial dimension

""= blank value is allowed in this  Financial dimension

Expense Account Structure 

Likewise for Expense Structure also we need to create and add the values by the same way we created "Asset Structure", the range will be 10501..10800 for expense structure

Only addition is, we need to add CC and BU both as per the requirement we agreed above.

Revenue Structure and Liability Structure 

These two will be created by the same concept as "Asset Structure", and the range will be 10801..10950 (Revenue) and 10951..11000 (Liability) range for these two and segment will be 'BU' only

The account structures are created as per the companies requirement

However, it is very much important to activate these structures, otherwise nothing will work as those are in "Draft State"

Activate Account Structures

Select account structure and activate all the structures we created

(Note- we can activate this by using batch, and it will take some time and after that all the structures are ready to use)

It will show as “Activating’ until activated by batch

Once activated, it will be in state “Active”

Link Account Structures into Ledger Setup

General Ledger- ledger Setup- Ledger- Account Structure tab- Add the created account structures we created above

The Configurations are done

Let’s validate the setup by booking few entries in general ledger 

We shall validate "Asset Structure"

The expectation is- Asset accounts will only be used with Financial Dimension 'BU'

See below, main account 1000 (Asset Accounts) can only be used with 'BU', hence met the requirement  

Lets check "Expense Structure"

Here the expectation is- Expense Accounts will be used with 'BU' and 'CC' both

See below- 10501 is Expense Account and it can be used with CC and BU both, hence requirement met.

For Revenue and liability structures, the approach is same as Asset structure, hence the results will be same as Asset, hence all the required topics are configured, business can start booking entries in MSD365 FO.

I hope this blog will be helpful for many Consultants specially who are beginner in Finance or working first time in this topic.

Stay tuned for more blogs