Mastering the Month End Close Process with Business Central: The General Ledger

This series covers the following areas:

• The General Ledger (this blog post)
• Accounts Payable
• Accounts Receivable
• Fixed Assets and Inventory
• Cash Management and Multicurrency Management

As a measure of good practice, you should periodically groom the G/L Accounts you have set up in the system.

Ever-so-often organizations will drop the use or deprecate certain G/L accounts in the system. You can block G/L Accounts one-by-one by going to the G/L Account card and checking off the Blocked checkbox:

Or using the Edit in Excel functionality, block them en masse setting the column as True or False to block and unblock respectively, publishing the changes after you’re done:

The “Direct Posting” checkbox will allow a user to directly post to the G/L on a journal or document line when checked off and will disallow it when unchecked, requiring the user to go through the relevant subledger to post through (e.g. Customer Posting Group to post to A/R).

To check which accounts are set up with Direct Posting, you can filter your Chart of Accounts to see which accounts are set with “Direct Posting” as “Yes” and make adjustments as necessary:

You can also use Edit in Excel as show in the previous section to do these changes across multiple accounts at the same time.

One major reporting tool in the system is the ability to generate Account Schedules by leveraging the G/L Account Categories functionality in the system. Additionally, the year-end process looks at the Income/Balance flag on G/L Accounts to perform the summarization to retained earnings/net assets.

With this in mind, it is a great practice to validate what each G/L Account has been set with by simply showing the columns on the Chart of Accounts page and verifying:

• Income/Balance designation;
• Account Category;
• Account Subcategory;

As shown below:

And making adjustments as necessary.

A Standard Journal allows users to save frequently used adjustment journal entries to a template defined by a unique code.

This helps to reduce the amount of time required to perform data entry at month-end and provides a way to manage entries that are posted on a regular basis (i.e. payroll, loan interest).  When a template is created, the user has the option of including the amounts entered on the journal if needed.

There are two ways to create a Standard Journal entry, but the easiest way is to create the entry you like and “save” it as a Standard Journal. To do so:

• Create the General Journal entry lines with the required information (i.e. Posting Date, Document No., No., Description, Amount, and Dimension(s), if applicable);

Click on “Save as Standard Journal…” in the ribbon (Actions > Functions). In the pop-up window that appears, enter a unique code and description for it (i.e. LOAN INT).  Select the “Save Amount” field if you want to save the values in the Amount field of the standard journal. Click “OK” to save:

To retrieve those Standard Journals every month:

• Click “Get Standard Journals…” in the ribbon (Process);

• Select the relevant saved journal;
• Click OK;

The journal lines then populate your batch. Note that when you use the “Get” function, it does not replace the lines in your batch, but appends them to the end of your entry, so you can retrieve multiple saved Standard Journals (or even retrieve the same one multiple times!)

Often, when finalizing a month, there are a series of recurring journal entries that need to be posted – whether it’s a manual entry of amortization, insurance, payroll items, rent allocations, or any other entry that needs to be posted month-after-month with similar accounts, and so on.

Within Business Central, the Recurring Journal activity can be used for this purpose. Recurring Journals are used for managing transactions that are posted frequently with few or no changes. As with the Standard General Journals, the lines entered in the Recurring Journal batch are retained after posting.

To set up a Recurring Journal in Business Central:

• Go to Recurring General Journals by searching via Tell Me or by exploring Finance > General Ledger > Journals;
• Create a Journal Batch and give it a meaningful name and description (e.g. “INSURANCE”);

• Edit the batch and create your entry as you would a normal journal entry, with the following additional components:
  • Recurring Method – this is where you define what kind of recurrence it is;
    • F (Fixed) – uses a fixed amount (e.g. $100.00) and saves that amount on the line after posting;
    • V (Variable) – uses a variable amount you enter before posting (e.g. $100.00) and then zeroes out the amount after posting;
    • B (Balance) – uses the entire balance of an account, allocated among the accounts specified in the Allocations worksheet (accessible on the ribbon);
    • Reversing F/V/B – same as above, with a reversing entry put through the day after the posting date (used principally for accruals);
  • Recurring Frequency ­– the date formula used for updating the posting date after you post this batch (i.e. the next posting date);
    • 1M = 1 month
    • 1D = 1 day
    • 1D+1M-1D = last day of the next month regardless of how many days in that month;
  • Expiration Date – the last date that the entry can be posted (i.e. when recurrence should end);

Quite often your entries will have a Document No. or Description that has some sort of date abbreviation in it (e.g. “ADJ-2021-01”). To accomplish that, you can use wildcards in those fields, described below.

• With Document No. and Description, you can use wildcards to update these fields with the date information. For example:
  • %1 – posting day number | e.g. “Dec %1 Insurance” becomes “Dec 31 Insurance”
  • %2 – posting week number | e.g. “Amort. – Week %2” becomes “Amort. – Week 52”
  • %3 – posting month number | e.g. “Rent %3/14” becomes “Rent 12/14”
  • %4 – posting month name | e.g. “Expenses – %4” becomes “Expenses – December 2014”
  • %5 – posting account period name (pulls from the Accounting Periods descriptions)

With regards to the Accounting Period, if you set up your Accounting Period names as being the month name and year, that simplifies the Description, shown in the example below:

Note: As a control measure, the system will only allow you to post recurring journals with Posting Dates after your current Work Date. If you need to future-post an entry, you’ll need to change your Work Date before posting (more on that in other sections of this series).