Chart of Account Structure

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• 98/03/06
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CHART OF ACCOUNT STRUCTURE

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Chart of Account Structure

• At the conclusion of this topic you will be able
  to
• Change the Chart of Accounts for your company
• Create, delete and change General Ledger Accounts
• Explain what a Control Account is
• Define the Currencies that the system uses to
  manage a General Ledger Account Balance
• Use Account Segmentation for reporting purposes

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The Structure of COA
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Chart of Accounts (1)

• A chart of accounts arranges a company's general
  ledger accounts in a hierarchical structure.
• The top level in the structure shows the titles
  of the account groups, which might be visualized
  as filing cabinet drawers.
• There are 4 furthers levels Levels 2 through 4
  contain either title accounts or active accounts.
  Level 5 only active accounts.

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Chart of Accounts (2)

• When starting a new company, you can create your
  own chart of accounts or use one of the system
  templates.
• There is an option to import a chart of accounts
  with the data transfer workbench. Let us look in
  the software at setting a template chart of
  accounts

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Demo Setup

• In the Business One Command Center, choose
  Administration gt System Initialization gt Company
  Details gt Basic Initialization tab The dropdown
  list shows the available chart of accounts
  templates
• Select one and click OK The chart of accounts can
  be seen in Financials gt Chart of Accounts
• The levels can be seen in the indenting of the
  list of accounts, And the level field.
• Title accounts appear in blue, And active
  accounts in black.

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Test Your Knowledge

• SAP Business one allows you to operate with your
  own individually structure Cart of Accounts?
• A True
• B False

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Control Account
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Control Account

• A General Ledger account can be set as a control
  account. A control account is an account that
  links a sub-ledger, a group of external accounts,
  to the general ledger. Business Partners
  accounts are linked through the control account
  set on their master record Whenever you post a
  document to a business partner account, the
  system automatically adds a journal entry to the
  general ledger which posts the receivables or
  payables to this control account. Some
  transactions, such as bills of exchange, must be
  posted to special control accounts, in Business
  One.

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Accounting Currencies
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Accounting Currencies

• Business One handles the accounts in two parallel
  currencies, the local currency and the system
  currency. The local currency is the currency in
  which the company is legally required to keep its
  books.
• The system currency may be a different to the
  local currency useful for subsidiaries reporting
  to head office the system automatically
  calculates all postings into the system currency
  and manages an additional account balance Local
  Currency
• System Currency are defined on the Basic
  Initialization tab just by the chart of
  accounts template

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G/L Account Currencies
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G/L Account Currencies

• In addition to the ledger currencies, you may
  specify a different currency for each General
  Ledger account. If the account currency is local,
  you can post to the account only in local
  currency. But if you specify a foreign currency
  for the account, then you will be able to enter
  transactions and see the balance in that currency
  as well. If you set the account as
  Multi-Currency, then you will be able to enter
  transactions in any currency.

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Other G/L Account Properties
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Other G/L Account Properties

• There are other properties which will be set for
  each active account. The Account Type defines an
  account as revenue or expense for the profit and
  loss account, or Other for Balance Sheet An
  account must be defined as a Cash Account if cash
  or payments are handled it will appear in the
  Cash Flow report. Other properties and flags can
  be used to put an account on hold, restrict
  access, provide extra details, and so on. Let us
  look in the software at editing General Ledger
  accounts

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Demo Account Editing and Properties
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Demo Account Editing and Properties

• An account can be created in Financials gt Chart
  of Accounts We wish to add a General Ledger
  account for a new Euro bank account, so we
  highlight the title account where we want it to
  appear And click Add mode We enter an account
  code And a name select Euro as the currency
  Identify the account as a cash account And click
  to add the account to the list. We wish the
  account to appear in sequence, so we will go to
  Edit Chart of Accounts, Choose the correct
  account group the drawer - Find the account And
  change the location in drawer To sort in its
  correct position, And click update. If we wish to
  delete an account, a right click in Edit Chart of
  Accounts will allow us to do this.

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OPENING BALANCE - BUSINESS PARTNERS

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• Create and Verify opening balance for Business
  Partners

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Opening Balances
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Opening Balances

• The set up of a new company in SAP Business One
  requires the transfer of both outstanding
  transactions and current balances from the
  existing business. There are three key data
  elements
• Firstly, the physical quantities and values for
  Items recorded against a warehouse within SAP
  Business One.
• Secondly, the outstanding Business Partner
  balances.
• Some business may not hold stock or buy and sell
  on credit in which case one or more of these
  first two data elements may not be applicable.
• For all companies however opening General Ledger
  account balances will exist and must be created.

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Considerations
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Considerations (1)

• The three opening balances elements are
  inter-related.
• The current value of Inventory will normally
  correspond to the initial balances against one or
  more General Ledger accounts.
• The total of unpaid and unmatched Customer
  documents will correspond to the initial balances
  against the General Ledger control accounts for
  Customers.
• The total of unpaid and unmatched Vendor
  documents will correspond to the initial balances
  against the General Ledger control accounts for
  Vendors.

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Considerations (2)

• The set up of opening balances for Items may, or
  may not result in the generation of General
  Ledger account balances depending on the SAP
  Business One company settings, and Inventory set
  up details and method used.
• The set up of Business Partner Balances will
  always result in the generation of General Ledger
  account balances.
• This interaction of the three elements dictates
  the sequence of set up
• in that opening General Ledger balances should
  always follow and take into account the effect of
  the Inventory and Business Partner opening
  balance setup.

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Business Partner - Opening Balances
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Business Partner - Opening Balances (1)

• Business Partner balances can be created by
  entering a current total against each Business
  Partner using the Business Partner Opening
  Balance menu option. Customer balances should be
  entered as positives, Vendor balances should be
  entered as negatives. Before attempting to enter
  the Business Partner Opening Balances, the
  current period should be set in line with the
  intended posting date for the opening balances.

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Business Partner - Opening Balances (2)

• Similarly, the exchange rates required for the
  conversion of opening balances between Business
  Partner functional currency, Local Currency and
  System Currency must be defined for the intended
  posting date. An Opening Balance Account should
  be created in the G/L. The reverse of the net
  total Business Partner opening balances entered
  will be posted to this account. We will now take
  a look at this process in a demonstration.

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Demo Business Partner Opening Balances
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Business Partner - Balance Verification

• It is important to verify opening balances in
  both Business Partner functional Currency and
  Local Currency.
• Verification of Business Partner opening balances
  to the Legacy System General Ledger opening
  balances is recommended before starting the set
  up of Business Partner opening balances or
  documents.
• If data is extracted from the Legacy System for
  import into SAP Business One, it is essential to
  verify the extracted data to the Legacy System
  report before starting data mapping and import.

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Demo Business Partner - Balance Verification (1)
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Demo Business Partner - Balance Verification (2)
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OPENING BALANCE GENERAL LEDGER

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• Enter and Verify opening balance for the General
  Ledger

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G/L Accounts Opening Balance (1)

• General Ledger Account balances can be created by
  entering the un-posted opening balance against
  each General Ledger Account using the General
  Ledger Account Opening Balance menu option.
• Debit balances should be entered as positives,
  Credit balances should be entered as negatives.
• Before attempting to enter the General Ledger
  Opening Balances, the current period should be
  set in line with the intended posting date for
  the opening balances.

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G/L Accounts Opening Balance (2)

• Similarly, the exchange rates required for the
  conversion of opening balances between specific
  Account Currencies, Local Currency and System
  Currency must be defined for the intended posting
  date.
• An Opening Balance Account should be created in
  the General Ledger. The same Account used in the
  set up of Business Partner Opening Balances can
  be used or a separate Account created. The
  reverse of the net total General Ledger Account
  opening balances entered will be posted to this
  account. We will now take a look at the opening
  balances screen in SAP Business One.

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Demo G/L Account Open Balance
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Demo G/L Account Opening Balance Verification