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Dynamics AX Finance Concepts - For Beginners Part 1

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Dynamics AX Finance Module – For Beginners

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Agenda

•Setting Up Currencies and Exchange Rate.•Creating Period in Fiscal Year.

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General Setup

Dynamics AX Finance Module General

Ledger Setup

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Introduction

• A general ledger (GL) is a formal ledger that contains a company's

accounting records.

• To make the general ledger functional, you need to:Setup Currency

Setup the chart of accounts

Fiscal calendars

Legal entities

Etc.

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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.

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Currency setup in Dynamics Ax 2012

• General ledger: Click setup, click currency, and then

click currencies.

• Reference currency for triangulation

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Triangulation

• Many spot currency cross pairs are not traded against each other

in the interbank market as standard pairs.

• Triangulation is a strategy whereby a trader exploits the

relationship between three currencies, as three pairs.

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Example

You have a subsidiary company in KSA, while your primary company is in Egypt. When running reports you want to see the results of the business operations in Egyptian Pound(EGP). To accomplish this, you must convert your Egyptian (EGP) to SAR. The system uses the exchange rate defined on the Exchange rates form to convert the amounts for reporting purposes.

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Procedure: Set Rounding Options

• From the Currencies form, select a currency.

• Tab to the Rounding Rules section.

• 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.

Rounding Option - Enter the unit for rounding amounts, such as

0.10 or 1.00.

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Rounding Method

• 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.

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Accounting and Reporting Currencies

• 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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Procedure: Create Exchange Rate Types

• To access the Exchange rates types form, click General

ledger, click Setup, click Currency, and then click

Exchange Rate Types.

• Click on the New button to create a new record.

• Enter the identification of the exchange rate type in the

Exchange Rate Type Field and a description in the

Name field.

• Save the record and close the form.

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Procedure: Create Currency Exchange Rates

• 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.

• Select a Exchange Rate Type from the drop-down list.

• Click the New button.

• 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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Procedure: Create Currency Exchange Rates

• 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.

• Select the date range by entering the From Date and a To Date in

the appropriate fields.

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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.

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Procedure: Create Revaluation Accounts

• For each ledger define the 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:

• Open General ledger, select Setup, select Currency, and then

select Currency Revaluation Accounts.

• Select the ledger in the Ledger field.

• 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.

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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.

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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

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Periods and fiscal year setup

• Each period (at the ledger level) can be:

o Closed completely or put On Hold to block

transaction postings

o Set to enable selected users to continue an update of

one or more modules

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Fiscal Year

• A period that a company or government uses for

accounting purposes and preparing financial

statements.

• The fiscal year may or may not be the same as a

calendar year.

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Fiscal Calendar

• Fiscal calendars are shared across multiple legal entities. The benefits of sharing

fiscal calendars include:

o 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.

o Reduces the amount of setup required for each legal entity as it is possible

to use the same fiscal calendar for multiple legal entities.

o 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.

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Scenario

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.

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Procedure: Create Shared Fiscal Calendar • Click General Ledger, click Setup, and then click Fiscal Calendar.

• Click the New Fiscal Calendar button.

• Enter the name of the calendar to be created in the Calendar field.

• Enter a description of the fiscal calendar in the Description field. This description may

print on reports.

• Enter the Start and End dates of the initial fiscal year in the appropriate fields.

• Enter a Fiscal Year Name of the initial fiscal year to be associated with this fiscal

calendar.

• Enter the Length of the period and the Unit of the periods. These fields work together

to determine how many periods will be created.

• Click the Create button.

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Periods Types

• 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.

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Review New Period

• 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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Modifying Fiscal Calendar

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.

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.

Financial Concept For the Beginer Part 1

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Contact

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