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Dynamics AX Dynamics AX Finance Module – Finance Module –

For BeginnersFor Beginners

Agenda Setting up Currencies and Exchange Rates

Creating Periods in a New Fiscal Year

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Dynamics AX Dynamics AX Finance Module Finance Module General Ledger General Ledger

SetupSetup

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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.

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

Currency Setup in Dynamics AX 2012 General ledger: Click setup, click currency, and then click

currencies.

Reference currency for triangulation

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.

ExampleAn example of this would be:

You have a subsidiary company in Canada, while your primary company is in

the United States. When running reports you want to see the results of the

business operations in Canadian dollars (CAD). To accomplish this, you must

convert your U.S. dollars (USD) to CAD. The system uses the exchange rate

defined on the Exchange rates form to convert the amounts for reporting

purposes.

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.

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.

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.

Currency Gender Currency Gender is used for Spanish speaking countries to

define the gender printed on checks and reports. Select

Feminine if the selected currency has a feminine gender and this

gender is used on checks and reports.

The default value for this field is Masculine, which, in effect,

means no gender.

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.

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.

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.

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.

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.

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.

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

Periods and Fiscal Year Setup Each period (at the ledger level) can be:

Closed completely or put On Hold to block transaction postings

Set to enable selected users to continue an update of one or more

modules

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.

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

sharing fiscal calendars include: 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.

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

same fiscal calendar for multiple legal entities.

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.

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.

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.

Period 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.

Review New Periods 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.

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.

Review New Periods There is no Period Status control on the Fiscal Calendar form.

This is because when you are sharing a calendar across multiple

legal entities, all legal entities may not be ready to be closed at

the same time. Therefore, you control the period status on a

per-legal entity basis, in their ledger (General ledger > Setup >

Ledger > Ledger calendar)

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