This presentation introduces you to the Microsoft Dynamics NAV Chart of Accounts. You will see how the Chart of Accounts can be structured, and how a well thought out structure can greatly help with basic financial reporting.
When you install Microsoft Dynamics NAV you can start with a blank sheet and set up your own Chart of Accounts from scratch, or you can use the Chart of Accounts of the CRONUS demo company as a basis and modify it. When you take a first look at this demo company, you can see the Chart of Accounts has a structure where accounts are indented, and headers and totals show in bold print:
How does this structure work? The formula 11100..11700 in column Totaling indicates that account 11700 Liquid Assets, Total shows the sum of of all liquid assets accounts.
The Account Type is End-Total. Because the Account Type is not Posting, account 11700 Liquid Assets, Total cannot have its own ledger entries. The system will not allow you to post any transactions to any account that appears in bold in the Chart of Accounts.
How to add Structure to the Chart of Accounts
Let us assume you want to use this Chart of Accounts as a basis and extend it. The goal of this excercise is to add a structure to the liquid assets section, reporting petty cash and checking accounts separately.
Click the New button in the top left corner of the Chart of Accounts window. A new, blank, G/L Account Card opens:
In field No.: enter the value 11399. Give the new account the name Checking Accounts. In field Account Type: select the value Begin-Total and click OK. The G/L Account Card closes and you see the Chart of Accounts again.
The first thing you notice is that the new account is not indented. Also, the structure is now incomplete. We have a new Begin-Total account without a corresponding End-Total account.
In the same way as above, create a new G/L Account 11610 Checking Accounts, Total and select the Account Type End-Total.
Both new accounts are still not indented, and field Totaling does not contain a formula. Select the ACTIONS tab in the ribbon at the top of the Chart of Accounts window. Click the Indent Chart of Accounts icon and confirm the pop-up message.
The Chart of Accounts is now correctly indented again. The indentation function recognized G/L Accounts 11399 and 11610 as a pair and indented all G/L Accounts between them. It also entered a sum formula into the Totaling field of G/L Account 11610.
Of course, the odd account number 11399 looks ugly and does not fit well in this otherwise nicely laid out Chart of Accounts. This may serve as an illustration on how important it is to define a well-structured number scheme for your Chart of Accounts.
Author: Thomas Paulsen