This post is about the key points of Dynamics 365 for Finance and Operations (aka D365FO) ledger functionality. It can be very beneficial to have this knowledge to better understand what is going on under the hood of D365FO. This knowledge helps to solve potential issue you can have with the ledger, such as traceability of the entry to figure out why the entry was created, or resolving inconsistency between ledger and module records.
This post is also applicable for Dynamics AX 2012 (aka AX2012).
1. The key thing in the ledger is the voucher. Every ledger entry has a voucher. A voucher is a code under which ledger entries collected. The sum of ledger entry amounts which are posted under a single voucher is always zero. It means the sum of the amount of all ledger entries in the system is also zero, or balanced.
2. The primary page where ledger balances can be found is the trial balance (menu item “General ledger > Inquiries and reports > Trial balance”). But you can find out that the trial balance doesn’t show opening balances for the beginning of the period, or that the balances are not the same as for the end of the previous period. The cause of this can be that balances were not transferred from the previous fiscal year. The transferring of opening balances is performed as a periodic operation during a fiscal year closing.
3. To discover why the ledger entries were created, check the audit trail option first. Every voucher is recorded to the audit trail. The feature is quite useful because it registers information about the user who created the voucher, and about the source document which was used. This is the main page where you should go to discover more about the entries under the voucher.
4. In some cases the system journalizes entries before posting them to the general ledger. It allows you to see the ledger entries before they come to the ledger. Also, this functionality allows you to adjust entries manually. That’s useful when you need to adjust the amount distribution between accounts. This option is available only for a purchase order, vendor invoice, expense report, and free text invoice. The details can be found in this link.
5. The system records transactions not only to the ledger. Module records are used to record the module’s specific information. For example, the inventory transactions are recorded to inventory trans. Or the receivable transactions are recorded to customer trans.
In most cases module records are a basis to ledger entries. It means that the system creates the ledger entries based on the module records. The link between a module transaction and a ledger entry is implemented via a voucher.
6. While the ledger entries are being created based on module records, the system picks the account needed in accordance to the setup. To find out where the account was set, you need to look at the posting type of the ledger transaction. There is a relation between the posting type and the setup used to post the entry. For example, a “Customer balance” posting type means that the ledger account was taken from a customer posting profile; a “Sales order revenue” posting type means that the setting was taken from the inventory management posting setup.
You can find more about ledger entry setup in the posts:
7. When module transactions are used to be a basement for ledger transactions, the balances between module and ledger should be the same. However, differences can occur. As a result, the system shows different amounts for detailed records from module and aggregated amounts from ledger. For example, the balance of the bank account is different from the related ledger account. In order to track differences, the system offers a reconciliation functionality.
The reports that can be used for reconciliation are:
- Bank to ledger reconciliation report
- Customer to ledger reconciliation report
- Potential conflicts – work in process and general ledger
- Inventory value report
- Potential conflicts – inventory and general ledger
- Vendor to ledger reconciliation report
- Sales tax/ledger reconciliation report
To make sure that the ledger records are consistent with the module records you need to reconcile modules and the ledger periodically. Usually this operation must be done every period close. More information about inventory and the ledger reconciliation can be found here.
Knowing and understanding all the things described above will help you resolve many question about D365FO ledger. However, if you need to know something in more detail, please feel free to ask questions in the comments.