The Chart of Accounts is at the heart of the Microsoft® Dynamics GP system. The structure is difficult to shrink once implemented, but can be much more easily expanded. Careful analysis of the structure will ensure a balance between current financial reporting needs and future growth.The Professional Services Tools Library (PSTL) and third-party products are available to make shrinking or expanding more user friendly.
First, let me explain the standard functionality, and then in my next two posts, I’ll temper that explanation with my recommendations and experience.
Microsoft Dynamics GP Capabilities
The GP account number is capable of accepting both alpha and numerical values in a string of up to 66 characters long with as many as 10 segments. Segment separators, normally a dash (-), can be a period (.), space ( ), or user-defined character (/ * +). The separator is visual only and is ignored during input.
Sorting is automatically assigned by the system to:
- the account number as a string with no separators,
- the main account segment,
- the account alias,
- the account description,
- the account category, and
- the accounting posting type
Additional sorts can be assigned based on each user-defined segment and the four user-defined fields. However, each user-defined sort will slightly degrade system performance when creating or looking up accounts. Balance is the key in deciding to use user-defined sorts.
A standard GL account number is broken into segments. The primary segment is referred to as the main account. Common other names for this segment include Natural and Object Account.
The main account segment is the breakdown of transaction types and most commonly consists of 4 to 6 characters following a pattern similar to the following:
- 1000 – 1999: asset accounts
- 2000 – 2999: liability accounts
- 3000 – 3999: equity accounts
- 4000 – 4999: revenue accounts
- 5000 – 5999: cost of goods accounts
- 6000 – 6999: expense accounts
- 7000 – 7999: other revenue accounts (i.e. interest income)
- 8000 – 8999: other expense accounts (i.e. income taxes)
Additional segments for the analysis of expenses by department, division, product line, location, or other characteristics may be as follows:
Other examples for departments, like Administration, Sales, and Production are as follows:
Segmentation Capabilities and Consequences
Based on thousands of implementations, in the next two posts in this series, Computeration will offer 10 explanations and recommendations on how to create a powerfully simple chart of accounts.©2011, Computeration, Inc.
Looking for more information on your Chart of Accounts? See the discussion on “Adding a Dimension to Your Existing Chart of Accounts” in our IFRS Accounting series.