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Intelligent Technologies, Inc.

Important Mistakes to Avoid When Creating New General Ledger Accounts in Dynamics GP


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If your company is like many others, management is always looking for ways to improve accountability. One common way to do that is by adding additional general ledger accounts to your accounting system.   Though creating new general ledger accounts can be very useful, they are only effective if they are categorized and labeled properly.  Since this is something that can confuse some users, I want to quickly walk you through the process.

How to correctly label and categorize general ledger accounts in Microsoft Dynamics GP.

When creating general ledger accounts within Dynamics GP it is imperative to correctly label the account posting type as balance sheet or profit and loss.   The posting type determines how the account balance is treated during the year-end closing process in Microsoft Dynamics GP.  Balance Sheet accounts will be rolled forward to the next year and profit and loss accounts will be rolled into retained earnings.

To correctly label an account go to (cards --> Financial --> Account)

Dynamics GP general ledger screenshot

 

Posting type is clearly labeled on the left side of this screen.   Please note that if you select an incorrect posting type one of the following situations will arise:

1)  Your P&L will be incorrectly labeled as balance sheet:  Account is rolled forward with ending balance set as beginning balance for new fiscal year.
2)  Your Balance Sheet will be incorrectly labeled P&L:  Balance as of 12/31/XX booked to retained earnings and beginning period 01/01/XX balance zero.

Before you close the ledger each year, it is a recommended best practice to check your account posting types.  Smartlist offers a quick option to identify potential issues.  If you need assistance please contact us.  Our friendly experts are here to help!

If you’d like to learn more about Microsoft Dynamics GP and its capabilities please visit our website.

by Intelligent Technologies

 

 

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