Understanding the General Ledger and the Chart of Accounts

The general ledger stores your financial data, and the chart of accounts shows the accounts that all general ledger entries are posted to. Business Central includes a standard chart of accounts that is ready to support your business.

General ledger setup and general posting setup

The setup of the general ledger is at the core of financial processes because it defines how you post data. Two pages play an important part in configuring your finance processes:

  • The General Ledger Setup page

    On the General Ledger Setup page, you specify how to handle certain accounting issues in your company, such as:

    • Invoice rounding details
    • Address formats
    • Financial reporting

    Tip

    The General Ledger Setup page includes generic fields and fields that are particular to your country or region. If you are not sure of the meaning of a field, we suggest you work with your accountant to determine whether it is of relevance to your organisation. Hover over a field to read a short description.

    Open the page here

  • The General Posting Setup page

    Similarly, on the General Posting Setup page, you specify how you want to set up combinations of general business and general product posting groups. Posting groups map entities like customers, suppliers, items, resources, and sales and purchase documents to general ledger accounts. You fill in a line for each combination of business posting group and product posting group. But you can also open each line in its own posting setup card. For more information, see Posting Group Setups.

    Tip

    If you cannot see the fields that you are looking for in the General Posting Setup page, then use the horizontal scroll bar at the bottom of the page to scroll to the right.

    Open the page here

The chart of accounts

The chart of accounts shows all general ledger accounts. From the chart of accounts, you can do things like:

  • View reports that show general ledger entries and balances.
  • Close your income statement.
  • Open the general ledger (G/L) account card to add or change settings.
  • See a list of posting groups that post to that account.
  • View separate debit and credit balances for a single account

You can add, change, or delete general ledger accounts. However, to prevent discrepancies, you can't delete a general ledger account if its data is used in the chart of accounts. Also, starting with 2022 release wave 2, you can also block the accidental deletion of accounts in sensitive periods. For more information, see Deleting accounts.

Account categories

You can personalise the structure of your financial statements by mapping general ledger accounts to account categories.

The G/L Account Categories page shows your categories and subcategories, and the general ledger accounts that are assigned to them. You can create new subcategories and assign those categories to existing accounts.

You create a category group by indenting other subcategories under a line on the G/L Account Categories page. This makes it easy for you to get an overview, because each grouping shows a total balance. For example, you can create subcategories for different types of assets, and then create category groups for fixed assets versus current assets.

You can specify whether the accounts in each subcategory must be included in specific types of reports. The account categories help define the layout of your financial statements.

Example

For example, the default balance statement has a subcategory for Cash under Current Assets. You want the balance statement consider petty cash and checking, so you take the following steps:

  1. Add two new subcategories:

    • One for petty cash
    • One for your everyday account
  2. Specify the another report definition Cash Accounts for these subcategories.

  3. Indent them under the Cash subcategory.

The next time you generate account schedules, your balance statement will show a total balance for cash and two lines with balances for petty cash and the everyday account.

Get a quick overview

The Chart of Accounts page displays accounts in a hierarchical list that offers fast access to the key information for each account. However, the list is static, and if you have many accounts, you might have to do a bit of scrolling to view information for different accounts. If you just want a quick overview of the basics, such as net changes and balances, the Chart of Accounts Overview page is a useful alternative. The column layout on the page is now the same as you’ll find on the Chart of Accounts page (there are just fewer of them), so you won’t have to reorient yourself, and you can expand or collapse the hierarchical levels to condense the view. To make it easy to switch between the pages, the Chart of Accounts Overview page is available from the Chart of Accounts page.

Access to create and edit accounts and account categories

In a small organisation, such as the CRONUS demonstration company, most users can edit the chart of accounts, except users with a TEAM MEMBER licence. However, in larger organisations, access to edit the chart of accounts is limited by roles and permissions. If you are an administrator, or you have the Business manager or Accountant role, you can check the permissions for all users to make sure the right people have access to the relevant tables. For more information, see To get an overview of a user's permissions.

See also

Finance
Set Up or Changing the Chart of Accounts
Business Intelligence
Assign Permissions to Users and Groups