Selecting a main account type in D365FO

In D365FO on each main account, you need to select a main account type.

What are the options that you can choose? And what is the impact of the selected values? And why are some values almost never chosen in most countries? In this article I try to give you answers on these questions.

Summarized:

Most of the main account types are related to Balance accounts (or a specification of balance) or Profit and Loss accounts (or a specification of profit and loss). By running the year-end close functionality, the system will transfer the ending balances of the Balance type values as opening balance to the new fiscal year. The debit and credit postings of the Profit and loss type values are used to calculate the result of the year that will be closed. That result will be posted on the main account selected for year-end result:

There are some other values, based on reporting or country specific regulation purposes.

The values:

1.Empty: if you select the empty value in the list and save this on a main account, the main account can't be used for postings.

So in my opinion you only select this value if you don't know the exact value to use for it and want a temporary status where the main account can't be used.

2.Profit and loss, Revenue or Expense: The system will use the main account as a profit and loss account. During year end closing, the ending balance of these main accounts will be taken into the calculation of the year-end result.

By using these main accounts in the Budget register entry, if you have selected value 'Profit and loss', you need to specify as user if the budget amount is for Revenue, or Expense. If you have selected value 'Revenue' or 'Expense' as main account type, the system will select the related value of Revenue or Expense in the budget register entry line automatically.

Example:

On main account 401200 the value Revenue is selected and on main account 401300 the value 'Profit and loss' is selected. By entering budget register entry lines for these two main accounts, main account 401200 will get the amount type 'Revenue' automatically, 401300 will get the amount type 'Expense' (the standard value):

Also in the Financial Reports options the setting can have effect. For main account 401200 with value Revenue the Normal Balance is added with a C (so that credit revenue postings will be presented as positive amounts). This is not the case for main account 401300, where the Profit and loss type is used:

3.Balance sheet, Asset, Liability, Equity: The system will use the main account as a balance sheet account. During year end closing, the ending balance of these main accounts will be transferred as opening balance in the new fiscal year.

4.Total: when you select value 'Total', this main accounts represent the value of selected main accounts. When you select this value, you can click at the value 'Totals' on the main account:

In the Totals-section you can define the main accounts that must be represented in total on this main account:

You cannot post on total accounts, but these main accounts can be used in Financial Reports (Management Reporter) to present a total amount of multiple main account values:

Also: even if you can't post ledger transactions on these main accounts, the total accounts can be used for posting budget amounts on it. This can be helpful if you don't want to budget on detail level of each main account. I have written about this in another article (click here), so I will not pay more attention to this option here.

5.Reporting: In AX 2012 Management Reporter was introduced (now called Financial Reports). Before this option, there was an option in the General Ledger module to create financial statements with output to Excel. Because of the introduction of Management Reporter, the financial statement option name was extended with '(traditional)', because that was the traditional older functionality for creating financial statements from older AX-versions:

For this statement functionality you could create main accounts with main account type 'Reporting':

By selecting the main account type 'Reporting', you could select a value in the Reporting type field. By example I have selected the option 'Page header':

In the financial statement this main account was used to start on a new page in the statement:

On this main account, in the Company section (now called the legal entity override section) you could also do some additional settings for the financial statement option regarding to main accounts of main account type 'Reporting':

The option for Financial statement (traditional) is not common available anymore, now you can use Financial Reports to create financial statements. But the main account type Reporting is still available, regarding to Microsoft documentation because of using it in financial statement report functionalities for Brazil only.

6.Common: These main accounts are for accounts that are used in banks or financial institutions in China. Accounts that have a?Common?main account type are recorded as assets if the balance is positive and as liabilities if the balance is negative. An example of an account that has the?Common?main account type is a currency hedging account.

Being able to use this main account type 'Common' is depending on a General Ledger parameter setting:

This parameter is only available for legal entities regarding to China:

So by enabling this parameter, you will be able to select main account type 'Common' on main accounts, regarding to specific functionality used in China.

The main account type in the Main account category:

On the Main account category you can also specify a Main account type:

The main account type can be used for reporting purposes, by example in Financial Reports. Also quite recent the main account categories can be selected in the trial balance as wel:

The account type is displayed in the?Main account category?form. However, selecting an account type here does not prevent you from linking the account category to ledger accounts of a different account type: