MB-310 Finance

Module 2: Set up and configure financial

management
Duration: 320 min

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 Create and configure new legal entity Perform periodic processes

Define and configure the chart of Configure, collect, and report taxes
accounts

Configure ledgers and currencies Module Summary

Implement and manage journals

Agenda Test Your Knowledge

Implement and manage cash and bank

Implement cost accounting and cost

management

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Lesson 1: Create and configure new legal entity

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Create a legal entity

A company is a type of legal entity. In Microsoft Dynamics 365 for Operations, currently, companies are
the only kind of legal entity that you can create, and every legal entity is associated with a company ID.
The company ID field is limited to four alphanumeric characters, and once is created cannot be
changed. Proper planning for naming convention should be considered prior to creation of legal
entities in the production environment.
Users can access data only for the company that they are currently logged on to and have security
access for the roles they belong to.

A search name is an alternate name that can be used to search for this legal entity.

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Number sequence scopes

Company Legal entity and Fiscal calendar period

Legal entity Company and Fiscal calendar period

Operating unit

Operating unit type

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Organization hierarchy

Organizational hierarchies represent the relationships between the organizations that make up a business. Therefore,
the most important consideration when you model organizations is the structure of your business.

You should define organization structures based on feedback from executives and senior managers from
functional areas, such as finance and accounting, human resources, operations, purchasing, and sales and
marketing.

When you are planning hierarchies, it is also important to consider the relationship between the organizational
hierarchy and financial dimensions.

You can set up multiple organizational hierarchies to represent different views of your business. By using
financial dimensions, you can create reports based on these views. You can create hierarchies that address
both organizational and statutory reporting needs.

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Exercise 1: Configure a new legal entity

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Lesson 2: Define and configure the chart of accounts

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Plan the Chart of Accounts
Degree of specification

Structure

External accountant suggestions

Space and numbering

Multiple or shared charts of accounts and dimensions

Can we use Data Import/Export Framework to import the chart of accounts

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Shared Chart of accounts

Legal Chart of Main

Entity 1 Accounts Accounts

Ledger

Legal Account Advanced

Entity 2 Structures Rules

Financial Financial
Dimension Dimensions
Sets
Group Discussion: What should you consider when planning for a chart of account

Before you create a company's Chart

of Accounts, what you should
consider?

Hint
Work as a group and create a list of items or
questions you should ask a CFO.

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Chart of accounts
Main accounts
 Main Account Information

Account Types General Company

Setup
Information Specific
• Profit and loss, • Debit/Credit • Currency, User, and • Allocation terms
Revenue and considerations Posting restrictions • Additional
Expense • Related accounts • Financial consolidation
• Balance Sheet, • Administration Reporting defaults accounts
Asset, Liability, and • Consolidation • View advanced • Sales tax
Equity rules. • Default financial
• Total dimensions
• Reporting
Main account types
Main Account Categories
Ledger account alias
Allocation Terms

Allocated transactions redistribute account balances from one account to one or more destination accounts or
account-dimension combinations. The allocation feature is valuable when centrally administrated expenses must
be distributed to, for example, individual cost centers.

You use allocation for realized and budget transactions. During allocation to the given accounts, the net amount is
totaled. After allocation, any remainder relative to the journal line is posted to the original account with the original
dimensions
Accounts for automatic transactions
Exercise 2: Create a chart of accounts and main accounts

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Financial Dimensions
Provide a more detailed description of a transaction

Simplify the accounting process when you enable detailed analysis without the creation of a detailed
Chart of Accounts

Financial dimensions are defined to analyze and classify financial transactions

Enable you to view the data file from different perspectives to improve the effectiveness in tracking
figures across accounts

Can be used throughout the system

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Custom dimensions
Legal entity overrides
Derived dimensions
Financial Dimension Sets
Used to determine how reports and inquiries
related to the general ledger are rendered

Balances are stored based on financial

dimension sets

Can be used alone or in pairs

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Account Structures
Advanced Rule Guidelines
Rules cannot replace the account structure. A structure must always exist with at least a main account
segment

Rules cannot add dimensions before other segments already in the account structure

Rules should not be used to replace the use of constraints in the account structure for additional
dimensions that are always required regardless of the main account

Rules should not be used to replicate account-dimension combinations that already exist in the
account structure or other rules

Any duplication will automatically join and use the most restrictive constraint

The location of the duplicated account-dimension combination will only appear in the first occurrence

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Advanced rule structures
Exercise 3: Create a chart of accounts and main accounts

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Lesson 3: Configure ledgers and currencies

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Fiscal Calendar Setup

Module
Fiscal Year Measurements Status Period Types
Access Level
• Any length • Years • Open • All • Opening
• Any number • Months • On Hold • None • Operating
of periods • Days • Closed • User Group • Closing
• Shared
across legal
entities
Fiscal calendars
Ledger calendars
Recalculate ledger periods
Date intervals
Exercise 4: Create a fiscal calendar, years and periods

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Currency in Dynamics 365 Finance
There are two types of currencies in Dynamics 365 for Finance and Operations. The main currency that the
company uses is called the accounting currency. Often, the company needs to report recorded financial
transactions based on a different currency, which we know it as the reporting currency

All companies will have a base reporting currency, and in some companies that will be the only currency
needed. Multicurrency functionality may be used if your company does business in more than one
currency. If your organization has multiple legal entities and transacts in multiple currencies, then
maintaining currencies and their corresponding exchange rates is essential.

You need to specify exchange rate types which allow you to set up the currency exchange rates. Once
you have determined the accounting and reporting currencies, then you define currency exchange
rates between two currencies or a currency pair. In the next lesson you learn how to setup currencies
and currency conversions for a newly created legal entity

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Currency Setup

Exchange Exchange Revaluation

Currencies
Rate Types Rates Accounts
Currency for triangulation
Configure and Import currency exchange rates
Exchange rates types are shared data across the entire system and only need to be setup once. Exchange rate types are a grouping
that allows different exchange rates for two currencies. Examples include Buy, Sell, Spot, and Budget. If a company trades with multiple
currencies, and uses multiple exchange rate conversions.

Use the Configure exchange rate providers page to select the exchange rate providers. Some exchange rate providers are included with the
demo data in Dynamics 365 Finance.

You can import exchange rates from the exchange rate providers source, and set them up in the Currency exchange rates page. Use the
Import currency exchange rates page to import the exchange rates. The following table provides descriptions the fields that are required to
successfully complete the import process.
Exercise 5: Import exchange rates by using a provider

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Lesson 4: Implement and manage journals

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Journal Types

Accounts Accounts Cash and Bank

General Ledger
Payable Receivable Management
• Daily Journal • Vendor • Customer • Bank Check
• Allocation Invoice Payment Reversal
• Elimination Recording • Bank Deposit
• Periodic • Invoice Slip
Register Cancellation
• Vendor
Disbursement
Balancing financial dimensions
Journal names
Posting restrictions
Journal control
General ledger parameters - Batch transfer rules
Asynchronous – This option will immediately schedule the transfer of the subledger accounting entries
to the general ledger. The general ledger voucher will be recorded as soon as resources are free to
process this request on the server.

Scheduled batch – This option will add the subledger accounting entries that are being transferred to the
processing queue in the general ledger, where the entries will be processed in order received. The general
ledger voucher will be recorded at the scheduled time if resources are free to process this batch job on the
server.
Voucher transactions
Audit trail
Balance control accounts
Journal Entry Process

Set Up Submit for

Create a Post
Journal Add Lines Review or Print Details
New Journal Transactions
Names Approval
Journalizing
Global General Ledger Journals
Post and Transfer
Voucher Templates
A voucher template is a voucher that can be used as the basis for future vouchers in other journal entries. You can
use voucher templates with a General journal or any of the financial sub ledger journals such as Accounts payable
and Accounts receivable Journals.

You can create a voucher template from a journal line (voucher) as either the Percent or Amount but the same
voucher cannot have both types.

If you save the voucher as Percent, the amounts in the voucher are converted into percentage factors, which allows
any amount to be applied when the voucher template is selected. In order to use this method your need to have
multiple line vouchers which indeed have the same voucher number.

When selecting a voucher template in a journal, the Amount field is only displayed if the voucher template is of type
Percent.

If you save the voucher as Amount the actual amount will be stored and applied when is used in a journal entry.
When using the Amount, the actual amounts will be stored and applied.

The process of voucher template creation, starts by creating a journal line. You do not have to post the voucher in a
journal to create a voucher template. If the journal line is used to create a voucher template as either Percent or
Amount, the template remains in Finance and Operations as long as the line is not deleted, or it has been posted.

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Import currency exchange rates
You can find Simulate posting on the Validate menu for most journals. When you validate a journal using the Validate function, the
system tests the journal for specific error conditions.

If you use the Simulate posting function, the system runs all of the same processes that are run during posting without actually posting the
journal.

You can then review the posting messages that are displayed, fix any errors that you find, and then click the Post menu to post the journal.
Exercise 6: Import exchange rates by using a provider

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Accrual schemes
Debit – The main account that you define will replace the debit main account on the journal voucher line. This account will also be
used for the reversal of the deferral, based on the ledger accrual transactions.

Credit – the main account that you define will replace the credit main account on the journal voucher line. This account will also be used for the
reversal of the deferral, based on the ledger accrual transactions.
Accrual Scheme Process
Jan = 583.18

Feb = 583.18
By using an
Accrual Scheme Mar = 583.18 Insurance Bill for
defer the cost the first half of
and recognize the year
costs at the Apr = 583.18 3,499.08
appropriate time
May = 583.18

June = 583.18
Ledger accruals
Allocation terms
Overview of ledger allocation

General journals Accounts Accounts Other types of

payable journals receivable journals
journals

Ledger allocation rules

Define source and

destinations

Allocated journals
Offi Inbou
ce nd
Ledger accounts = main account+ Financial dimensions
Dock doors
Source
Destination
Offset
Ledger allocation rule
Allocation Methods

• Basis
• Fixed Percentage
Methods •
•
Fixed Weight
Equally

• General Settings
• Source Data
Components •
•
Destination Data
Offset Entries
Exercise 7: Configure and test Accrual schemes

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Exercise 8: Configure and test ledger allocation rules

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Group activity: Intercompany accounting example 1
Group activity: Intercompany accounting example 2
Intercompany accounting
Trace an Intercompany Entry
Exercise 9: Set up and use Intercompany accounting

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Lesson 5: Implement and manage cash and bank

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Group discussion: Bank Transaction Types
Bank Transaction Groups
Cash and bank management parameters
Prenotes: In the cash and bank management parameters, you can select the Allow prenote creation on inactive bank
accounts check box to allow users to create prenotes for inactive bank accounts.

Copies of payments: You can also select the Allow copies of payments check box to allow users to print copies of
payments. These include checks, promissory notes, and electronic payments.

Credit Limit Tolerance: Use the Bank credit limit tolerance list to select how to notify the user when a payment
journal that is posted, causes a balance that exceeds the credit limit.

Payment Purpose Codes: You can use the Payment purpose codes form to create payment purpose codes for the
central bank, if it is required. The central bank is the official bank of a federal government.

Set up SEPA direct debit mandate: The Single Euro Payments Area (SEPA) is set up by the European Commission,
and dictates that all electronic payments are considered domestic, regardless of the place where the individual,
business, or organization, and the bank are located.

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Set up IBAN structures
Check Layout
Cashflow forecast setup General ledger
Cashflow forecast setup Accounts payable
Cashflow forecast setup Accounts receivable
Types of transactions are considered when the cash flow is calculated:
Sales orders: Sales orders that aren't yet invoiced, and that result in physical or financial sales.

Purchase orders: Purchase orders that aren't yet invoiced, and that result in physical or financial purchases.

Accounts receivable: Open customer transactions (invoices that aren't yet paid).
Accounts payable: Open vendor transactions (invoices that aren't yet paid).

Demand forecasts: Inventory forecast model lines that are selected for cash flow forecasts.
Supply forecasts: Inventory forecast model lines that are selected for cash flow forecasts.

Ledger transactions: Transactions where it's specified that a future posting will occur.

Budget register entries: Budget register entries that are selected for cash flow forecasts.

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Cashflow calculation
Exercise 10: Create bank transaction types and bank transaction groups

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Exercise 11: Create a bank group and bank account

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Bank management workspace
Exercise 12: Make deposits and perform payment reversals

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Exercise 13: Use Bank management workspaces

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Create positive pay file
Positive pay files can contain sensitive information about payees and check amounts. Therefore, make sure that you
use appropriate security measures from the time that the files are generated until they are received by the bank.

Positive pay files are created by using data entities. Before you can generate a positive pay file, you must set up a
transformation input format that will be used to translate the check information into a format that can communicate
with the bank.

The specific format depends on the transformation file that you're using. For example, the sample Extensible
Stylesheet Language Transformations (XSLT) file that is provided uses the XML-Element format. Use the Upload file
used for transformation action to specify the location of the transform file for the format that your bank requires

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Lesson 6: Implement cost accounting and cost management

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Cost accounting
Cost accounting lets you collect data from various sources, such as the general ledger, sub-ledgers, budgets, and statistical
information.

You can then analyze, summarize, and evaluate cost data, so that management can make the best possible decisions for price updates, budgets,
cost control, and so on.
Cost control workspace

Fixed asset
groups

Books Fixed assets

Depreciation Books
profiles

Posting profiles General ledger

Cost control

Fixed asset
groups

Books Fixed assets

Depreciation Books
profiles

Posting profiles General ledger

View details

Fixed asset
groups

Books Fixed assets

Depreciation Books
profiles

Posting profiles General ledger

Cost entries

Fixed asset
groups

Books Fixed assets

Depreciation Books
profiles

Posting profiles General ledger

Allocation base

Fixed asset
groups

Books Fixed assets

Depreciation Books
profiles

Posting profiles General ledger

Demo: Configure cost control workspace parameters

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Cost Control workspace configuration – Demo result

Fixed asset
groups

Books Fixed assets

Depreciation Books
profiles

Posting profiles General ledger

Cost Control Get started

Fixed asset
groups

Books Fixed assets

Depreciation Books
profiles

Posting profiles General ledger

Cost Control Get started – choose company

Fixed asset
groups

Books Fixed assets

Depreciation Books
profiles

Posting profiles General ledger

Cost Control Get started – Main account type

Fixed asset
groups

Books Fixed assets

Depreciation Books
profiles

Posting profiles General ledger

Cost Control Get started – Fiscal year, exchange rate and currency

Fixed asset
groups

Books Fixed assets

Depreciation Books
profiles

Posting profiles General ledger

Cost Control Get started – Financial dimension

Fixed asset
groups

Books Fixed assets

Depreciation Books
profiles

Posting profiles General ledger

Cost Control Get started - Budget

Fixed asset
groups

Books Fixed assets

Depreciation Books
profiles

Posting profiles General ledger

Cost Control Get started - Finish

Fixed asset
groups

Books Fixed assets

Depreciation Books
profiles

Posting profiles General ledger

Exercise 14: Create Cost accounting by using a wizard

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Costing versions

Fixed asset
groups

Books Fixed assets

Depreciation Books
profiles

Posting profiles General ledger

Planned costs

Fixed asset
groups

Books Fixed assets

Depreciation Books
profiles

Posting profiles General ledger

Explosion mode

Fixed asset
groups

Books Fixed assets

Depreciation Books
profiles

Posting profiles General ledger

Entering costs

Fixed asset
groups

Books Fixed assets

Depreciation Books
profiles

Posting profiles General ledger

Blocking

Fixed asset
groups

Books Fixed assets

Depreciation Books
profiles

Posting profiles General ledger

Cost groups

Fixed asset
groups

Books Fixed assets

Depreciation Books
profiles

Posting profiles General ledger

Cost groups – Profit settings

Fixed asset
groups

Books Fixed assets

Depreciation Books
profiles

Posting profiles General ledger

Calculation groups

Fixed asset
groups

Books Fixed assets

Depreciation Books
profiles

Posting profiles General ledger

Cost price model

Fixed asset
groups

Books Fixed assets

Depreciation Books
profiles

Posting profiles General ledger

Costing sheets
Define the basis for calculating indirect costs
Configure item groups and inventory posting profiles
Perform inventory closing and adjustment processes
Lesson 7: Perform periodic processes

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Resources

Fixed asset
groups

Books Fixed assets

Depreciation Books
profiles

Posting profiles General ledger

Task areas

Fixed asset
groups

Books Fixed assets

Depreciation Books
profiles

Posting profiles General ledger

Calendars

Fixed asset
groups

Books Fixed assets

Depreciation Books
profiles

Posting profiles General ledger

Templates

Fixed asset
groups

Books Fixed assets

Depreciation Books
profiles

Posting profiles General ledger

Closing schedule

Fixed asset
groups

Books Fixed assets

Depreciation Books
profiles

Posting profiles General ledger

Financial period close workspace

Fixed asset
groups

Books Fixed assets

Depreciation Books
profiles

Posting profiles General ledger

Period end - overview
Closing Calendar Task setup Closing roles Resources/Employees Closing schedule Template
Exercise 15: Perform year end close

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Financial reports
Advanced bank reconciliation

Set up a bank statement import.

Import bank statements through the data entity framework.
Fixed asset
Three typical bank statement formats are built in: ISO20022, BAI2, and MT940.
groups
The functionality can be extended to any format.
Set up a number sequence to use for advanced bank reconciliation and define the bank
reconciliation matching rules.
Books Fixed assets
A reconciliation matching rule is a set of criteria that are used to filter bank statement lines and Microsoft
Dynamics 365 Finance bank transaction lines during the reconciliation process. Depending on your business
practice, you can set up more than one matching rule to automate and optimize your reconciliation process.
Reconcile bank Depreciation
statements with Finance and Operations
Books
bank transactions.
Perform automatic profiles
matching and creation of reconciliation journals.
View bank statements and Finance and Operations bank transactions side by side.
Automatically post Finance and Operations bank transactions if they appear on a bank statement but don't
appear in Finance and Operations.
Posting profiles General ledger
Generate a reconciliation statement.
Revaluation Process
Set foreign
currency
View revaluation
exchange Print to view in
adjustments reports the show list

View Show Print a

exchange foreign simulation
revaluation currency report
transactions revaluation
as reviewed
Automatic for accounts transaction

Fixed asset
groups

Books Fixed assets

Depreciation Books
profiles

Posting profiles General ledger

Ledger
Currency
Use consolidation account
Consolidation account
Export
Dimensions
Legal entities
Import
Currency conversion
Year-end close checklist

1 Prepare to run the year-end close 6 Purchase Order Year-End Processing

Perform Encumbrance & General Ledger Year-End

2 Define year-end close templates 7 Processes

3 Setup closing sheets 8 Prepare the closing period

4 Run the year-end close process

5 Fiscal Year-End Tasks

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Set fiscal year status to permanently closed
Run fiscal close
Lesson 8: Configure, collect, and report taxes

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Sales tax

Sales tax authorities

Sales tax settlement Sales tax Ledger Sales tax

periods posting groups reporting codes

Sales tax codes

Sales tax groups Item sales tax groups

Sales tax setup steps

1. Ledger posting group

2. Create vendors for the tax authorities

3. Sales tax authorities

4. Sales tax settlement period

5. Sales tax codes

5. Sales tax groups 5. Item sales tax groups

Ledger / Vendor / Customer Item

Ledger Posting Groups
General ledger parameters
Sales tax discounts
Sales Tax Authorities
Companies pay and report taxes to authorities

The authorities determine when and where the company pays its taxes

Tax authorities can be federal, state, region, and municipality

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Sales tax authorities report layout
Sales tax settlement periods
Sales Tax Code Options
Origin Marginal Base Calculation Method
• Percentage of net • Net amount per line • Whole amount
amount • Net amount per unit • Interval
• Percentage of gross • Net amount of invoice
amount balance
• Percentage of sales • Gross amount per line
tax • Gross amount per
• Amount per unit unit
• Calculated percentage • Invoice total incl.
of net amount other sales tax
amounts
Sales tax codes
Sales tax groups
Item sales tax groups
Settings for amounts include sales tax
General Ledger parameters

General Ledger journal names

Individual journals

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Withholding tax
Conditional Sales Tax

Create Ledger Create Two Create Two

Create Ledger
Posting Settlement Sales Tax
Accounts
Groups Periods Codes
Sales Tax for Imported Goods

Create an
Create a Create a
Create a Sales Invoice and
Ledger Ledger Posting
Tax Code Select the Sales
Account Group
Tax Code
Module Summary

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Summary
In this module you have learned how to:

1 Create and configure new legal entity 6 Implement cost accounting and cost management

2 Define and configure the chart of accounts 7 Perform periodic processes

3 Configure ledgers and currencies 8 Configure, collect, and report taxes

4 Implement and manage journals

5 Implement and manage cash and bank

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Test your knowledge

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© Copyright Microsoft Corporation. All rights reserved.