In Dynamics NAV, everything leads to accounting, but as we have seen in the previous chapters, most operations inside the financial management area can be done with a little accountancy knowledge. In this chapter, we will learn the setup options that allow this to happen.
The topics that we will cover in this chapter are as follows:
- Posting groups
- Dimensions
- Number series
- The general setup
Posting groups are the linking bridge between the G/L accounts and the accounts used on all application areas, such as items, customers, vendors, and fixed assets. Posting groups are used to notify the system which accounts to use on each transaction. There are three main types of posting group as follows:
- Specific posting groups: These are used to link subsidiary ledgers (namely the vendor ledger entries) to the general ledger. They are used to specify balance sheet accounts.
- General posting groups: Typically, these are used to specify income statement accounts that should be used on transactions. They are used to specify to whom and what we sell or buy.
- TAX posting groups: You use these to specify the tax rates, calculation types, and accounts.
Specific posting groups are mainly used to instruct the system about which balance sheet account to use for each subsidiary ledger. For example, the sum of balances of all customers must be equal to the balances of the accounts receivable in the balance sheet.
In Dynamics NAV, you can find the following specific posting groups:
|
Posting Group name |
Description |
|
Customer Posting Groups |
This specifies the accounts for transaction such as receivables, payment discounts, roundings, and interest and fees that relate to customers. |
|
Vendor Posting Groups |
This maps payable accounts, payment discount amounts, rounding accounts, and interest and fee accounts that relate to vendors. |
|
Inventory Posting Group/Inventory Posting Setup |
This maps inventory accounts, WIP accounts, and other accounts that relate to the inventory. Inventory posting groups define the type of inventory, while accounts are specified in the Inventory Posting Setup page in combination with locations. |
|
Bank Account Posting Groups |
This links a bank G/L account to a bank account. |
|
Fixed asset posting groups |
This specifies the accounts used in FA transactions such as posting its acquisition cost, or depreciation. |
|
Job Posting Groups |
This maps the accounts used in transactions involving jobs. |
To access each posting group, type its name in the search box and select the corresponding link. The following screenshot shows the customer posting groups defined in the CRONUS International Ltd. demo company:
As an example, when you post an invoice, a customer ledger is created and the account specified in the Receivables Account field is used to post the corresponding amount in the general ledger.
Specific posting groups are assigned to its corresponding cards in fields that have the same name. In Customer Card, for instance, you find a field called Customer Posting Groups, where you can assign one of the defined posting groups to each customer, in the same manner you find the Bank Acc. Posting Group field in the bank account card or the FA Posting Group field in the depreciation book lines of the FA card.
The main purpose of general posting groups is to bind subsidiary ledgers to income statement accounts. There are two different general posting groups, as follows:
- General Business Posting Groups: This specifies who we are selling to and who are we buying from. You need to specify them on Customers, Vendors, and, in some occasions, G/L accounts.
- General Product Posting Groups: They specify what is being sold or purchased. They are assigned to Items, Resources, G/L Accounts, and Item Charges.
As a general rule, create as many business groups as needed to analyze sales by customers or purchases by vendors. Also, consider how many product groups are needed to analyze sales and purchases by products. As a rule, you create one general product posting group for each major product group reflected in the chart of accounts.
Navigate to Departments | Administration | Application Setup | Financial Management | Posting Groups to access both posting groups.
Take a look at the following screenshot:
So far, we have defined groups, but we have not assigned them to G/L accounts. It is the mixture of a business and a product group that will define the account to be used. The following screenshot shows the general posting setup used in the CRONUS company:
As an example, when you post an invoice with a customer in the EXPORT group and an item in the MANUFACT group, the account 6130 is used to post the corresponding amount in the general ledger, as specified in the Sales Account field.
Tax posting groups are used by the system to know how tax is to be calculated and posted, depending on who the item is sold to or purchased from and what is sold or purchased. Just like general posting groups, to define tax you need to create the following posting groups:
- Tax business posting groups that are assigned to customers and vendors
- Tax product posting groups that are assigned to items and resources
- Combinations of both are specified on the TAX Posting Setup page
In the earlier versions of Dynamics NAV 2016, the TAX Posting Group was known as the VAT Posting Group.
The following screenshot shows the TAX Posting Setup page for the export business group:
For each combination, you need to specify TAX %, TAX Calculation Type, and the general ledger accounts to use on sales and purchases. The accounts to use for unrealized VAT or to adjust VAT for payment discounts can be specified in additional fields.
You can select one of the following options for TAX Calculation Type:
- Normal: This option is used to calculate VAT.
- Reverse charge: This option is used when doing business with other countries in the EU where the purchaser must calculate and settle VAT accounts with the tax authorities.
- Full VAT: This option is used when the entire amount is considered VAT.
- No taxable VAT: When this option is selected, the system does not generate any VAT ledger entry. It is useful for concepts that are not subject to VAT.
- Sales tax: This option is used only if the program has to calculate US sales tax instead of VAT.