HOW DYNAMICS NAV USES POSTING GROUPS IN SALES TRANSACTIONS

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In my previous blog we looked at understanding posting groups in Microsoft Dynamics NAV. Microsoft Dynamics NAV uses Posting Groups to link sub ledger entities to the general ledger (G/L). Below is an example of how Dynamics NAV will determine which G/L accounts to use when posting a sales transaction.

The sales transaction begins with the customer. An example of a customer card is shown below. The General Business and Customer Posting Group fields are found on the invoicing tab. The Posting Groups provide the link between the customer and the G/L accounts that will be used in various sales transactions. Additionally, the General Business Posting Group and Customer Posting Group can be used as category types to allow users to report on customers by category.

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Two Item Cards are shown below. The General Product Posting Group and Inventory Posting Group fields are found on the Invoicing tab. The Posting Groups provide the link between the item and the G/L accounts that will be used in sales and purchase transactions. Additionally, the General Product Posting Group and Inventory Posting Group can be used as category types to allow users to report on inventory by category.

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When creating a sales order Dynamics NAV uses the information in the Posting Group fields to determine which G/L Accounts Dynamics NAV will post when the Sales Order is invoiced. Below is a typical sales order.

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When Dynamics NAV posts the sales order above, it will create 2 journal entries. The first journal entry will be a debit to Accounts Receivable (A/R) and a credit to Revenue for the sales price of the items. The G/L Accounts that are posted to are found by looking at the Posting Group information for the customer and items.

Dynamics NAV looks at the customer card and determines that the Business Posting Group for this customer is Export and the Product Posting Group for the first item on the sales order is Retail. It looks at the General Product Posting Setup matrix to find out which revenue account to post to.

The screen below shows the link between the Business Posting Group of Export and the Product Posting Group of Retail. Dynamics NAV reads the Sales Account and determines that the revenue account will be account 44300.

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Dynamics NAV also looks at the Customer Posting Group on the customer card to determine which A/R Control account to post the receivable value to. The Customer Posting Group for the customer on this sales order is Foreign. Dynamics NAV then looks to the Customer Posting Group table to determine which A/R account to post to.

The screen below shows the Customer Posting Group table.

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Dynamics NAV reads the table shown above and determines that the A/R value of the sales order should be posted to account 13200.

The second entry that is made when a sales order is posted is to remove the inventory dollars and increase Cost of Sales. This entry will credit the Inventory account and debit Cost of Goods Sold for the cost of each line item.

Dynamics NAV determines the correct accounts to post this entry to by looking at the General Product Posting Setup form. The Business Posting Group from the Customer (Export) and the Product Posting Group from the Item (Retail) are used to determine which Cost of sales account to post to. In the screen shot below, the COGS account for this combination of Posting Groups is 54700.

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Dynamics NAV uses the Inventory Setup screen to determine the Inventory account to post to. This matrix is made up of a combination of the Location and Inventory Posting Group to determine the inventory account to credit.

The location on the sales order is Blue and the Inventory Posting Group on the item is Resale. In the Inventory Setup posting screen shown below the user can see that the inventory account that will be posted to is 14100.

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After posting the sales order above, the following journal entry has been created.

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