Setup Accrual schemes

This article describes how to setup and use accrual schemes in Dynamics AX 2012. Ledger accruals redistribute the costs or revenues of a journal line so that the costs and revenues are recognized in the appropriate periods. In the first step, you enter the invoice in a temporary account (or a prepaid account). And when you use the accrual scheme functionality, the temporary account is reversed to be allocated in the charge or product account in each appropriate periods. To illustrate this functionality, I will use two examples, one with a vendor invoice and one with a customer invoice:

  • Example 1: I receive a rent invoice from a vendor for the next quarter. Total amount of the invoice is $300. If I enter directly the amount, all the charge are going to be allocated for the same period. But I want to allocate each third in the good period.
  • Example 2: I send a rent invoice to a customer for the next quarter. Total amount of the invoice is $300. If I enter directly the amount, all the product is going to be allocated for the same period. But I want to allocate each third in the good period.

1/ Setup accrual schemes

Access: GL > Setup > Posting > Accrual schemes

  • Click New to create an accrual scheme.
  • Enter an accrual identification and a description of the scheme

AccrualSchemesGL001

For a charge accrual scheme (example 1) :

  • Enter the accrual account in the field “Debit” and an other account in the field “Credit”.
  • Select how to use voucher:
    • Base: the main voucher number is used for all generated transactions.
    • Single: a new voucher number is used for each transaction date.
    • Multiple:  a new voucher number is used for all accrued transactions.
  • If you have selected the single or multiple option, select a sequence code.
  • Enter a description.
  • Select the calendar type to use, the frequency and the length. In the case of the example 1, I want to follow the calendar type (not fiscal), for 3 months.
  • Select the posting frequency: in my example, I want to post the accrual scheme each month.
  • In the field “Value posting”, select the option of the calculation : Even = same amount for each period or scale = amount depend of the number of the days.
  • Select the posting date : beginning, middle or end.

AccrualSchemesGL003

For a product accrual scheme (example 2) :

  • Enter the accrual account in the field “Credit” and an other account in the field “Debit”.
  • Select how to use voucher: Base, Single or Multiple. If you have selected the single or multiple option, select a sequence code.
  • Enter a description.
  • Select the calendar type to use, the frequency and the length. In the case of the example 2, I want to follow the calendar type (not fiscal), for 3 months.
  • Select the posting frequency: in my example, I want to post the accrual scheme each month.
  • In the field “Value posting”, select the option of the calculation : Even = same amount for each period or scale = amount depend of the number of the days.
  • Select the posting date : beginning, middle or end.

AccrualSchemesGL002

2/ Accrual scheme : Charge

Example 1: I receive a rent invoice from a vendor for the next quarter. Total amount of the invoice is $300. If I enter directly the amount, all the charge are going to be allocated for the same period. But I want to allocate each third in the good period.

AccrualSchemesGL004

Step 1: Enter the invoice

Access: AP > Journals > Invoices journal (or use purchase order)

  • Create a new journal
  • Go to the line and create a new journal line.
  • Select the vendor account, VAT account if necessary, and other information (invoice number, terms of payment, …)
  • Select a temporary account in the offset account field and not the charge account.

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  • Post the journal
  • Go to Inquiries > Voucher to check the accounting: Debit = temporary account and Credit = Vendor account

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Step 2: Accrual schemes

Access: GL > Journals > General journal

  • Create a new journal
  • Go to the line and create a new journal line.
  • In the field account, select the charge account.
  • Enter the total amount of the invoice in the debit field ($300)
  • Select the temporary in the Offset account field.

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  • Go to Function > Ledger accrual

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  • Select the accrual schema to use
  • Check that the charge account is selected in the field “Account/Ledger account”

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  • Click on “Transactions” to check if the accounting is correct.

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  • In the example, we have 3 voucher with amount equal $100 (300/3) and each accounting date equal to the end of the three months.
  • Accounting for each voucher is: Debit = charge account and Credit = accrual account.
  • If the transactions are not correct, click on “Cancel”.
  • If it is correct, click on “OK”

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  • Post the journal.
  • Go to Inquiries > Voucher to check the accounting: Debit = Accrual account for the total amount and Credit = Temporary account.

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3/ Accrual schemes : Product

Example 2: I send a rent invoice to a customer for the next quarter. Total amount of the invoice is $300. If I enter directly the amount, all the product is going to be allocated for the same period. But I want to allocate each third in the good period.

AccrualSchemesGL013

Step 1: Enter the invoice

Access: AR > Common > Free text invoice > All free text invoices (or use a GL journal)

  • Create a new free text invoice
  • Select the customer account and other information you need.
  • Select a temporary account in the account field and not the product account.

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  • Post the invoice
  • Check the accounting: Debit = Customer account and Credit = Temporary account.

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Step 2: Accrual schemes

Access: GL > Journals > General journal

  • Create a new journal
  • Go to the line and create a new journal line.
  • In the field account, select the product account.
  • Enter the total amount of the invoice in the credit field ($300)
  • Select the temporary in the Offset account field.

AccrualSchemesGL016

  • Go to Function > Ledger accrual

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  • Select the accrual schema to use
  • Check that the product account is selected in the field “Account/Ledger account”

AccrualSchemesGL018

  • Click on “Transactions” to check if the accounting is correct.

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  • In the example, we have 3 voucher with amount equal $100 (300/3) and each accounting date equal to the end of the three months.
  • Accounting for each voucher is Debit = accrual account and Credit = Product account.
  • If the transactions are not correct, click on “Cancel”.
  • If it is correct, click on “OK”.

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  • Post the journal.
  • Go to Inquiries > Voucher to check the accounting: Debit = Temporary account for the total amount and Credit = Accrual account.

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4/ Ledger settlements

To close this process, you need to pay the invoice and it is better to settle the temporary account and the accrual account.

Access: GL > Periodic > Ledger settlements

  • Search the two journals that used the temporary account. In the example 1 it was GL100322 for the AP journal and GL100323 for the GL journal.
  • Select the two transactions (button Include).
  • In the top of the form, the balance should be equal to 0
  • Accept the settlement

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  • You can do the same for the accrual account

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10 thoughts on “Setup Accrual schemes

  1. Pingback: General journals with template | My Financial Dynamics AX

  2. Hi Violaine ,

    In the Accural scheme setup what is the Debit account and credit account and when created the General journal for the accural then which account i need to select the account and offset account ?

    To understand easily explain with the accounts names ?

    Reply
    • In the fields Credit account or Debit account, you need to enter the account used for accrual schema. It is a provision account. The debit account is used when the accrual schema is about an expense and the credit account is used when the accrual schema is about a product. For example, in France we use 486000 or 487000.

      In the journal, you need to enter, the charge (or the product) account and use a temporary account for the offset account.

      You can reverse all the accrual journal, go to the main account > Posted. In this form, select the initial transaction and click on Reverse transaction. This button is not availalbe for related entry, but all the entries are reversed.

      Reply
  3. Hi Violaine,

    Thanks for the detail and process by process explanation of Ledger Accruals. It’s Really Helpful thanks once again…..

    Reply
  4. Hi Violaine,

    Thx for the explanation.

    Still I have a question:
    Is it possible to not contaminate next fiscal year(s)?
    Like, let’s assume the fiscal year ends at 31/12/2013. In your example you already post some costs in January 2014.
    Is it possible to set up AX in such a way that it will only post in the current fiscal year. So in our example, 100 in November en 100 in December and keep the 100 left in the accrual account till 2014?

    Thx

    Raph

    Reply
  5. Pingback: Important Functional references – Dyanmics Links Store

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