Why the Chart of Accounts (CoA) matters
The Chart of Accounts is the backbone of your financial management in Dynamics 365 Business Central (BC). Every journal entry, posting, and report flows through the CoA. A cleanly structured CoA means:
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Accurate financial reporting
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Easier compliance and audits
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Smooth day-to-day posting
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Reduced errors and rework
Where to find it
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In BC, open Tell Me (Alt+Q) → search Chart of Accounts.
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You’ll see a list of all general ledger (G/L) accounts, with filters and columns to drill down into balances, entries, and posting setups.
Step 1: Define your account structure
Before creating accounts, design a numbering and grouping strategy.
Example numbering structure
| Number Range | Purpose | Example Accounts |
|---|---|---|
| 10000–19999 | Assets | 10100 – Cash, 12000 – Accounts Receivable |
| 20000–29999 | Liabilities | 21000 – Accounts Payable, 23000 – Loans |
| 30000–39999 | Equity | 31000 – Share Capital, 32000 – Retained Earnings |
| 40000–49999 | Revenue | 41000 – Sales, 42000 – Services Income |
| 50000–59999 | Cost of Goods Sold (COGS) | 51000 – Materials, 52000 – Purchases |
| 60000–69999 | Operating Expenses | 61000 – Salaries, 62000 – Rent |
| 70000–79999 | Non-operating Income/Expenses | 71000 – Interest Income, 72000 – Interest Expense |
| 80000–89999 | Year-End Adjustments/Reserves | 81000 – Depreciation Reserve |
Tip: Leave gaps between numbers for future accounts. For example, start “Cash” at 10100, then you can add more accounts like 10110, 10120 without disrupting numbering.
Step 2: Create G/L accounts in Business Central
From Chart of Accounts → New, you’ll configure fields such as:
| Field | Purpose |
|---|---|
| No. | Unique account code (e.g., 10100). |
| Name | Clear description (e.g., “Cash – Main Bank”). |
| Income/Balance | Choose Balance Sheet (Assets/Liabilities/Equity) or Income Statement (Revenue/Expenses). |
| Account Category | Helps group accounts in financial statements (Assets, Liabilities, etc.). |
| Account Subcategory | Adds more detail (e.g., “Cash and Cash Equivalents”). |
| Account Type | Options: Posting, Heading, Total, Begin-Total, End-Total. |
| Direct Posting | If checked, users can post directly to this account. Usually off for control accounts (e.g., Accounts Payable). |
Step 3: Use account types correctly
Account types let you organize and calculate totals:
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Posting – Can be posted to (used in journals and transactions).
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Heading – Group header (e.g., “Current Assets”). Cannot post.
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Total – Shows the sum of accounts in a range.
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Begin-Total / End-Total – Used together to define summing ranges.
Example
| No. | Name | Account Type | Comment |
|---|---|---|---|
| 10000 | Assets | Heading | Top-level grouping |
| 10100 | Cash | Begin-Total | Start total block |
| 10110 | Cash – Main Bank | Posting | Can be posted |
| 10120 | Petty Cash | Posting | Can be posted |
| 10190 | Total Cash | End-Total | Sums 10110–10120 |
Step 4: Link posting groups
To simplify posting from subledgers, configure Posting Groups. These automatically direct transactions to the correct G/L accounts.
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General Business Posting Groups – Classify customers/vendors (e.g., Domestic, EU, Export).
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General Product Posting Groups – Classify items/resources (e.g., Raw Materials, Services).
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General Posting Setup – Links the above two groups to revenue/expense accounts.
Example: A Domestic customer buys a Service item → mapped via posting groups → posts to Sales Revenue (41000) and Receivables (12000) automatically.
Step 5: Use categories & subcategories for reporting
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Assign each account to an Account Category (e.g., Assets, Liabilities, Income, Expenses).
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Refine with Account Subcategory (e.g., Current Assets → Cash).
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This drives out-of-the-box financial reports and helps with account schedules.
Step 6: Control direct posting
Not all accounts should be posted to directly. Common practice:
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Disable Direct Posting for:
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Accounts Payable/Receivable (control via subledgers).
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VAT/GST accounts (system-calculated).
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Inventory accounts (controlled by item transactions).
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Enable Direct Posting for:
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Adjustment accounts (e.g., Bank Fees).
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Non-integrated accounts (e.g., Miscellaneous Income).
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Step 7: Test & validate
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Post a sample transaction (e.g., Sales Invoice) → confirm it hits the right G/L account.
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Run the Trial Balance report to ensure totals reconcile.
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Verify Balance Sheet and Income Statement categories display correctly.
Best practices
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Plan before creating: Changing account numbers later is difficult.
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Keep it lean: Too many accounts = complexity; use dimensions for detailed tracking (e.g., departments, projects).
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Use totals & headings: Improves readability in the CoA and reports.
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Standardize naming: Short, descriptive, consistent.
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Lock down critical accounts: Disable direct posting to prevent errors.
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Review regularly: Archive unused accounts, ensure categories align with financial reporting needs.
Go-live checklist
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Numbering scheme finalized with room for growth
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Posting groups mapped and tested
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Account categories and subcategories assigned
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Direct posting disabled where necessary
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Test transactions posted and reconciled
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Financial statements verified with accountants
Final thoughts
Setting up the Chart of Accounts in Dynamics 365 Business Central is more than a one-time data entry task—it’s the foundation of your financial reporting. A well-structured CoA, combined with posting groups and dimensions, makes your system scalable, accurate, and audit-ready.