FINANCIAL REPORTING: Income Statement (P&L) in ERP Dynamics 365 Finance

The income statement also known as the profit
and loss statement is used to show earnings. By the end of this video you ll learn how
to set up the income statement in Dynamics 365 Finance. Hello guys, I believe you re
doing great. My name is Vadim. My job is to help companies to be successful in the enterprise
resource planning implementation projects. This video aims to explain how to setup the
income statement report in Dynamics 365 Finance. Keep watching If you want to get a solid overview
how the financial reporting works in the system. Let s begin from our example. Now you can
see our simplified income statement. It has three sections where we ll calculate gross
profit, operating income and net income. All needed information for the statement we will
get from the ledger accounts. Getting information from the ledger accounts means that we have
to define which accounts to use for every row of the report. To understand how it works,
let s look at the main accounts in the system.

To pull up the main accounts page, we should
navigate to the general ledger module. Then click on the chart of accounts and go to the
main accounts menu item. We are looking at the main accounts page. Every ledger account
in Dynamics 365 Finance can be linked to the main account category. Account categories
help to categorize accounts and use those categories for reporting. In other words,
the system allows to link account categories to the report lines. So, our plan is to use
the account categories to get necessary information for each income statement line. Now you see
all account categories which are used for the P and L reporting in my DEMO system. What
I need now is to define the report line for each category. ADMINEXP is for the administrative
expenses. COGS is for cost of goods sold. And so on. There we go, all categories are
linked to the report lines and we are ready to go further. To build the income statement
we ll use the financial reporting functionality in Dynamics 365 Finance. Let s navigate to
the general ledger module. Then go to the inquiries and reports and click on the financial
reports item.

Now you can see the financial reports page. This page shows all configured
financial reports in the system. The system already has some preconfigured out-of-the-box
reports. These reports are great examples to look at how the functionality can be used.
But in this video we will create our income statement from scratch. To create a new report
let s click on the new button. The system starts the report designer. Now we enter credentials.
Okay, the report designer is up and running. The report designer is used to create and
edit financial reports. It has three main areas here: report definitions, row definitions,
and column definitions. We will come through these definitions in the videos. The definitions
are building blocks of the report. We ll start building of our report from the row definitions
Let s create row definitions. Choosing the row definitions here.

And then click on the
new button. The row definition form is used to define rows of the report and apply some
filters for each row. Now you can see the grid which is used to define the lines of
the report. We just copy and paste the lines of our income statement to the grid. There
we go. What we are going to do next is to link the report rows to the main account categories.
This setting should be specified in the link to financial dimensions column.You can consider
the link to financial dimensions as a source of information for the row. Double-clicking
on the field. Now you can see the dimensions form. Yeee, it looks weird now. You will understand
why in a minute. The report fetches the data from the ledger transactions.

You can see
the list of transactions now. Each ledger transaction has a ledger account. The ledger
account consists of the main account number and financial dimensions. The financial dimensions
are configurable. There can be defined a lot of them in the system. We use the dimensions
form to define the rules for fetching the necessary transactions. The dimensions form
has so many columns because there was configured a lot of financial dimensions in my demo system.
To make the form readable we need to configure a dimension set. A dimension set is used to
specify a preset of the exact dimensions we need. I already created one for the demo where
I only put the account category. Let's use it now. So, we are ready to specify the account
categories for the revenue line. The needed categories are in the excel we prepared before.
Let s just copy and paste the needed categories. Copy/paste is done, lets click okay and the
link of the report row and categories is ready.

As we know, the revenue account has a credit
balance. The credit value is fetched to the report as a negative number. We don t want
to show the negative revenue in the income statement. That is why I would like to introduce
you a new parameter. The name of the parameter is normal balance. We set the C valued here,
so the sing of the amount will be reversed. Now let s set the account categories and normal
balance parameters for other rows of the report where we need to get data from the ledger
accounts. Ok, well done, the settings are in place.

Next step is to set calculated rows
like gross profit, total operating expense, etc. For each of those rows we need to set
the format code parameter. Your can consider the format code as a parameter which defines
the action related to the report row. For our rows we set the total option, or TOT.
The TOT means that the row uses mathematical operators in the related formulas/rows/units
column. So with this we also need to specify the related formulas in the column D. We set
a formula for the gross profit line. To calculate the total operating expenses we use the range
of rows. For the operating income, total non-operating, and net income we specify the formula. Okay!
Our row definition is ready. We just need to save it and close the row definition form.
Terrific! The next step is to define columns for the report.

Our simplified income statement
will have just two columns. The first one is for the row descriptions, the second is
for the amounts. Let s go back to the report designer. To define report columns, we should
employ the column definition functionality. To create a new column definition, we should
click on the new button and choose to create a new column definition. Now you can see the
column definition form. On the left side of the grid you can see the parameters of the
report columns. The parameters are header one, header two, etc. The A B C columns on
the top are the report columns. Let s look at the column type parameter. The column type
setting is used to specify the type of data in the column.

The first column we need to
setup is the row description from our row definition. Let s set the DESC option for
the column type parameter and it will be our first report column. That is easy. To set
the column for the amount, we use the financial dimension or FD column type. FD column type
is used to display financial data when is used a Link to Financial Dimensions column
in the row definition. We used the link to financial dimension column in the row definition
form to specify categories.

Now let s choose the FD option in the column type parameter.
As a result, the system filled some columns as well. We can see the default value in the
book code, fiscal year, period, and period covered fields. Let s look at the parameters
the system set by default. The list of book codes reflects the actual, budget, and non-financial
options which are available in the system. The fiscal year cell identifies the fiscal
year that the column should include. The base value here means that the system uses the
year of the date, which should be defined at the report run parameters. The period cell
identifies the fiscal period that the column should include. Similarly to the fiscal year,
the system uses the date form the report run parameters to define the fiscal period. The
periods covered cell identifies the amount that the column should display. Will it be
the amount for the current fiscal period or a sum from the beginning of the fiscal year
to the fiscal period.

In the book code cell we keep the actual value because we need actual
data from the accounts. We keep the base value in the fiscal year and period. But we specify
year-to-date or YTD in the periods covered field. This setting allows us to get the balance
at the end of the fiscal period. We need to touch one more important concept which is
named a posting layer. Every ledger transaction in the system is recorded to the exact posting
layer. This allows in some circumstances to split data for different reporting purposes
like GAAP, taxation, IFRS, etc. In order to get the transactions of the requited posting
layer, we need to set up the attribute filter for the column.

To do so, let s double-click
on the field here. We choose posting layer attribute. And select current layer in the
from field. Well done! Everything is ready, let s save the column definition and close
the form. Now we are ready to setup the report definition parameters. A report definition
is a building block that uses a row definition, a column definition, and an optional reporting
tree definition to create a report. I didn t cover a tree definition in this video. If
you are interested in this functionality, please let me know in the comments. There
is a report definition form on the screen now. As I mentioned, the report definition
uses a row and column definitions to create reports. There is a building blocks section.
We should specify our newly created column and row definitions here. The management reporter
also has a drill down functionality. It means that you can navigate to the different level
of data granularity by clicking on the elements in the report. To activate the drill down
we use the detail level parameter. We can also specify how to divide the lower level
of data.

Let s have a closer look at this option. By default, the drill down works in
the following way. When you click on the line or amount in the report where you need to
get a lower level of data, the system show the report where it splits the amount among
ledger accounts and financial dimensions. It is possible to change that behavior and
split the amount among the ledger accounts only or among dimensions you need. Can you
see the difference? Now let s setup the drill down functionality, so we set the detail level
to the financial, account, & transaction. And for this example, I would like to see
in the drill down report only ledger accounts. I already configured the set where I only
include the ledger account. So, I choose the account value in the financial set parameter.
Next step is to set headers.

These settings are on the headers and footers tab. There
are three sections. The first is printed on the most left part of the report. The second
is printed in the middle. And the third is on the most right. Let s put or header in
the center of the page. We need the report name. Then the blank line Then the company
name. The blank line. After that let s show the information about the covered period.
I use the period covered and date year month labels for this. The report definition is
ready. Let s save it and generate the report. Our income statement is ready to be generated.
Let s go to the Dynamics 365 Finance web interface and generate our first report. Now you can
see the financial report page. Our report is not shown here yet. We should refresh the
page and then we will generate the report.

Let s do it! Refreshing the page. Or report
has appeared. Click on the generate button. Enter the 31st of December 2015, OK. The system
is generating report now. The report is ready. Let s click on the view button and have a
look at the report. The header has the name of the report, the name of the legal entity
and the period of the report. The Rows, amounts, and totals are in place. Let s check the drilldown
functionality. Clicking on the revenue. All ledger accounts which were used to calculate
the amount are shown. It s sweet. Clicking on the amount. Now we see all transactions
which were used to calculate the amount. We set up the income statement in Dynamics 365
Finance. I hope this video helped you to understand the key concepts behind the financial reporting
in the system. If you liked this video, please give it thumbs up. Please comment your ideas
about financial reporting in Dynamics 365 Finance. And if you are not subscribed yet,
don t forget to subscribe.

Thank you so much for watching. See you soon..

test attribution text

Add Comment