1. Basic concepts

I use the which contains a good example of the chart of accounts.

There are the following accounts:

1. Assets are all accounts from 100500 till 199990

o Cash and cash equivalents are from 110100 till 119000

o Accounts receivable are from 130000 till 130900

o Inventory accounts are from 140000 till 150990

2. Liabilities are all accounts from 200000 till 250990

o Accounts payable are from 211000 till 212990

3. Owner’s Equity are all accounts from 300000 till 309900

4. Profit and Loss are all accounts from 400000 till 899990

o Sales accounts are from 401000 till 401990

o Cost of goods sold accounts are from 500000 till 519900

o Expense accounts are from 600000 till 699900

Note that the header and total accounts are available in the Chart of accounts form. The Header accounts arejust a label and is used in reports and inquiries. The total account contains the sum of all accounts that are assigned to it. The header and total accounts are not used in a transaction and do not influence the accounting equation. They are used for convenience. For example the 119000 (TOTAL CASH & CASH EQUIVALENTS) account shows the total amount for the accounts from 110100 till 119000 (select the total account and click Setup > Totals button to verify this) – it is not necessary to manually sum all accounts to know how much cash the company has.

We will use some of these accounts when analyzing the purchase and sales transactions in Microsoft Dynamics AX.

Financial Statements – Balance Sheet, Income Statement, and Cash Flow Statement

When we purchase or sell, we use the circle to analyze the current financial situation in the company. The circle answers the questions how many assets or liabilities there are in the company for the current moment. In other word, the circle is a snapshot of the company’s financials. In accounting, instead of the circle the Balance sheet is used.

The accounting balance sheet is one of the major financial statements used by accountants and business owners. The balance sheet presents a company’s financial position at the end of a specified date. Because the balance sheet informs the reader of a company’s financial position as of one moment in time, it allows someone—like a creditor—to see what a company owns as well as what it owes to other parties as of the date indicated in the heading. This is valuable information to the banker who wants to determine whether or not a company qualifies for additional credit or loans. Others who would be interested in the balance sheet include current investors, potential investors, company management, suppliers, some customers, competitors, government agencies, and labor unions. .

We already know how to answer the questions whether our company is profitable or not. To know this, it is required to sum the amounts of all profit and loss accounts. In our example, we have the Sales,