Guide To Learn: BlogBloghttps://www.guidetolearn.com/Thu, 28 Mar 2024 15:35:33 GMTurn:store:1:blog:post:5https://www.guidetolearn.com/the-technological-wonders-of-saudi-arabian-localized-dynamics-365-financeThe Technological Wonders of Saudi Arabia with localized Dynamics 365 Finance<p style="text-align: left;">The Kingdom of Saudi Arabia, a country renowned for its technological advancements and commitment to fiscal responsibility.</p> <p style="text-align: left;">In this blog, we will explore the top 5 technological wonders of Saudi Arabia, while also shedding light on the utilization of fiscal documents and the localization of Dynamics 365 Finance in the Kingdom.</p> <p style="text-align: left;"><strong>Advanced Data Centers and Fiscal Documentation:</strong></p> <p style="text-align: left;">Saudi Arabia's state-of-the-art data centers serve as the backbone of its digital infrastructure.</p> <p style="text-align: left;">Alongside this technological marvel, the Kingdom places great emphasis on fiscal documents, ensuring transparency, accuracy, and compliance in financial transactions.</p> <p style="text-align: left;">The integration of Dynamics 365 Finance localization with fiscal documents streamlines financial operations, providing businesses with a comprehensive platform to manage and track their financial activities.</p> <p style="text-align: left;"><strong>Smart Cities and Fiscal Compliance:</strong></p> <p style="text-align: left;">Saudi Arabia's commitment to smart city initiatives is accompanied by a strong focus on fiscal compliance. Dynamics 365 Finance localization allows businesses operating within these smart cities to adhere to fiscal regulations seamlessly.&nbsp;</p> <p style="text-align: left;">By utilizing the platform, organizations can generate accurate fiscal documents, such as invoices and receipts, that comply with local requirements. This alignment between smart city initiatives and fiscal compliance ensures a harmonious integration of technology and financial accountability.</p> <p style="text-align: left;"><strong>Digital Transformation and Efficient Fiscal Practices:</strong></p> <p style="text-align: left;">Saudi Arabia's digital transformation journey is augmented by the utilization of efficient fiscal practices. Dynamics 365 Finance localization enables businesses to digitize their financial operations, replacing manual processes with automated workflows.&nbsp;</p> <p style="text-align: left;"><strong>Cybersecurity and Secure Fiscal Transactions:</strong></p> <p style="text-align: left;">As Saudi Arabia embraces advanced technologies, cybersecurity remains a top priority. The localization of Dynamics 365 Finance incorporates robust security measures to protect fiscal transactions and sensitive financial data.&nbsp;</p> <p style="text-align: left;"><strong>Types of Fiscal Documents</strong>:</p> <p style="text-align: left;">(Fatora) فاتورة (Invoice): In Saudi Arabia, businesses issue invoices, known as "فاتورة" (Fatura), to document the sale of goods or services. The invoice includes details such as the seller's and buyer's information, a description of the goods/services, quantities, prices, applicable taxes (such as VAT), and total amounts.&nbsp;</p> <p style="text-align: left;">Invoices are crucial for tax compliance, accounting, and auditing purposes.</p> <p style="text-align: left;">Receipts (Tasrih): Receipts, or "Tasrih," are issued by businesses to customers as proof of purchase. These documents include information such as the date of the transaction, items purchased, total amount paid, and any taxes charged. Tasrih plays a critical role in tracking transactions, facilitating returns or exchanges, and preventing tax evasion.</p> <p style="text-align: left;"><strong>Credit Notes and Debit Notes</strong>: Credit notes and debit notes are used to adjust previous transactions. A credit note is issued when there is a refund or credit due to the customer,&nbsp;</p> <p style="text-align: left;">إيصال (Receipt): A receipt, or "إيصال" (Is'al), is issued to customers as proof of payment received. It typically includes details such as the date, amount paid, description of the transaction, and any relevant tax information.</p> <p style="text-align: left;">While a debit note is used to account for additional charges or adjustments. These documents help in maintaining accurate financial records and ensuring proper reconciliation of transactions.</p> <p style="text-align: left;"><strong>Delivery Notes (Tashir):</strong></p> <p style="text-align: left;">Delivery notes, or "Tashir," are commonly used in logistics and supply chain operations. They provide details about the goods being delivered, including the quantity, description, and recipient's information. Tashir acts as proof of delivery and helps in reconciling the inventory with the actual shipments made.</p> <p style="text-align: left;">A <strong>fiscal establishment </strong>in Saudi Arabia refers to any legal entity or individual engaged in business activities subject to taxation. Businesses must register with the General Authority of Zakat and Tax (GAZT) and obtain a unique taxpayer identification number. This identification number is used for tax reporting, compliance, and identification purposes.</p> <p style="text-align: left;">preventing tax evasion and ensuring accurate documentation of transactions.</p> <p style="text-align: left;">Saudi Arabia has specific requirements for <strong>fiscal printers</strong>, which are used by businesses to issue receipts and ensure compliance with tax regulations.</p> <p style="text-align: left;">The fiscal printers are equipped with features to record transactions, generate fiscal receipts with unique identifiers, and store data securely. The use of fiscal printers helps in preventing tax evasion and ensuring accurate documentation of transactions.</p> <p style="text-align: left;">Please note that the information provided is a general overview, and it's advisable to consult official sources or local tax authorities in Saudi Arabia for precise and up-to-date information on fiscal documents, fiscal establishments, and any specific requirements related to the country's tax system.</p>urn:store:1:blog:post:4https://www.guidetolearn.com/exploring-fiscal-documents-and-financial-accountability-by-unveiling-the-cultural-marvels-of-brazilExploring Fiscal Documents and Financial Accountability in Brazil<p style="text-align: left;">From the energetic rhythms of samba to the breathtaking landscapes of the Amazon rainforest, Brazil offers a cultural tapestry that is truly awe-inspiring. Join us as we dive into the wonders of Brazil's culture and uncover the significance of fiscal documents in maintaining financial accountability.</p> <p style="text-align: left;">If you plan to implement <strong>Dynamics 365 Finance</strong> with <strong>Braziln localization</strong>, you might as well, Immerse yourself in the captivating cultural heritage of Brazil, where every corner reveals a new marvel. From the exuberant Carnival celebrations that ignite the streets with color and joy to the iconic Christ the Redeemer statue standing tall over Rio de Janeiro, Brazil's cultural treasures are bound to leave you spellbound.</p> <p style="text-align: left;">Beyond its vibrant culture, Brazil's financial system relies on a robust framework of <strong>fiscal documents.</strong> These documents, mandated by law, ensure transparency, accurate tax calculation, and compliance. From invoices to receipts, they serve as crucial evidence of financial transactions, maintaining a transparent and accountable financial ecosystem.</p> <p style="text-align: left;">Fiscal documents in Brazil play a vital role in ensuring transparency and facilitating compliance with tax regulations. They provide a clear trail of financial transactions, enabling auditing and verification by tax authorities. By adhering to these documents, businesses contribute to a fair and equitable tax system, preventing tax evasion and promoting financial integrity.</p> <p style="text-align: left;">In addition to compliance, fiscal documents enable businesses to track and control their financial activities effectively. By maintaining accurate records of income, expenses, and taxes, businesses can make informed decisions and maintain financial stability. These documents serve as a valuable tool for financial planning and strategic growth.</p> <p style="text-align: left;">The utilization of fiscal documents in Brazil goes beyond individual businesses. These documents contribute to the overall health of the economy by ensuring the collection of taxes, which play a vital role in funding public services and infrastructure development. By embracing fiscal responsibility, Brazil sustains its economic growth and prosperity.</p> <p style="text-align: left;">If you need any help implementing Dynamics 365 Finance and Operations in Brazil, let us help you learn the fiscal practices with Microsoft Dynamics 365 Finance that contribute to the country's remarkable success.</p> <p style="text-align: left;">In summary, Brazil, like many other countries, utilizes fiscal documents as a crucial part of its financial system to ensure transparency, accuracy, and compliance. These documents play a vital role in regulating financial transactions and facilitating tax collection. Let's explore why fiscal documents are important in Brazil.</p> <ol> <li> <p style="text-align: left;">Legal Requirements: In Brazil, businesses are required by law to issue fiscal documents for their financial transactions. These documents serve as evidence of the transaction and are necessary for legal compliance. They help maintain a transparent and accountable financial system.</p> </li> <li> <p style="text-align: left;">Tax Compliance: Fiscal documents in Brazil are essential for tax compliance purposes. They provide detailed information about transactions, including the seller's and buyer's information, description of goods or services, quantities, prices, applicable taxes, and payment terms. This information ensures accurate calculation and reporting of taxes, preventing tax evasion and promoting fair taxation.</p> </li> <li> <p style="text-align: left;">Audit and Verification: Fiscal documents are subject to auditing and verification by tax authorities in Brazil. These documents provide a clear trail of financial transactions, enabling authorities to ensure compliance with tax regulations. By having proper fiscal documents, businesses can demonstrate their adherence to the law and avoid potential penalties or legal issues.</p> </li> <li> <p style="text-align: left;">Track and Control Transactions: Fiscal documents help track and control financial transactions in Brazil. They provide a record of purchases, sales, and expenses, allowing businesses to monitor their financial activities and make informed decisions. Additionally, these documents facilitate the reconciliation of accounts and help detect any discrepancies or irregularities.</p> </li> <li> <p style="text-align: left;">Consumer Protection: Fiscal documents provide protection to consumers in Brazil. When individuals make purchases, they receive a fiscal document as proof of their transaction. This document includes important details such as the date, items purchased, total amount paid, and taxes charged. It enables consumers to validate their purchases, seek warranty services, or exercise their rights if any issues arise.</p> </li> </ol>urn:store:1:blog:post:3https://www.guidetolearn.com/a-journey-through-captivating-landscapes-and-rich-culture-with-austrian-localized-dynamics-365-financeA Journey Through Captivating Landscapes and Rich Culture of Austria with localized Dynamics 365 Finance<p style="text-align: left;"><strong>Austria</strong>, a land of breathtaking landscapes and rich cultural heritage, offers a plethora of incredible experiences. Majestic Alpine Scenery, Viennese Coffee Culture, Rich Musical Heritage, Architectural Marvels, Festivals, and Traditions are only the top 5 great things about this charming country and its captivating culture, that I could think of.</p> <p style="text-align: left;">As you immerse yourself in Austria's majestic landscapes, vibrant culture, and historic traditions, it's worth appreciating the seamless integration of efficient fiscal practices that underpin the country's <strong>financial system</strong>.</p> <p style="text-align: left;">Probably you might wonder how <strong>Dynamics 365 Finance</strong>, has anything to do with Austria, a country nestled amidst awe-inspiring natural beauty, beckons travelers with its irresistible charm and vibrant cultural tapestry.</p> <p style="text-align: left;">Well, there's more to Austria than its breathtaking landscapes and captivating traditions. Behind the scenes, Austria boasts an efficient <strong>fiscal system</strong> supported by a range of <strong>fiscal documents</strong> that ensure transparency, accuracy, and compliance.</p> <p style="text-align: left;">In Austria, fiscal documents play a crucial role in regulating financial transactions and facilitating tax collection. Businesses in Austria utilize various fiscal documents to formalize their operations and meet legal requirements.</p> <p style="text-align: left;">One of the primary fiscal documents used is the <strong>Rechnung</strong>, also known as an <strong>invoice</strong>. A Rechnung contains essential details such as the seller's and buyer's information, a description of the goods or services, quantities, prices, applicable taxes, and payment terms. This document serves as evidence of the transaction and is vital for both businesses and tax authorities.</p> <p style="text-align: left;">Another important fiscal document in Austria is the <strong>Beleg </strong>or <strong>receipt.</strong> Businesses issue Beleg to customers as proof of purchase, containing information such as the date, items purchased, the total amount paid, and taxes charged. Beleg plays a critical role in tracking transactions and preventing tax evasion.</p> <p style="text-align: left;">A <strong>fiscal establishment</strong> in Austria refers to any legal entity or individual engaged in economic activities subject to taxation. Businesses are required to register with the relevant tax authorities, obtain a tax number, and comply with tax regulations. The fiscal establishment status enables businesses to fulfill their tax obligations, maintain proper accounting records, and report their financial activities accurately.</p> <p style="text-align: left;">Austria's efficient <strong>fiscal establishment</strong> also extends to the use of <strong>fiscal printers</strong>, which are devices capable of issuing and printing fiscal documents directly. Austria does not have specific requirements for fiscal printers. However, businesses are required to ensure that their invoicing systems or software generate invoices in compliance with the country's tax regulations. The invoices should contain all necessary information and meet the criteria set by the Austrian tax authorities.</p> <p style="text-align: left;">These printers are equipped with advanced features to ensure accuracy, security, and compliance with fiscal regulations. By integrating fiscal printers into their operations, businesses in Austria streamline the process of generating fiscal documents, reduce manual errors, and enhance the overall efficiency of their fiscal practices.</p> <p style="text-align: left;">The utilization of fiscal documents, such as <strong>Rechnung</strong> and <strong>Beleg,</strong> along with the implementation of modern <strong>fiscal printers</strong>, reflects Austria's commitment to fiscal responsibility, transparency, and effective tax administration.</p> <p style="text-align: left;">If you need any help implementing Dynamics 365 Finance and Operations in Austria, we can help you learn by shedding light on the fiscal practices with Microsoft Dynamics 365 Finance that contribute to the country's remarkable success.</p>urn:store:1:blog:post:2https://www.guidetolearn.com/guide-to-microsoft-dynamics-365-finance-basic-accounting-principlesGuide To Microsoft Dynamics 365 Finance basic accounting principles<p><strong>Basic accounting principles in Dynamics 365</strong></p> <p>Microsoft Dynamics 365 Finance is a comprehensive business management solution for mid-sized and larger organizations that works like and with familiar Microsoft software to help your people improve productivity.</p> <p>Microsoft Dynamics 365 Finance and Operations apps are built to make it easy to do business across locations and countries by consolidating and standardizing processes, providing visibility across your organization, and help in simplifying compliance.</p> <p>&nbsp;With Microsoft Dynamics 365 Finance and Operations apps, you can be confident your business management solution is and will continue to be, relevant to the needs of your people and the demands of your industry and business.</p> <p>Expand easily across international borders with the country- and region-specific functionality, including capabilities for multiple languages and currencies and compliance with local financial requirements for over 36 countries/regions with the full support of GDRP and localization and regulatory features.</p> <p>Consolidate financial, operational, and customer data while preserving local information to build your strategic edge and personalized customer, partner, and supplier relationships.</p> <p>The first, and most important, the function of financial module in Microsoft Dynamics 365 Finance and Operations apps is to provide you with information that will help you see the trends taking place within your business's operation.</p> <p>Throughout this article alongside&nbsp;<a href="https://www.guidetolearn.com/" target="_blank" rel="nofollow noopener">our training videos</a>, you will understand complete business processes by using a simple set of records, which makes it possible to show you what is happening with your business, which areas are productive and cost-effective, and will require the implementation of changes.&nbsp;</p> <p>Configuration of Microsoft Dynamics 365 Finance must be tailored to your company needs. Obviously, a service-oriented industry will not use the same records as a retail business.&nbsp;</p> <h2>Quick Basics of General Accounting</h2> <p>Let's get familiar with the basics of general accounting. It is necessary to understand how terminology and practices of general accounting fit into Microsoft Dynamics 365 Finance and Operations apps, whether or not you are a professional in the accounting department in your company, a consultant work in a VAR (Value Added Reseller), a developer who wants to customize or modify functionality.</p> <p><strong>Income and Expenses</strong></p> <p>Every transaction that takes place involves money that is earned, spent, infused into, or taken out of business. All earnings and monies spent as a result of doing business fall under one of two classifications: income (or revenue) and expenses. Before you set up Financial Module in Microsoft Dynamics 365 Finance and Operations apps, let’s understand some basic facts about the two terms.</p> <p><strong>Income (Or Revenue)</strong></p> <p>Income is all the money received by your business in any given period of time. It is made up of monies derived from retail sales, wholesale sales, sale of service, interest income, and any miscellaneous income.</p> <p><strong>Expenses</strong></p> <p>Expenses are all the monies paid out by your business. They include those paid by check and those paid by cash. All require careful recording. Expenses fall into four distinct categories:</p> <p>&nbsp;1)&nbsp;&nbsp;&nbsp;Cost of good sold (Inventory)</p> <ul> <li>The cost of the merchandise or inventory sold during an accounting period.</li> <li>Includes material and labor or the purchase price of manufactured goods.</li> </ul> <p>2)&nbsp;&nbsp;&nbsp;Variable (selling) expenses</p> <ul> <li>Those expenses are directly related to the selling of your product or service.</li> <li>Include marketing costs, production salaries, vehicle expenses, machinery and equipment, and any other product or service overhead.</li> </ul> <p>3)&nbsp;&nbsp;&nbsp;Fixed (administrative) expenses</p> <ul> <li>These are costs not directly related to your production or rendering of services. They are the type of expenses that all businesses have in common.</li> <li>Include normal office overhead such as accounting and legal, bank charges, office salaries, payroll expenses, rents, licenses, office equipment, telephone, utilities, etc.</li> </ul> <p>4)&nbsp;&nbsp;&nbsp;Other expenses</p> <ul> <li>Interest expense</li> <li>Include monies paid out for interest on purchases, loans, etc.</li> </ul> <p><strong>Note</strong>: Some categories of expenses may be divided into both selling and administrative expenses. Examples are:</p> <ul> <li><strong>Utilities</strong>. Those used for production as differentiated from utilities consumed in the office, heating, restrooms, etc.</li> <li><strong>Telephone</strong>. Telemarketing and advertising are selling expenses. Monthly charges and office telephone charges are administrative expenses.</li> <li><strong>Freight and postage</strong>. Shipping of your product is a selling expense. Postage used as office overhead is an administrative expense.</li> </ul> <p><strong>Deductible Expenses</strong></p> <p>Deductible expenses are those expenses that are allowed by the government when you are computing the net profit (loss) or taxable income at the end of your business tax year. To pay the least amount of income tax and maximize your own profits, you need to become familiar with those expenses that you are allowed by law to deduct. Knowing ahead of time which expenses are deductible will help you to better utilize them to your advantage while keeping proper records for income tax verification and business analysis.</p> <p><strong>Fully Deductible or Depreciable</strong></p> <p>Expenses fall into two major categories:</p> <p>1)&nbsp;&nbsp;&nbsp;<strong>Fully deductible expenses</strong>: all expenses incurred in the operation of your business are deductible in their entirety in the year in which they occur and reduce your net income by their amount unless they are major expenses that fall in the depreciable assets category. Expenses will have to be itemized for tax purposes and receipts should be easily retrieved for verification.</p> <p>2)&nbsp;&nbsp;&nbsp;<strong>Depreciable expenses</strong>: if you buy a business property with an expected life of over one year and is not intended for resale, it is considered a depreciable property. They generally include tangible assets as buildings, vehicles, types of machinery, and equipment and also intangible assets such as copyrights or franchises. Depreciation is taken at a fixed rate. The portion allowed for the current year is deducted as an expense.&nbsp;&nbsp;&nbsp;</p> <p><strong>Cash Accounting versus Accrual Accounting</strong></p> <p>Selecting the method to be used by your company is an important decision that must be made very early in the life of your business. Once it has been established, it is difficult to change due to government legalities.</p> <p>The two methods are cash accounting and accrual accounting. Cash accounting is the most popular method used for small businesses because it is the most simple and direct to deal with. However, the government requires that certain types of businesses use the accrual basis of accounting.</p> <p>Please note that Microsoft Dynamics 365 Finance and Operations apps are designed to support all types of businesses of any sizes, therefore it does support both Cash and Accrual methods.&nbsp;</p> <p><strong>1)&nbsp;&nbsp;Cash Accounting</strong>. The reporting of your revenues and expenses at the time they are actually received or paid. A company that uses the cash accounting method is considered to have made a transaction when the cash is physically received or paid out for services or products.</p> <p><strong>Pros</strong>:</p> <ul> <li>Simple</li> <li>Allows for use of single-entry accounting</li> <li>Taxes paid only on cash actually received</li> </ul> <p><strong>Cons</strong>:</p> <ul> <li>Does not closely match revenues and expenses to the actual period in which the transaction occurred</li> </ul> <p><strong>2)&nbsp;&nbsp;Accrual Accounting. &nbsp;</strong>The recognition of revenues and expenses at the time they are earned or incurred, regardless of when the cash for the transaction is received or paid out.&nbsp;</p> <p><strong>Pros</strong>:</p> <ul> <li>Provides a better analytical tool because it closely matches revenues and expenses to the actual period in which the transactions occurred.</li> </ul> <p><strong>Cons</strong>:</p> <ul> <li>Requires a more complex double entry system of accounting</li> <li>Income tax is paid on revenues invoiced out but yet received.&nbsp;</li> </ul> <p>The following example helps you understand the difference between cash and accrual accounting:</p> <p>Sabrina owns a consulting company. In January she earned $4,000 but received only $1,500 in check. At the same time, here expenses were:</p> <ul> <li>Rent: $1,500, which she paid</li> <li>Advertising: $500, which she did not pay</li> <li>Utilities: $250, which she paid</li> <li>Miscellaneous: $50, which she paid</li> <li>Office supplies: $100, which she did not pay.</li> </ul> <p><img style="display: block; margin-left: auto; margin-right: auto;" src="https://www.guidetolearn.com/images/uploaded/t1.png" alt="Cash Accounting versus Accrual Accounting" width="627" height="216" /></p> <p>Microsoft Dynamics 365 Finance and Operations apps are designed to simplify the accounting whether you use cash or accrual accounting. It performs lots of ledger posting using offset accounts. This simplifies the complex double-entry system.</p> <p><strong>Essential General Records</strong></p> <p>In the past, only double-entry accounting was thought to be proper for businesses. However, it is now generally recognized that a single-entry system will adequately serve much smaller (micro) businesses. As the business grows and becomes more complex, it will become necessary to move into double-entry accounting (best accomplished through the use of Microsoft Dynamics 365 Finance and Operations apps) in which each transaction is posted as a debit to one account and a credit to another.</p> <p><strong>Single Entry</strong></p> <p>This is a term referring to a manual bookkeeping system that uses only income and expense accounts. Your personal checkbook is an excellent example of single-entry record keeping. You can view the transactions via check register.</p> <p><strong>Double Entry</strong></p> <p>This is an accounting method by which every transaction is recorded as debits or credits. This is based on the premise that every transaction has two sides. A sale, for example, could be both delivery of goods and a receipt of payment. On your Balance Sheet, the delivery of goods to your customer decreases your inventory and would be recorded as a credit (reduction of assets), while the payment to you for the goods purchased from you would increase cash and would be recorded as a debit (an increase of assets). You should note that the words debit and credit do not have the usual non-accounting connotation in this application.</p> <p>The two halves of the double-entry always have to be equal. Through the utilization of Microsoft Dynamics 365 Finance and Operations apps, the process has been simplified for the user, because the transaction is easily entered and matched to its primary account. Microsoft Dynamics 365 Finance and Operations apps then automatically debit or credit the proper corresponding account with the use of an offset account in a journal entry.</p> <p>&nbsp;<strong>Note</strong>: in double-entry systems such as Microsoft Dynamics 365 Finance and Operations apps, at least two accounts must be used. The Balance Sheet equation must remain in balance after every transaction.</p> <p><strong>Example:</strong></p> <p>1.&nbsp;&nbsp;&nbsp;The company started with an investment of $50,000.</p> <p><img style="display: block; margin-left: auto; margin-right: auto;" src="https://www.guidetolearn.com/images/uploaded/1.png" alt="Step 1" width="612" height="83" /></p> <p>2.&nbsp;&nbsp;&nbsp;The company earned $20,000 on the account.</p> <p><img style="display: block; margin-left: auto; margin-right: auto;" src="https://www.guidetolearn.com/images/uploaded/2.png" alt="Step 2" width="604" height="101" /></p> <p>3. The company purchased a $55,000 building with $5,000 down and a mortgage for the remainder.</p> <p><img style="display: block; margin-left: auto; margin-right: auto;" src="https://www.guidetolearn.com/images/uploaded/3.png" alt="Step 3" width="609" height="168" /></p> <p>4. Paid $125 for the utility bill.</p> <p><img style="display: block; margin-left: auto; margin-right: auto;" src="https://www.guidetolearn.com/images/uploaded/5.png" alt="Step 4" width="607" height="106" /></p> <p>5. Paid personal (withdrawal from owner’s capital resources) telephone bill for $55</p> <p><img style="display: block; margin-left: auto; margin-right: auto;" src="https://www.guidetolearn.com/images/uploaded/6.png" alt="Step 5" width="612" height="80" /></p> <p><strong>The flow of Accounting Data</strong></p> <p>After a transaction is completed, the initial record of that transaction, or a group of similar transactions, is evidenced by a business document such as a sales ticket, a check stub, or a cash register tape. The amount of the debits and credits are automatically transferred to the proper accounts within the chart of accounts table in Microsoft Dynamics 365 Finance and Operations apps.</p> <p>The flow of data from transaction to individual accounts may be diagrammed as follows:</p> <p><img style="display: block; margin-left: auto; margin-right: auto;" src="https://www.guidetolearn.com/images/uploaded/10.png" alt="The flow of Accounting Data" width="590" height="215" /></p> <p><strong>Chart of Accounts</strong></p> <p>Double-entry software accounting such as Microsoft Dynamics 365 Finance and Operations apps requires that you set up a chart of accounts. These accounts are used when recording transactions in Microsoft Dynamics 365 Finance and Operations apps so that they will be properly posted to the correct accounts. Your chart of accounts must match your business.</p> <p><strong>Debits and Credits</strong></p> <p>For every entry you make in Microsoft Dynamics 365 Finance and Operations apps journals, one account will be debited and the other will be credited. And the debits must equal the credits. Microsoft Dynamics 365 Finance and Operations apps automatically take care of both sides of this entry.</p> <p>&nbsp;There is a well-known accounting equation that must always remain true in your business bookkeeping. The equation is as follow:</p> <p>&nbsp;Assets – Liabilities = Net worth (equity/capital)</p> <p>The accounting equation is kept in balance through the double-entry system such as Microsoft Dynamics 365 Finance and Operations apps. In the sample below you will see an example of a chart of accounts I have set up six different categories. Increases and decreases in each of these accounts are represented by debits or credits as follows:</p> <p><img style="display: block; margin-left: auto; margin-right: auto;" src="https://www.guidetolearn.com/images/uploaded/11.png" alt="Debits and Credits" width="596" height="159" /></p> <p><strong>Example1</strong>: When you buy office supplies with a check, you must credit (decrease) your bank account (an asset) and you will debit (increase) your office expense account (expense). One is debited and the other is credited in an equal amount.</p> <p><strong>Example2</strong>: When you purchase $10,000 of office furniture and equipment, you make a down payment of $1,000, and take a loan for the $9,000 balance. The correct double entry for this transaction would be:&nbsp;</p> <p><img style="display: block; margin-left: auto; margin-right: auto;" src="https://www.guidetolearn.com/images/uploaded/12.png" alt="Debits and Credits" width="596" height="99" /></p> <p>The debits and the credits balance ($10,000), but the increases and the decreases do not have to balance.</p> <p><strong>Note</strong>: To simplify the concept remember a simple rule; the one giving in the transaction is the creditor which records the corresponding account as a credit, and the one receiving in the transaction is the debtor which records the corresponding account as a debit. For example, if you sell one hour of your service, service revenue is the giver, therefore, is credited and cash in the bank is the receiver therefore cash is debited and increased.</p> <p><strong>The Accounting Cycle</strong></p> <p>The entire accounting cycle of a business is shown below. Business transactions are recorded in a journal, during the month. At the end of the month, adjusting entries are prepared and placed in the journal. A final set of closing entries are then placed in the journal, and the financial statements such as the Balance Sheet and Income Statement are prepared.&nbsp;</p> <p><img style="display: block; margin-left: auto; margin-right: auto;" src="https://www.guidetolearn.com/images/uploaded/13.png" alt="The Accounting Cycle" width="528" height="251" /></p> <ul> <li><strong>Journal</strong>: The book of original entry. All transactions are recorded here first.</li> <li><strong>Transaction</strong>: Business papers and source documents.</li> <li><strong>Adjusting Entries</strong>: these are entries to assign revenue and expenses in the period incurred. These additional month-end entries match expired costs and unrecorded revenues to the period.</li> <li><strong>Balance Sheet</strong>: A snapshot of the business asset, liabilities, and owner’s equity (also known as net worth). Owner’s equity is the difference between the assets and liabilities.</li> <li><strong>Income Statement</strong>: The profit and loss of a business based on earnings less expense. This statement reflects a period of time (usually one month).</li> <li><strong>Closing Entries</strong>: Entries made to zero balance all temporary accounts at the end of the accounting periods.&nbsp;</li> </ul> <p><img style="display: block; margin-left: auto; margin-right: auto;" src="https://www.guidetolearn.com/images/uploaded/14.png" alt="" width="577" height="618" /></p> <p><img style="display: block; margin-left: auto; margin-right: auto;" src="https://www.guidetolearn.com/images/uploaded/15.png" alt="" width="562" height="606" /></p> <p><img style="display: block; margin-left: auto; margin-right: auto;" src="https://www.guidetolearn.com/images/uploaded/16.png" alt="" width="551" height="616" /></p> <p><strong>Note:&nbsp;</strong>Permanent accounts are accounts that are not closed at the end of the period. There are Balance Sheet accounts (except for withdrawals). They carry current balances as long as the business continues.</p> <p>Temporary accounts will be closed out to zero at the end of the period allowing the account to start the next period without previously accumulated funds.&nbsp;</p> <p><strong>The Ledger</strong></p> <p>Each business transaction is recorded in the journal and then posted (placed) into the ledger book.</p> <p><img style="display: block; margin-left: auto; margin-right: auto;" src="https://www.guidetolearn.com/images/uploaded/17.png" alt="" width="574" height="285" /></p> <p>The ledger has all the accounts listed in order, beginning with assets, liabilities, equity, revenue, and expense accounts.</p> <p>&nbsp;The general method of recording these ledger account transactions in Microsoft Dynamics 365 Finance and Operations apps is done via Journal entries in most modules. This process consists of the following steps:</p> <p>&nbsp;1)&nbsp;&nbsp;&nbsp;After reading the transaction, determine which of the accounts are affected. In Microsoft Dynamics 365 Finance and Operations apps, at least two accounts must be affected. The concept of an offset account is used to identify the second account.</p> <p>2)&nbsp;&nbsp;&nbsp;Determine whether the accounts you selected are assets, liabilities, etc. This can be determined by choosing the Account Type column in a journal entry.</p> <p>3)&nbsp;&nbsp;&nbsp;Determine if the accounts are increased (debited) or decreased (credited) by the transaction.</p> <p>4)&nbsp;&nbsp;&nbsp;Place the correct amount on the proper side of the “T” account. This process can be achieved by choosing either the debit or credit column in a journal entry.</p> <p><strong>Note</strong>: “T” Accounting has been used for hundreds of years.</p> <p><img style="display: block; margin-left: auto; margin-right: auto;" src="https://www.guidetolearn.com/images/uploaded/18.png" alt="" width="276" height="122" /></p> <p>The increase and decrease of an account are difficult to understand. As a reminder please consider the following table:</p> <p><img style="display: block; margin-left: auto; margin-right: auto;" src="https://www.guidetolearn.com/images/uploaded/19.png" alt="" width="654" height="582" /></p>urn:store:1:blog:post:1https://www.guidetolearn.com/letter-of-credit-in-dynamics-365-for-finance-and-operations-appsLetter of credit in Dynamics 365 for Finance and Operations apps<p>Letters of credit are used for international transactions to ensure that payments will be made. A letter of credit is an agreement that is issued by a bank, in which the bank agrees to ensure payment on behalf of the buyer if the terms of the agreement between the buyer and seller are met. Note that a letter of credit is also referred to as a documentary credit (DC).</p> <p>For an import letter of credit, the legal entity is the buyer or the applicant for the letter of credit. For an export letter of credit, the legal entity is the seller or the beneficiary of the letter of credit. The following parties are involved with a letter of credit:</p> <ul> <li> <p>The applicant (buyer) intends to pay for the goods.</p> </li> <li> <p>The beneficiary (seller) will receive the payment.</p> </li> <li> <p>The issuing bank that issues the letter of credit.</p> </li> <li> <p>The advising bank carries out the transaction on behalf of the applicant.</p> </li> </ul> <p>The letter of credit includes a description of the goods, any required documents, the date of shipment, and the expiration date after which payment will not be made. The issuing bank collects a margin for the letter of credit.</p> <p>A letter of credit can be <strong>Revocable</strong> or <strong>Irrevocable</strong>. The nature of a letter of credit can be <strong>Transferable</strong>, <strong>Nontransferable</strong>, or <strong>Revolving</strong>. Typically, a letter of credit is an irrevocable and confirmed agreement that payment will be made to a specific beneficiary upon submission of complete and accurate shipping documentation.</p> <p>A letter of credit allows you to:</p> <ul> <li> <p>Generate a report of the bank facilities and their uses.</p> </li> <li> <p>Generate the entries for the letter of credit.</p> </li> <li> <p>Print the letter of the credit application form.</p> </li> <li> <p>Enter the letter of credit details.</p> </li> <li> <p>Amend the letter of credit.</p> </li> <li> <p>Record letter of credit margin payments.</p> </li> <li> <p>Allocate a margin amount to shipments.</p> </li> <li> <p>Associate a packing slip in a purchase order with the letter of credit shipment details.</p> </li> <li> <p>Process payment for the invoice.</p> </li> <li> <p>View the cash flow forecast according to the letter of credit.</p> </li> <li> <p>Print various reports and inquiries related to the letter of credit.</p> </li> <li> <p>Generate a vendor statement.</p> </li> </ul> <div><span style="font-size: 12pt;"><strong><a class="LW_CollapsibleArea_TitleAhref" title="Click to collapse. Double-click to collapse all."><span class="LW_CollapsibleArea_Title">Activate the letter of credit as a bank document</span></a></strong></span></div> <div class="sectionblock"> <p>You must activate the letter of credit as a bank document before you initiate transactions that involve letters of credit.</p> <ol> <li> <p>Click <strong>Cash and Bank Management</strong> &gt; <strong>Setup</strong> &gt;&nbsp;<strong><strong>Cash and Bank Management</strong> parameters</strong>.</p> </li> <li> <p>On the <strong>Ledger</strong> link, click the <strong>Bank document</strong> FastTab.</p> </li> <li> <p>Select the <strong>Enable import letter of the credit</strong> check box to activate the letter of credit.</p> </li> <li> <p>Close the form to save your changes.</p> </li> </ol> <div><span style="font-size: 12pt;"><strong><a class="LW_CollapsibleArea_TitleAhref" title="Click to collapse. Double-click to collapse all."><span class="LW_CollapsibleArea_Title">Set up the bank facilities and posting profiles</span></a></strong></span></div> <div class="sectionblock"> <p>You can set up bank facility types and bank facility groups in the <strong>Bank facilities</strong> form. After the bank posting profile is set up, you can create facility agreements.</p> <ol> <li> <p>Click <strong>Cash and bank management</strong> &gt; <strong>Setup</strong> &gt; <strong>Bank documents</strong> &gt; <strong>Bank facilities</strong>.</p> </li> <li> <p>On the <strong>Facility groups</strong> link, click <strong>New</strong> to create a new bank facility group.</p> </li> <li> <p>In the <strong>Facility group</strong> and <strong>Description</strong> fields, enter the bank facility group name and description.</p> </li> <li> <p>Click the <strong>Facility types</strong> link, and then click <strong>New</strong> to create a new facility type.</p> </li> <li> <p>Enter a unique code in the <strong>Facility type</strong> field, and then in the <strong>Facility group</strong> and <strong>Facility nature</strong> fields, select the group and nature of the bank facility.</p> </li> <li> <p>Close the form to save your changes.</p> </li> <li> <p>Click <strong>Cash and bank management</strong> &gt; <strong>Setup</strong> &gt; <strong>Bank documents</strong> &gt; <strong>Bank documents posting profile</strong>.</p> </li> <li> <p>In the <strong>Settle account</strong> field, select the main account for settlement. This account is used when calculating the cash flow forecast.</p> </li> <li> <p>In the <strong>Charges account</strong> field, select the account for expense transactions.</p> </li> <li> <p>In the <strong>Margin account</strong> field, select the account for the margin transaction. This account is debited when the opening margin is posted and credited when the payment is posted. A margin is an advance payment to the bank that is adjusted by the bank when the final settlement is made by the buyer. &nbsp;</p> </li> <li>Close the form to save your changes.</li> </ol> <div><span style="font-size: 12pt;"><strong><a class="LW_CollapsibleArea_TitleAhref" title="Click to collapse. Double-click to collapse all."><span class="LW_CollapsibleArea_Title">Create a bank facility agreement</span></a></strong></span></div> <div class="sectionblock"> <p>You must create bank facility agreements that record various facilities provided by the bank. Bank documents can be used in transactions only after facility agreements are created. The bank assigns a limit for the letter of credit, which is recalculated every time a letter of credit transaction is recorded.</p> <p>When a facility agreement ends, you can create a new version of the agreement, with new starting and ending dates, by extending the old agreement.</p> <ol> <li> <p>Click <strong>Cash and bank management</strong> &gt; <strong>Setup</strong> &gt; <strong>Bank documents</strong> &gt; <strong>Bank facility agreements</strong>.</p> </li> <li> <p>Press CTRL+N to create a new line.</p> </li> <li> <p>In the <strong>Agreement number</strong>, <strong>Bank account</strong>, <strong>Start Date</strong>, and <strong>End date</strong> fields, enter the agreement number according to the agreement with the bank, the account number at the issuing bank, and the validity period of the agreement.</p> </li> <li> <p>On the <strong>General</strong> FastTab, click <strong>Add line</strong>. Facility agreements cannot have overlapping dates. For example, if an agreement extends from January 01, 2015, to August 31, 2015, you cannot create another facility agreement that begins or ends within that period.</p> </li> <li> <p>In the <strong>Facility type</strong> and <strong>Limit</strong> fields, select the facility type, and then enter the facility amount that was negotiated with the bank. The <strong>Amount used</strong> field displays the amount that is currently used for the letter of credit.</p> </li> <li> <p>Close the form to save your changes.</p> </li> <li> <p>In the <strong>Bank facility agreements</strong> form, select the facility agreement that is no longer active, and then click <strong>Extend</strong> to extend the term of the agreement.</p> </li> <li> <p>In the <strong>New agreement number</strong> and <strong>End date</strong> fields, enter the new agreement number as assigned by the bank and the desired ending date of the agreement, and then click <strong>Extend</strong>. The value in the <strong>Start date</strong> field of the extended agreement is the day after the selected agreement’s end date. The <strong>Amount used</strong> field is set to zero because this is a newly created agreement.</p> </li> <li> <p>Close the form to save your changes.</p> </li> </ol> <div><strong><a class="LW_CollapsibleArea_TitleAhref" title="Click to collapse. Double-click to collapse all."><span class="LW_CollapsibleArea_Title">Set up vendor bank accounts</span></a></strong></div> <div class="sectionblock"> <p>Vendor bank accounts must be specified for the letter of credit transactions to be recorded appropriately.</p> <ol> <li> <p>Click <strong>Accounts payable</strong> &gt; <strong>Common</strong> &gt; <strong>Vendors</strong> &gt; <strong>All vendors</strong>. Select a vendor, and then on the <strong>Vendor</strong> tab, in the <strong>Setup</strong> group, click <strong>Bank accounts</strong>.</p> </li> <li> <p>In the <strong>Vendor bank accounts</strong> form, enter the <strong>Bank account</strong> and <strong>Bank account number</strong> information, along with any other details.</p> </li> <li> <p>Close the form to save your changes.</p> </li> </ol> <p><span style="font-size: 12pt;"><strong><a class="LW_CollapsibleArea_TitleAhref" title="Click to collapse. Double-click to collapse all."><span class="LW_CollapsibleArea_Title">Create a purchase order and enter the letter of credit details</span></a></strong></span></p> <div class="sectionblock"> <p>A letter of credit is associated with a purchase order to process vendor transactions with minimal manual intervention. The involved parties are the buyer (applicant), the seller (beneficiary), the issuing bank (buyer’s bank), and the advising bank (beneficiary’s bank). When a company is both the buyer and applicant for the letter of credit, the letter of credit is called an import letter of credit. Purchase orders that are associated with letters of credit are not considered for summary invoicing.</p> <ol> <li> <p>Click <strong>Procurement and sourcing</strong> &gt; <strong>Common</strong> &gt; <strong>Purchase orders</strong> &gt; <strong>All purchase orders</strong>.</p> </li> <li> <p>Click <strong>Purchase order</strong> to create a new purchase order.</p> </li> <li> <p>In the <strong>Create purchase order</strong> form, select the vendor account in the <strong>Vendor account</strong> field.</p> </li> <li> <p>In the <strong>Bank document type</strong> field, select <strong>Letter of credit</strong>, and then click <span class="label">OK</span>. When the <strong>Bank document type</strong> field is set as a <strong>Letter of credit</strong>, the purchase order is displayed in the list of letters of credit in the <strong>Cash and bank management</strong> module. Because the letter of credit details have not yet been added, the <strong>Require update</strong> check box on the <strong>Cash and bank management</strong> &gt; <strong>Common</strong> &gt; <strong>Letters of credit</strong> &gt; <strong>Import letter of credit/import collection</strong> list page is selected.</p> </li> <li> <p>Click <strong>Cash and bank management</strong> &gt; <strong>Common</strong> &gt; <strong>Letters of credit</strong> &gt; <strong>Import letter of credit/import collection</strong>. Double-click the order number associated with the letter of credit to be updated.</p> <p>-or-</p> <p>In the <strong>Purchase order</strong> form, click the <strong>Manage</strong> tab, and then click <strong>Letter of credit/import collection</strong>.</p> </li> <li> <p>Click the <strong>General</strong> FastTab, and in the <strong>Bank account</strong> field, select the bank that assigns the letter of credit. In the <strong>Bank document number</strong> field, enter the document number specified by the bank.</p> </li> <li> <p>Click the <strong>Lines</strong> FastTab, and then click <strong>Add line</strong> to add shipment details. Enter the necessary values in the <strong>Amount</strong>, <strong>Expected maturity date</strong>, <strong>Actual maturity date</strong>, and <strong>Document status</strong> fields. Click <strong>Fetch purchase order shipments</strong> to view the shipment details that are already specified in the purchase order lines or delivery schedule. Click <strong>Shipment margin transactions</strong> to open the <strong>Shipment margin</strong> form to view the shipment margin transactions for the selected shipment.</p> </li> <li> <p>Optional: Click the <strong>Bank document</strong> FastTab, and then specify details in the <strong>Documentary credit type</strong>, <strong>Documentary credit nature</strong>, and <strong>Expiration date</strong> fields. A letter of credit can be either <strong>Irrevocable</strong> or <strong>Revocable</strong>. It can be <strong>Nontransferable</strong>, <strong>Transferable</strong>, or <strong>Revolving</strong> in nature.</p> </li> <li> <p>Optional: Click the <strong>Bank details</strong> FastTab, and then enter the advising bank details in the <strong>Advising bank</strong> and <strong>Date of issue</strong> fields.</p> </li> <li> <p>Optional: Click the <strong>Terms</strong> FastTab, and then specify the shipment terms and payment terms for the letter of credit.</p> </li> <li> <p>Optional: Click the <strong>Insurance</strong> FastTab to specify details of the insurance request submitted by the vendor in the <strong>Insurance status</strong>, <strong>Insurance vendor number</strong>, and <strong>Insurance number</strong> fields.</p> </li> <li> <p>Click <strong>Confirm</strong> to confirm the letter of credit. The <strong>Facility balance</strong> field is updated based on the value in the <strong>LC / IC Amount</strong> field. The <strong>Amount used</strong> field in the <strong>Bank facility agreement details</strong> form is updated with the letter of credit amount.</p> <p>The letter of credit details is confirmed only if the line amounts total equals the <strong>LC / IC Amount</strong> and it does not exceed the amount available for the particular facility type.</p> </li> <li> <p>Click <strong>Print application</strong> to print the letter of credit application form to be submitted to the bank.</p> </li> </ol> <div><strong><span style="font-size: 12pt;"><a class="LW_CollapsibleArea_TitleAhref" title="Click to collapse. Double-click to collapse all."><span class="LW_CollapsibleArea_Title">Amend the letter of credit details</span></a></span></strong></div> <div class="sectionblock"> <p>If the purchase order details change, you must update the letter of credit details before you invoice the purchase order completely. You can modify a confirmed letter of credit only when the letter of credit has a <strong>Confirmed</strong> status. The bank may charge a fee for amending an existing letter of credit.</p> <ol> <li> <p>Click <strong>Cash and bank management</strong> &gt; <strong>Common</strong> &gt; <strong>Letters of credit</strong> &gt; <strong>Import letter of credit/import collection</strong>. Double-click the import letter of credit or import collection to be amended.</p> <p>–or–</p> <p>Click <strong>Procurement and sourcing</strong> &gt; <strong>Common</strong> &gt; <strong>Purchase orders</strong> &gt; <strong>All purchase orders</strong>. Select a purchase order, and then on the <strong>Manage</strong> tab, click <strong>Letter of credit/import collection</strong>.</p> </li> <li> <p>Click <strong>Amend</strong>, and then amend the letter of credit details. You can change the letter of credit amount or number of shipments if required. You can edit the shipment details only if the packing slip or invoice is not posted. If you delete a shipment line detail for which the margin was already allocated, the allocated amount is reversed to an unallocated amount in the <strong>Letter of credit margin transactions</strong> form.</p> <div class="alert">&nbsp;</div> </li> <li> <p>Click <strong>Confirm</strong> to confirm the changes made to the letter of credit. Changes must be confirmed to be saved as amendments. Each confirmed amendment results in a new version of the letter of credit. This helps to track the revision history of the letter of credit. If shipment line details are changed, the letter of credit details is confirmed only if the total shipment amount does not exceed the letter of credit amount.</p> </li> <li> <p>Click <strong>Inquiries</strong> to open the <strong>Letter of credit/import collection history</strong> form, and then view the amendment history of the letter of credit.</p> </li> <li> <p>Close the forms to save your changes.</p> </li> </ol> <div><span style="font-size: 12pt;"><strong><a class="LW_CollapsibleArea_TitleAhref" title="Click to collapse. Double-click to collapse all."><span class="LW_CollapsibleArea_Title">Post a margin payment for a letter of credit</span></a></strong></span></div> <div class="sectionblock"> <p>When you receive a letter of credit advice from the bank, you can check the margin collected by the bank and post it in a <strong>General journal</strong> of the type <span class="label">Daily</span>. To post the transaction against the appropriate posting profile, the <strong>Transaction type</strong> field must be selected as <strong>Margin</strong>.</p> <ol> <li> <p>Click <strong>General ledger</strong> &gt; <strong>Journals</strong> &gt; <strong>General journal</strong>.</p> </li> <li> <p>Press CTRL+N to create a new journal.</p> </li> <li> <p>In the <strong>Name</strong> field, select a daily journal, and then click <strong>Lines</strong> to open the <strong>Journal voucher</strong> form.</p> </li> <li> <p>In the <strong>Debit</strong> field, enter the margin amount collected by the bank.</p> </li> <li> <p>Click the <strong>Payment</strong> tab, and then in the <strong>Transaction type</strong> field, select <strong>Margin</strong>. The values in the <strong>Account type</strong>, <strong>Account</strong>, <strong>Offset account type</strong>&nbsp;and <strong>Offset account</strong> fields are displayed according to the posting profile.</p> </li> <li> <p>In the <strong>Letter of credit/import collection</strong> field, select the bank document number associated with the letter of credit.</p> </li> <li> <p>Click <strong>Post</strong> &gt; <strong>Post</strong> to post the journal.</p> </li> <li> <p>Close the form to save your changes. The margin amount for the letter of credit is recorded in the <strong>Letter of credit margin transactions</strong> form.</p> </li> </ol> <div><span style="font-size: 12pt;"><strong><a class="LW_CollapsibleArea_TitleAhref" title="Click to collapse. Double-click to collapse all."><span class="LW_CollapsibleArea_Title">Allocate the margin amount to the shipment</span></a></strong></span></div> <div class="sectionblock"> <p>To adjust the margin amount at the time of invoicing (partially or completely), the margin amount must be allocated to each shipment. You can use the <strong>Letter of credit margin transactions</strong> form to allocate the margin amount across shipments for a letter of credit.</p> <ol> <li> <p>Click <strong>Cash and bank management</strong> &gt; <strong>Common</strong> &gt; <strong>Letters of credit</strong> &gt; <strong>Import letter of credit/import collection</strong>. Double-click the import letter of credit or import collection for which the margin amount must be allocated to the shipment.</p> </li> <li> <p>Click the <strong>Bank document margin</strong> to open the <strong>Letter of credit margin transactions</strong> form.</p> </li> <li> <p>Select the margin amount line to be allocated, and then click <strong>Allocate to shipment</strong> to open the <strong>Allocate on</strong> drop dialog.</p> </li> <li> <p>In the <strong>Allocation type</strong> field, select <strong>Dedicated</strong> to allocate the margin amount to a particular shipment or select <strong>Distributed</strong> to allocate the margin amount proportionally among all shipments that are not invoiced. Select the shipment number in the <strong>Shipment number</strong> field.</p> <p>You can allocate margin amounts only if the value in the <strong>Balance</strong> field is greater than zero and the shipment that you are allocating to is not already invoiced. If you select <strong>Distributed</strong> in the <strong>Allocation type</strong> field, the shipment share of the margin amount is calculated as follows:</p> <p>Shipment Share = Margin amount multiplied by (Shipment amount/Letter of credit amount).</p> </li> <li> <p>Click <span class="label">OK</span> to return to the <strong>Letter of credit margin transactions</strong> form. The <strong>Allocated</strong> field is updated with the margin amount that was allocated, and the status is updated as <strong>Posted</strong>.</p> </li> <li> <p>Close the form to save your changes.</p> </li> <li> <p>In the <strong>Letter of credit/import collection</strong> form, click the <strong>Lines</strong> FastTab, and then click <strong>Shipment margin transactions</strong> to open the <strong>Shipment margin</strong> form and view the margin amount allocated to a shipment.</p> </li> </ol> <div><span style="font-size: 12pt;"><strong><a class="LW_CollapsibleArea_TitleAhref" title="Click to collapse. Double-click to collapse all."><span class="LW_CollapsibleArea_Title">Post a packing slip and an invoice for the purchase order</span></a></strong></span></div> <div class="sectionblock"> <p>After the margin is allocated to the shipment, you can post a packing slip and register an invoice for the purchase order. When you post a packing slip, you can specify the shipment number to map the shipment with the delivery. You cannot post the invoice or update a packing slip unless the letter of credit shipment line amount either equals the invoice amount or the shipment variation is within the tolerance limit specified in the <strong>Tolerance percentage</strong> field in the <strong>Letter of credit/import collection</strong> form.</p> <ol> <li> <p>Click <strong>Procurement and sourcing</strong> &gt; <strong>Common</strong> &gt; <strong>Purchase orders</strong> &gt; <strong>All purchase orders</strong>.</p> </li> <li> <p>Select the purchase order for the letter of credit that must be invoiced, and then double-click the purchase line to open the <strong>Purchase order</strong> form.</p> </li> <li> <p>Click the <strong>Receive</strong> tab, and then click <strong>Product receipt</strong> to open the <strong>Posting product receipt</strong> form. Select the shipment number in the <strong>Shipment number</strong> field, and then click <span class="label">OK</span> to post the packing slip.</p> </li> <li> <p>Click the <strong>Invoice</strong> tab, and then click <strong>Invoice</strong> to open the <strong>Vendor invoice</strong> form. Select the shipment number in the <strong>Shipment number</strong> field, and then click <span class="label">OK</span> to post the invoice. The invoice amount must be equal to the shipping amount. The shipment status is set as <strong>Invoiced</strong>.</p> </li> <li> <p>Close the forms to save your changes.</p> </li> </ol> <div><span style="font-size: 12pt;"><strong><a class="LW_CollapsibleArea_TitleAhref" title="Click to collapse. Double-click to collapse all."><span class="LW_CollapsibleArea_Title">Make a payment for the invoice</span></a></strong></span></div> <div class="sectionblock"> <p>After the purchase order is invoiced, you can make the payment and settle the accounts. The payment for the letter of credit must be equal to the amount due minus the margin amount because the margin amount is already collected by the bank. The payment must be within the tolerance limit for the letter of credit.</p> <ol> <li> <p>Click <strong>General ledger</strong> &gt; <strong>Journals</strong> &gt; <strong>General journal</strong>.</p> </li> <li> <p>Press CTRL+N to create a new journal.</p> </li> <li> <p>In the <strong>Name</strong> field, select a daily journal, and then click <strong>Lines</strong> to open the <strong>Journal voucher</strong> form.</p> </li> <li> <p>Enter the required information.</p> </li> <li> <p>Click the <strong>Payment</strong> tab, and then in the <strong>Transaction type</strong> field, select <strong>Settlement</strong>.</p> </li> <li> <p>In the <strong>Letter of credit/import collection</strong> and <strong>Shipment number</strong> fields, select the bank document number associated with the letter of credit and the shipment number.</p> </li> <li> <p>Click <strong>Post</strong> &gt; <strong>Post</strong> to post the journal. After the settlement invoice is posted, the letter of credit status is set as <span class="label">Closed</span>. The bank account is credited with the amount. The shipment status is set as Paid. You can close a letter of credit only after all the lines are settled against payments. &nbsp;</p> </li> </ol> </div> </div> </div> </div> </div> </div> </div> </div> </div> </div>