Managing Accruals: D365 F&O Reversing Journal Entries

August 16, 2023

For anyone who has been in accounting long enough can relate to the struggle of remembering to reverse accruals. For some ERP systems, pushing a journal entry to a future period is not always possible or require an additional manual journal entry to reverse the accrual. If you have ever been in either scenario, remembering to reverse an accrual or accurately entering a manual entry has likely produced unfavorable results. Whether you missed entering the reversal journal entry or made a mistake on the manual reversal entry, you have probably searched for a better solution.

D365 F&O provides built in functionality to allow the reversal date of your accrual to be entered once for the whole journal and create the reversal entry automatically. While the automatic reversal functionality only exists for general journals, all account types (Ledger, Customer, Vendor, Project, Fixed Assets, and Bank) can be used in the journal, allowing flexibility in the accruals your company may need.

When it comes to the automatic reversing functionality, making a general journal a reversing journal is as simple as 1, 2, 3!

Create The Accrual Journal

Following your normal process, prepare the data and journal header where you will make accrual entries. Before adding lines to the journal, review step 2 to determine where if your reversal should be enabled at the header or line level of your journal entry for your intended results.

2. Add Reversing Details

Once you have your journal created, you have 2 areas where you can mark the journal as reversing and specify the reversing date.

General Journal Header

When you first create the general journal, check the Reversing entry box and enter the desired Reversing date. Once entered on the journal header, the selection will flow to the journal lines automatically as you add lines. When these values are set at the header level, changing the date of one line will automatically change the reversing date for the whole journal.

Marking the reversing entry and setting the reversing date at the header level provides the consistency to create multiple accruals and ensure the reversing entry box is checked and the reversal date is consistent, providing additional piece of mind. There is also an additional ability to filter to general journals that have this reversing entry flag marked to quickly identify journals that contain reversing entries.

General Journal Lines

As you create lines, mark the Reversing entry box and enter the desired Reversing date for each line that you would like to reverse automatically. When marking the lines as reversing at the line level, you have the ability to choose which lines will be reversed. The reversing date can be different for the lines within the journal, unlike when this is set at the header.

Marking the reversing entry and setting the reversing date at the line level provides the flexibility to create multiple accruals with different reversing dates in one journal.

3. Continue with Journal Approval and Posting As Normal

Continue with your normal general journal approval and posting processes.

That's it.

Once the journal is posted, the accrual will automatically post the reversing journal entries for the reversal date. Both the accrual and the reversal will be in the same journal, allowing for easy identification of both the accrual and reversal vouchers. Descriptions added on the accrual line will automatically flow to the reversing entry.

Have questions about the functionality or want to discuss any questions? Send me a message and I will be in touch!