How to configure the chart of accounts in Business Central

In Business Central · 30 August 2026

The chart of accounts is the master list of general ledger accounts that store the organisation’s financial data. Every journal line, customer invoice, vendor bill, bank payment, and inventory adjustment eventually posts to one of these accounts.

Business Central demo tenants come with a generic chart of accounts that you can customise. However, if you are already using Business Central in a live environment, change the CoA only when the company’s finance lead—and sometimes the auditor—approves. The goal is rarely to build a custom account structure from scratch (unless you are working on a new implementation), but rather to decide which accounts belong on the balance sheet versus the income statement, which accept direct posting, how totals roll up, and how default statements group them.

What you need before you change the chart of accounts

Assuming you have permission to change the CoA, you need to know first whether new accounts belong on the Balance Sheet or the Income Statement. Balance sheet accounts hold assets, liabilities, and equity, while income statement accounts record revenue and expenses and close out at fiscal year-end. The field Income/Balance on the G/L Account Card serves that purpose.

The next thing you need is the company’s account numbering policy to give the new accounts numbers that fit into a clear numbering scheme which will also affect reporting. Many organisations prefix account numbers by account type (e.g., assets in one numerical range, equity in another). While this hierarchy is an organisational convention rather than a strict Business Central rule, using headers along with Begin-Total and End-Total lines makes the structure visually clear.

Keep the chart lean where possible. Departmental, project, or product reporting categories belong on Financial Dimensions, not as dedicated G/L accounts for every reporting category. Microsoft’s design guidance is explicit and I always recommend this approach in my consulting work: start with fewer posting accounts, add accounts only when the ledger requires a new General Ledger Account; remove accounts exclusively at period-end.

Understanding the G/L Account Card

The five FastTabs on the G/L Account Card separate core Dynamics 365 Business Central finance setup from consolidation and cost-ledger requirements:

How do you add a G/L account in Business Central?

You can create a new G/L account using the card view when configuring specific fields such as category, direct posting, and default posting groups. You can also use the list view when quickly adding an account number and name.

1. Select the Search icon (Alt+Q), enter Chart of Accounts, and select the related link.
2. Select New to open a G/L Account Card.
3. On the General FastTab, configure the fields that control account behaviour:
   • No. — A unique identifier of up to 20 characters. Accounts sort alphanumerically (as strings), so account 10 sits between 1 and 101.
   • Name — The display name users see on journals and reports. Use Extended Texts in the Account menu if the name requires more than one line.
   • Income/Balance — Set to Income Statement or Balance Sheet. The fiscal year-end close process reads this field.
   • Account Type — Set to Posting if journals post directly to the account. Use Heading, Total, Begin-Total, or End-Total strictly to format the list structure and totals.
   • Account Category and Account Subcategory — Categorise the account into Assets, Liabilities, Equity, Income, Cost of Goods, or Expense so built-in financial statements group it correctly.
   • Direct Posting — Leave On if users can manually select this account on a journal line. Turn it Off for control accounts that should only receive entries generated by posting groups (e.g., receivables, payables, inventory, bank contra accounts). New accounts default to On. To learn more about posting groups, read Understand inventory posting in Business Central.
4. On the Posting FastTab, set defaults only for accounts that will appear on journals without an associated customer, vendor, or item. Gen. Posting Type (Purchase, Sale, or blank), Gen. Bus. Posting Group, Gen. Prod. Posting Group, and tax/VAT groups act as fallbacks. On sales or purchase documents, customer, vendor, or item posting groups take priority over account defaults.
5. Close the card. The account will appear in the Chart of Accounts list in numerical order.

To edit multiple accounts simultaneously, open Chart of Accounts, select Manage > Edit List, and modify values directly in the grid. Hover over any field to view its built-in tooltip description.

Pay attention to the posting group fields on the G/L card. You don’t need to use these to map general sales, purchases, or inventory transactions because the mapping is done on the General Posting Setup, Customer Posting Groups, Vendor Posting Groups, Bank Account Posting Groups, and Inventory Posting Setup. Posting groups on G/L codes are only needed for nominal ledgers with direct posting, i.e., accounts used directly on journal lines or invoices.

How do you indent totals in the chart of accounts?

Begin-Total and End-Total account types define a range of accounts that allows you to group and sum totals for accounts in the same category. All accounts placed between them will indent visually, and the End-Total line will automatically hold the totalling formula. Total accounts function differently: you must manually enter the formula in the Totaling field.

Total accounts do not replace financial reports, but users in finance often find them useful when they need to quickly get info from BC without running a report. Think of total revenue, cost of goods sold or general expenses. These are all examples of account types you can group using totals.

1. On the Chart of Accounts page, place a Begin-Total account above the target group and an End-Total account below it. Place Posting accounts between them.
2. Select Process > Indent Chart of Accounts.
3. Select Yes to confirm.

Running the indent action populates the Totaling field on every End-Total account. Note that indenting automatically overwrites any manual totalling formulas previously entered on End-Total lines.

What are G/L account categories and why should you use them?

G/L Account Categories organise your financial accounts above the account number level. The six main categories are Assets, Liabilities, Equity, Income, Cost of Goods, and Expense. Subcategories break these sections down into further groups that you define. Business Central demo comes with a complex list of Subcategories which I recommend checking before trying to modify it.

A quick note: you will not find these Subcategories using the Tell-me function; search for G/L Account Categories to find them.

1. Search for G/L Account Categories and open the page.
2. Select Edit List.
3. Create or adjust a subcategory: select the parent category, select New, enter a Description, and set G/L Accounts in Category to the corresponding account range.
4. Use Indent and Move Down to nest subcategories (for example, placing Petty Cash and Checking under Cash).
5. Select Generate Financial Reports.

Selecting Generate Financial Reports updates all built-in financial reports prefixed with M- based on the current category map. You can specify which reports update in the Reporting section of General Ledger Setup.

Ensure the new accounts you create are mapped with a subcategory or the balance on those accounts will not show on built-in financial reports. If you create a new account without a category and assign it to a posting group, Business Central may automatically copy the category from the account immediately above it. However, the account will not appear on financial statements until you run Generate Financial Reports or manually set the category on the card.

How do you delete a G/L account in Business Central?

Deleting an account permanently removes it from the system. Business Central prevents deletion if the account holds a non-zero balance, contains ledger entries in an open fiscal year, is referenced in setup tables, or falls within the retention window defined in General Ledger Setup.

Before attempting deletion, verify account dependencies:

1. Open Chart of Accounts and select the account.
2. Select Account > Where-Used List. Each line indicates a setup table referencing the account (such as a posting setup line). Update or remove these references if Check G/L Account Usage is enabled.

Next, verify that the ledger is clear: the current balance must be zero, and no entries can exist within an open fiscal year.

Review retention rules in General Ledger Setup: search for General Ledger Setup, expand the General FastTab, and select Show more:

• Allow G/L Acc. Deletion Before: The account cannot contain ledger entries on or after this date.
• Check G/L Account Usage: When selected, blocks deletion if the account is referenced in posting setup.
• Check G/L Acc. Deletion After and Block Deletion of G/L Accounts: Enable an additional safety lock preventing account deletion if entries exist after the specified date.

Once the account clears these validation checks:

1. Open the account from Chart of Accounts or its G/L Account Card.
2. Select Delete (or press Shift+Delete) and confirm.

Obsolete accounts can also be blocked without going through full deletion by setting Blocked to Yes on the card. Blocked accounts prevent new postings while retaining complete historical audit trails.

How do you map G/L accounts for company consolidation?

Consolidated reporting requires a dedicated parent chart and subsidiary account mapping. The consolidated company maintains an independent chart of accounts, allowing subsidiaries to operate with different account numbers, fiscal calendars, and local currencies.

Consolidation mappings are stored on individual subsidiary accounts rather than the parent chart. Open each posting account in the subsidiary business unit and configure the Consolidation FastTab:

1. In the subsidiary company, open Chart of Accounts and select the G/L Account Card.
2. Set Consol. Debit Acc. and Consol. Credit Acc. to the destination account numbers in the consolidated company. Leave both blank only if the parent and subsidiary share identical account numbers (Business Central will default to a 1:1 match).
3. Select the appropriate Consol. Translation Method if foreign currency conversion is required:
   • Average Rate (Manual) — Typically used for income statement accounts.
   • Closing Rate — Typically used for balance sheet accounts.
   • Historical Rate — Uses the exchange rate on the original posting date (common for equity and specific intercompany accounts).
   • Composite Rate or Equity Rate — Converts current-period transactions at the average rate while maintaining historical balances.
4. Enable Exclude from Consolidation if an account should be omitted from group reporting.

The parent company requires a Business Unit card for each subsidiary, defining ownership percentages and applicable fiscal dates. Exchange rates applied during consolidation are pulled from the Currency Exchange Rate Table configured on the business unit card. Consolidation can combine entities across separate environments or external software systems.

Note that elimination entries are not automatic: after running the consolidation process, post elimination journals in the consolidated company and preview their impact using the G/L Consolidation Eliminations report.

Complete subsidiary mappings only after individual statutory accounts post cleanly. An incorrect Consol. Debit Acc. mapping will not disrupt subsidiary ledger integrity, but it will misstate group trial balance lines during consolidation. To learn more about intercompany in BC, see my other article: Intercompany transactions in Business Central.

How do you link G/L accounts to cost accounting?

“Statutory G/L and cost accounting run on separate ledgers. The chart of accounts represents the statutory financial record, whereas cost types provide internal management views broken down by cost centres and cost objects. Advanced finance teams use cost accounting to manage allocations and operational reporting without altering statutory G/L balances.

Only Income Statement G/L accounts transfer to cost accounting. Balance sheet accounts, zero-amount entries, closing-date entries, and accounts without an assigned cost type are excluded. Multiple G/L accounts can map to a single cost type, but each G/L account links to only one cost type.

This relationship is recorded in two places: Cost Type No. on the G/L account and G/L Account Range on the cost type. The most efficient setup method is to generate cost types directly from the income statement structure:

1. Search for Chart of Cost Types and open the page.
2. Select Get Cost Types from Chart of Accounts and confirm Yes. This action updates Cost Type No. across the chart of accounts and creates corresponding cost types, headings, and subtotals.
3. Refine the mapping: group multiple G/L accounts under a single cost type by specifying a range (e.g., 7110..7193) in G/L Account Range. Leave G/L Account Range blank on cost types reserved exclusively for allocations.
4. Select Indent Cost Types and confirm to calculate subtotals.

Verify the configuration by opening an income statement account on the Chart of Accounts page and checking Cost Type No. on the Cost Accounting FastTab. Automatically transferring posted G/L entries into cost entries requires completing additional cost accounting setup (such as defining transfer start dates and dimension mappings). Without an assigned Cost Type No., entries remain strictly within the general ledger.

Use this feature when the statutory chart must remain streamlined while internal management requires distinct operational groupings. Avoid creating duplicate G/L accounts solely to satisfy internal reporting needs.

What to do next

The chart of accounts is fully operational once posting groups reference its accounts. Configure General Posting Setup, followed by customer, vendor, bank, and inventory posting groups. Disable Direct Posting on control accounts, such as bank and inventory accounts to prevent users from bypassing subledgers via general journals.

Apply the changes in a sandbox company and validate your configuration by executing three tests: post a manual journal to an open posting account, process a sales or purchase document targeting a control account via posting groups, and run a default financial report after executing Generate Financial Reports. If journals post successfully, control accounts block direct entries, and financial statements accurately reflect category mappings, your new chart of accounts can be copied to production.

Related resources

• MB-800: Dynamics 365 Business Central Functional Consultant Associate

Microsoft Learn

• Organize report data using account categories
• Set up company consolidation
• Set up cost accounting