Financial management functions in Microsoft Dynamics Marketing

 

Updated: November 1, 2016

Applies To: Dynamics Marketing

System_CAPS_importantImportant

Microsoft Dynamics Marketing is scheduled to be retired on May 15, 2018. After that date the service will no longer be available. Please plan accordingly. For details, see the blog post Microsoft Dynamics Marketing service will be discontinued, and learn what’s coming next.

Microsoft Dynamics Marketing offers a robust set of accounting and financial management functions.

Accrual accounting is an advanced method of accounting in which income and expenses are considered incurred at the time they are realized rather than when payment is made. Under this method, the time when you enter a transaction and the time when you actually pay or receive cash may be two separate events.

Microsoft Dynamics Marketing maintains your financial records in its general ledger using the Accrual Accounting method rather than the Cash Accounting method. To help sites that use the cash method, a variety of reports are available to organize financial data using the accrual method.

Cash accounting is a method of accounting in which income and expenses are considered incurred at the time payment is made or received.

Use the cash accounting method, together with the accrual accounting method, to calculate taxable income for U.S. federal income taxes. Cash basis taxpayers include income when it is received, and claim deductions when expenses are paid. A cash basis taxpayer can look to the doctrine of constructive receipt and the doctrine of cash equivalence to help determine when income is received. Users should contact a tax advisor to help them determine which method is required and appropriate.

Transaction

Description

Asset Accounting vs. General Ledger operations

Cash Accounting – Income Statement

Booking

Lets users reserve an asset item.

Doesn’t post

N/A

Client Quote

Lets users provide clients with a price quote.

Doesn’t post

N/A

Credit Memo

Lets users enter a client credit into Microsoft Dynamics Marketing for application against an invoice.

Debit Revenue

Credit AR

N/A

Expense

Lets users enter an expense to be paid.

Debit Expense

Credit AP

Pro-rata amount paid is shown as of the payment date.

Inventory Purchases (Expenses)

Lets users purchase inventory.

Debit Inventory

Credit AP

N/A

Inventory purchase expenses are shown via the inventory use and invoice transactions.

US Regulation  §1.1.162-3 states that inventory expenses are deductible in the year in which items are actually used  or sold, or in the year in which the taxpayer actually pays for the items, whichever is later. Users will need to create adjusting entries to adjust as needed by their tax jurisdiction.

Inventory Adjustment – Qty Decrease

Lets users adjust the quantity and or value of inventory on hand.

Credit Inventory

Debit Inventory Adjustment

N/A

Inventory Adjustment – Qty Increase

Lets users adjust the quantity and or value of inventory on hand.

Doesn’t post

N/A

Inventory Adjustment – Unit Cost

Lets users adjust the quantity and or value of inventory on hand.

Old Value

Credit Inventory

Debit Inventory Adjustment

and

New  Value

Credit Inventory

Debit Inventory Adjustment

N/A

Inventory Use

Lets users move inventory costs to a project.

Credit Inventory

Debit Expense/COGS

The inventory cost is shown as of the date the inventory was used.

Invoice

Lets users enter a client bill.

Credit Revenue

Debit AR

Pro-rata amount paid by the client and pro-rata COGS are shown as of the payment date.

Journal Entries

Lets users enter adjusting entries.

As specified

Shown on the income statement as of the accrual dates.

Media Expense

Lets users enter an expense to be paid.

Debit Expense

Credit AP

Pro-rata amount paid is shown as of the payment date.

Media Invoice

Lets users enter a client bill.

Credit Revenue

Debit AR

Pro-rata amount paid is shown as of the payment date.

Media Order

Lets users enter a purchase order for media.

Doesn’t post

N/A

Media Sales Order

Lets users enter a sales order for a client.

Doesn’t post

N/A

Purchase Order

Lets users enter a purchase order.

Doesn’t post

N/A

Refund

Lets users enter a client refund into Microsoft Dynamics Marketing for payment.

Debit Revenue

Credit Over payment Liability

N/A

Retainer

Lets users enter a retainer or advance invoice for a client.

Credit Deferred Revenue

Debit AR

Not shown on the income statement until applied to an invoice.

Sales Order

Lets users enter a sales order for a client.

Doesn’t post

N/A

Transfer Funds

Lets users move cash from one account to another.

Debit Bank

Credit Bank

N/A

Vendor Quote

Lets users enter a vendor quote.

Doesn’t post

N/A

Vendor Return

Lets users return inventory to a vendor.

Doesn’t post

N/A

Write Check

Lets users pay bills by check.

Credit Bank

Debit Expense

Full amount of check is shown as of the check’s date.

Most Microsoft Dynamics Marketing transactions have a transaction date and item dates. For example, you might enter an expense on January 14 for an ad that runs on March 1. Microsoft Dynamics Marketing will use the transaction date to post to Accounts Payable and the item's date (in this case, the ad) to post the ad expense. In general this greatly reduces the amount of 'accruing' since Microsoft Dynamics Marketing automatically posts the transactions correctly into the general ledger and reports expenses (and revenue) correctly. If you prefer to have the dates match you can always use the same date for the transaction and the items.

For day-to-day transaction entry, Microsoft Dynamics Marketing uses familiar forms including invoices, expenses, checks, etc. These transactions automatically create entries - also known as posting - in the general ledger. For example for an expense transaction, Microsoft Dynamics Marketing makes a single entry in the Accounts Payable account and in the Expense or COGS accounts specified by the user. Posting is the process of recording amounts as credits and debits in the general ledger. Because each bookkeeping entry debits one account and credits another account in an equal amount, the double-entry bookkeeping system helps ensure that the general ledger is always in balance.

Microsoft Dynamics Marketing provides support for accrual accounting and includes a number of reports that cash-basis taxpayers can use, including a cash-basis income statement. More information: Generate built-in reports and work with analytical views 

Microsoft Dynamics Marketing does not provide a cash-basis balance sheet. If you use cash-basis accounting, you’ll need to prepare your balance sheet manually.

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