Welcome to the Default GL Accounts – Overview topic.

In this session, we will discuss the options for defining default GL accounts.

Imagine that you are implementing SAP Business One at a new customer.
- James, the CEO, tells you that in the Profit and Loss report, he wants to see what are the profits for each item group (for example, Printers).
- He wants the system to automatically post journal entries to the relevant profit and loss accounts.

When you first implement SAP Business One you define default GL accounts to be used when transactions are created during the different business processes, such as sales, purchasing and inventory. This is done in the GL Account Determination window in the Financials Setup area of the Administration module.
When choosing a pre-defined Chart of Accounts template, most of the default GL accounts are already defined. You can change them if required.
When items are used in the transactions, there are 2 options for account determination: the traditional solution and the advanced solution.
Note! It is very important to ensure you make decisions about GL Account Determination together with the client accountant.
Both options are based on the accounts defined in the GL Account Determination window.

The first option is the traditional solution that was available prior to version 9.0.
- According to the traditional solution there are three options to define a default GL method for an item: warehouse level, item group level, and item level. Each item will have one method defined for it. You can set the method in advance for all new items.
- If your company uses the traditional solution, choose the default GL method for new items in the General Settings on the Inventory tab. On the sub-tab for items, you will find the Set GL Accounts By field.
- You can then change the method per item.
- The values that you define under the tabs in the GL Account Determination window are defaulted into all 3 levels. You can then change the default accounts for any of the levels. For example, you can manage different inventory accounts for each warehouse the company owns.

Whenever you add a document that posts a journal entry, an AR Invoice for example, the system looks at each item in the document to determine the level set for that item and then finds the associated GL accounts to use from the default accounts.
Each item can have one method defined for it.
Note that although you specify one default GL method for new items, you can manage different items with different methods if this scenario is necessary in your company. In the presented example you can see that 3 items in the AR invoice have the item group level defined as the default GL method. One item has the item level method defined for it and you can assign different GL Accounts to be used in the monetary transaction created for this item.

With the advanced solution, the GL Account Determination window is used to define GL accounts in the company level.
In addition, the advanced solution provides centralized matrix to determine rules for assigning GL accounts in journal entries according to a predefined (closed) list of criteria.
Therefore, the solution is more flexible and consistent with accounting.
For a new company and for an upgraded company, the advanced solution is not the default option. This is due to compatibility considerations.
- To activate the advanced solution go to the Basic Initialization tab in the Company Details window. Select the Enable Advanced GL Account Determination checkbox.
- Once the box is checked and transactions exist, it can be un-checked again, however in this case no accounts will be assigned and the GL Account Determination form will be used to define GL accounts in all levels: warehouse, item group and item level.

So, you use the GL Account Determination window for defining the company level accounts in one place.
Many companies will find the company level accounts sufficient.
For tailored business scenarios you have the option to define rules for assigning GL accounts in journal entries.
Those rules support:
- GL Account determination for Item Code, Item Group, Warehouse Code, Ship-to Country, Ship-to State, Business Partner Group, user defined fields and more.
- As well as multi determination criteria. That is, a combination of the criteria.
Any rule you define in the advanced form will have a higher priority (than the GL Account Determination window) in determining which account is assigned in journal entries.
So, in our example, OEC Computers can define a separate revenue account for each item group per country (for example, revenues from printers in Canada, Brazil and US).

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