In Openbravo, as an ERP, the financial

management of the application is related

with the rest of the application modules.
Functional Documentation/Financial Management/Accounting
Contents
1 Introduction
1.1 Example 1
2 Accounting Concepts
2.1 Posting Documents
2.2 Fiscal Calendar
2.2.1 Example 2
2.3 Default Accounts
2.3.1 Example 3
2.4 Account Tree
2.5 Account Dimension
2.5.1 Example 4
3 G/L Journal
4 Annual Financial Statements
5 Budgets
6 Negative Accounting
Introduction
According to Wikipedia an Enterprise Resource Planning (ERP) is
a system that attempts to integrate all data and processes of an
organization into a unified system. In Openbravo, as an ERP, the
financial management of the application is related with the rest of
the application modules.
Accounting in Openbravo is led through the documents. Some
examples of documents in Openbravo are: purchase order, sales
invoice, settlement and cash journal. Most part of the documents
can generate an accounting entry in the general ledger journal.
Let's imagine that a company working with Openbravo needs to
change some parameters of its accounting and apply them to all
the accounting entries. As the accounting is generated through the
documents, it is possible to remove all the accounting entries -
documents remain intact, so no data is lost-, change any
accounting parameters, and re-build automatically the general ledger journal, and so, all the accounting data of the
company.
When a document is posted, each line of the created accounting entry is recorded as a new line in the table
Fact_Acct of the database. So in this table, every accounting operation done in the application is registered. And
from this table, all the accounting information is generated, like for example, balance sheet or general ledger
journal.
Example 1
A new purchase invoice is created. Some lines added, with a total amount of $5,000. It has a 20% tax associated,
so when posting the invoice the next accounting entry should be created:
Account No. NAME DEBIT CREDIT
116 Tax Receivables 1,000.00
122 Product Assets 5,000.00
211 Accounts Payable 6,000.00
So three new rows will be created in the Fact_Acct table, one for each line of the accounting entry.
Accounting Concepts
There are some concepts related to the accounting process in Openbravo that must be explained.
Posting Documents
There are two possibilities of performing accounting in Openbravo:
1. To manually generate the accounting entries of each document. This action is called posting the document.
This option is not usually used. It can be useful for studying the created accounting entry for a concrete
document, for example.
2. To let Openbravo automatically post all the documents. This automatic accounting is done through a
background process that can be scheduled to work only at certain hours (usually at night).
Fiscal Calendar
The accounting in a company is split in years, and so in Openbravo exists a calendar that contains years and each
year contains periods (usually months) inside. Additionally, each period have a relation to the document types that
can be posted in that period.
Each document type of each period will be in one of these states:
Open: Posting is allowed in the period.
Closed: Posting is not allowed in the period, but could be allowed again in the future.
Never Opened: Initial state of a document type in a period. Posting is not allowed until it changes to the
Open state.
Permanently Closed: Posting is not allowed in the period now and will not be allowed again. This is the
case, for example, when the period or year has been closed and the accounting entries sent to the Trade
Registry.
Example 2
On January 1st 2008, Company A creates the year 2008 in Openbravo's calendar. Twelve periods (from January
to December) are also created inside.
On February 1st, Company A obtains a bank statement for the activity of the month of January via electronic
bank, completes all the bank statement lines not present in the system and permanently closes the document type
bank statement in the period January.
On February 5th, Company A permanently closes the next document types: purchase orders, sales orders and
sales invoices, and closes (not permanently) the document type purchase invoices.
On February 10th, a new purchase invoice arrives from the supplier S1, dated January 30th. January's invoices
document is reopened, the invoice posted and the period closed again.
On March 1st, January's period is permanently closed.
This is the aspect of a Chart of Accounts
Default Accounts
As Wikipedia says, an account is a label used for recording and reporting a quantity of almost anything. Most
often it is a record of an amount of money, owned, or owed by, or to a particular person or entity, or allocated to a
particular purpose. Each country has different accounting system and rules. Accounting is organized in trees of
accounts. A chart of accounts is a list of all accounts tracked by a single accounting system (Wikipedia), so a
chart of accounts describes the accounting tree used in a specific country or accounting system. In Openbravo, the
charts of accounts are implemented in a text file in csv format.
Some of the accounts of the chart of accounts are marked up as default accounts. These are accounts that are
specific to a concrete operation of a document. When building a chart of accounts, the accounts representing this
default values must be located, for that accounting system.
Example 3
Although each chart of accounts is different, all of them will have, for example, one account used for the expenses
from purchase invoices. This is one default account, named P_EXPENSE_ACCT . In the US it could be the
account 512: Service costs, in France, the account would be 60710: Marchandise (ou groupe), and in Spain
60000: Compras de mercaderas.
Account Tree
A chart of accounts is needed to initialize the accounting in Openbravo. When this chart is loaded through the csv
file, the account tree represented in that chart of accounts, is built in the application. Also the default accounts are
filled in.
The accounts are arranged hierarchically in the chart of accounts file, through the Parent column. This structure
provides the way of obtaining the balance report and income statement report. For creating these reports, the root
elements of the reports are selected (i.e.: assets, liabilities and owner's equity, for the balance report), and all the
sub-accounts below it are covered to build the report.
Once the account tree is built, new accounts can be added to the tree.
Account Dimension
Openbravo allows to analyse accounting of a client separated in dimensions. It means that, for example, an
income statement can be generated for the whole client, or for a concrete project, or a concrete business partner.
Some dimensions are mandatory (for example, the organization) and some others optional, for example, business
partner, product, project, campaign and sales region. When a new client is created, its dimensions can be selected.
Even afterwards, it is possible to increase the accounting dimensions.
Once the client has some accounting dimensions activated, accounting results can be obtained either for the whole
client, or for a concrete organization, business partner, etc.
Example 4
Company A creates a new client, and checks the project dimension, amongst others. At the end of the year, the
income statement is obtained: one with the whole client accounting data, and one for each project, so it can be
analysed the profitability not only of the whole company, but also of each project.
G/L Journal
A G/L Journal Entry is a manually created entry in the general ledger journal. It means, an accounting entry that
does not correspond to any document.
Not all the accounting entries are associated to a document. For example, the opening entry does not correspond to
any document in Openbravo. A provision of funds made to a notary's office is an example of a general ledger
journal entry that does not belong to any document, and is done through a G/L Journal entry.
Annual Financial Statements
The general ledger journal is built grouping the registers of the Fact_Acct database's table by date. The general
ledger report is also built from the Fact_Acct registers, grouped by account. Actually, all the accounting reports,
such as balance sheet, the income statement and the balance report, are built from the Fact_Acct data.
Openbravo provides a powerful customizable tool to build the reports corresponding to the annual financial
statements: the Balance sheet and P&L structure, and the user defined accounting reports.
Budgets
The budgets are managed in Openbravo in this way: Openbravo automatically creates a spreadsheet with a
specific format. This spreadsheet is edited externally and filled in with the budget data. Once finished, it is
imported to a database table through the import file loader.
It is also possible to generate the budgets through the application, but is usually such a huge amount of data, that it
is more comfortable to use a spreadsheet.
Negative Accounting
Negative accounting affects the way that reversals are accounted, and is set up as part of the accounting schema.
When you reverse a transaction you can use either negative or positive values. For example, if a sales invoice
document generates the following transactions lines:
GL Line Type Debit Credit
Debtor Sales Invoice 1,000 0
Revenue Sales Invoice 0 1,000
If the Allow Negative option is selected, when the transaction is reversed, the system will allow the creation of the
following negative transaction lines. Using negative lines for reversals is sometimes called storno accounting.
GL Line Type Debit Credit
Debtor Sales Invoice -1,000 0
Revenue Sales Invoice 0 -1,000
However, in some countries, negative entries are not accepted by auditors, in which case the correct way to
reverse the transaction would be as follows:
GL Line Type Debit Credit
Debtor Sales Invoice 0 1000
Revenue Sales Invoice 1000 0
Negative transaction lines are considered best practice in some countries, particularly in Central and Eastern
Europe. These include (but are not limited to):
Czech Republic
Poland
Romania
Russia
Slovakia
Ukraine
In most countries negative transaction lines are not looked upon favorably by auditors and the expectation is that
transactions are reversed using contra accounting. These countries include (but are not limited to):
Spain
United Kingdom
United States
Because both types of transaction reversal are legitimate (in the correct accounting context), you can configure
Openbravo ERP to suit your locale and preference.
The default behavior of reversing transactions is controlled by the accounting schema. For countries where
transaction reversal using negative values is not normally used, make sure that the Allow negative option in
Financial Management > Accounting > Setup > Accounting Schema not selected.
However, you can also override the schema behaviour at document type level, for example to allow negative
accounting for particular accounting documents. This gives complete control to the implementer in defining the
transaction reversal behaviour for each combination of schema and document type.
Note: in earlier versions of Openbravo ERP negative transactions were enabled by default.Users upgrading to
Openbravo 2.50 from earlier versions will find the Allow negative option selected. It is recommended that
you consider reconfiguring their systems to take advantage of the increased options for managing transaction
reversals. In Openbravo ERP 2.50 the default behavior is to not allow negative transactions. In new
implementations of Openbravo ERP, the Allow Negative option is deselected by default. This means that the
implementations of Openbravo ERP, the Allow Negative option is deselected by default. This means that the
default behavior for transaction reversal will be to use contra accounting, i.e., to disallow negative transactions
unless they are specifically enabled at a schema or document level.
Retrieved from "http://wiki.openbravo.com/wiki/Functional_Documentation/Financial_Management/Accounting"
This page has been accessed 19,591 times. This page was last modified 11:12, 29 May 2009. Content is available
under Creative Commons Attribution-ShareAlike 2.5 Spain License.