Setting up account module in OpenERP

It is easy to start working with OpenERP account module, starting a new company or carry-forward the entries to next financial year. We have seen in my last post Want to setup OpenERP Accounting module?,
In this post I would like to show you how we can configure journals, chart of accounts and start working with financial transactions. Auditing is most important process in Indian accounting system. It has to be perform at the end of every financial years for small and medium size companies but quarterly for big or public companies. The second and most important things is quarterly balance sheet. Well OpenERP’s account module is capable enough to provide lots of flexibility so that we can generate monthly balance sheet too. Lets start configuration of Periods, Journals, Accounts.Download the configured database before proceeding the article, If you wanted to checkout configuration step by step on the live database.

Financial Years
In the accounting database you can get two financial years, 2010-2011 previous year and 2011-2012 for the current year.
List of Financial years
If you create a new financial year using trunk series, you will get one extra period with the name “Opening Period”, this period is for first day of the financial years. So, if you create monthly periods you will get 13 periods instead of 12 periods. In case of Indian account the first period will be from 1st april to 1st april and it make easy to track all the opening entries.

 

Accounting Journals
Accounting journals are like a books in manual accounting system, and its good to keep separate book for every years. But in OpenERP no need to keep separate journals for every financial years. Its very easy to maintain separate the transaction based financial years rather then keeping them in separate journals.

Accounting Journals

Sometimes people do this because they want to keep separate numbering which start from 1 (one) every financial years for every journals. but according to me its better to configure the sequence to do the same instead of keeping the separate journals, please have a look at the below screen.

Sequence based on Financial years for Accounting Journals

So, now you can understand what’s the important of Financial Years on the sequence.

Enable Auditing
If you want to enable the auditing please unchecked “Skip ‘Draft’ State for Manual Entries”. According to the auditing process, entries are posted  manually by  physical documents verification. We can also use the Post Journal Entries wizard under Periodical Processing to post the entries by journals for selected period. So according to this configuration when we do any accounting entry it will be in the draft and not reflect the chart automatically. Lets open the chart of account using following configurations.

Select the Accounting Period and Targeted Transactions

Above configuration will open the below chart of account.

Chart of Account – Only posted entries are selected

Expenses and Payment
Lets do some expenses and payments for the same using the suppliers vouchers and supplier payments.

Expenses by Periods

Payment to the expenses made during the April, May and June 2010.

Payments done against the expenses – By Months

You can explore the expenses made and payments relevant to the expenses. Same way you can explore the sales and payment entries with in April, May and June – 2010.

Recurring Entries
Some times you may required to work with the bank ECS, postdated cheques or enter the regular entries for some expense or income. you can manage this kind of situation easily with the recurring entry system. In our case ABC Pvt Ltd have taken a loan of 7,53,000/- from Bank of India, you can check in the balance sheet. and we have to setup the recurring entries for 2 things

  1. Every month we have to pay 1500 Rs interest which is a expense to the company
  2. Payment of the Installments which includes principal amount + interest.
Recurring entry for Interest on Installment
Now, configure the occurrence and limit for the interest expense. In our case payment of the loan and the interest will run for next 5 years. but its easy to keep the recurring configuration for yearly basic.
Auditing
The database you downloaded its not audited by the accountant so you need to generate all reports by selection “All Entries” instead of “Posted Entries” once it will get audited and confirm the entries then you can directly print the reports by selecting “Posted Entries” and i think its a correct accounting methods to keep the entries separate until they get verified.
Accounting entries to be audited
Reporting
Download some of the reports generated from accounting database.
Download the accounting database to do more exercise on the accounting module.

 

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