In this article you learn how to configure your Balance sheet in OpenERP from the very beginning. OpenERP is a very efficient tool to manage the complete accounting for any organization.
The configuration basically consists of the following sections :
- Installation of the Indian chart of Account
- Configuration of the Balance sheet
- Configuration of Assets
- Configuration of Liabilities
I. Installation of the Indian chart of Account
First of all you need to install the Indian chart of accounts.
Use the OpenERP module l10n_in to install the Indian Chart of Accounts. It is present in the list of modules in the Administration tab .
You can even download this module from the following link :
After installing the module for Indian chart of account, you can see the various Accounts created , for this use the menu : Accounting à Charts à Chart of Accounts.
As you can see above, Indian Chart of Accounts is mainly categorized into 2 categories. They are :
- Balance Sheet &
- Profit & Loss Accounts
II. Configuration of the Balance Sheet :
Balance sheet consists of the all the Assets and Liabilities of a company. It can be said as a table that lists someone’s assets and Liabilities along with the value of each of those assets and liabilities at a particular point in time. Configuration of the balance sheet consists of configuration of the Assets and Liabilities.
i. Configuration of Assets:
Asset : This is something you owe ,it can be money, premises, land, shares etc.
There are basically two type of assets : Current Assets and Fixed Assets.
- Current assets: are assets you expect to sell or turn into cash within one year; e.g. stocks, amounts owed to you by your clients.
- Fixed assets :are those which company uses on Long term basis, eg : machinery, Computers, Land etc.
- Opening a new Asset A/c :
To open a new asset Account use the menu :
Click on new to open a new account. Account form is shown below:
Description of the fields :
- Name : Enter the name of the asset account
- Code : Enter the Account code.
- Parent : Select the parent account for this new account.
- Internal Type : It can receivable, Liquidity and view.
For the customer accounts such as sundry debtors select it as receivable, for your bank accounts select this as Liquidity, and when you are creating a parent account, select this as View.
- Account Type: select this as asset for child accounts and ‘asset view’ for the parent accounts.
For all the client accounts(sundry debtors) – mark them as reconcilable, i.e. Tick the ‘reconcile’ field in account form.
ii. Configuration of Liabilities:
Liability : A liability is anything you owe to someone else, it is generally money but can be anything else.
There are basically two types of liabilities : Current Liabilities and long term liabilities.
- Current Liabilities: These are the liabilities that you expect to pay within a year. It consists of the amounts to be paid to suppliers.
- Long term Liabilities: These consists of the amounts to be paid in a long term. eg: Loans from the bank.
Opening a new Liability account :
To open a new Account use the menu :
Click on ‘New’ to create a new account. Account form opens up as shown above.
Field Description to create new Liability account :
- Name : Enter the name of the Liability account.
- Code : Enter the account code to be used.
- Parent: Select the parent for this account.
- Internal type: For liabilities it can be payable, view & Regular . For your supplier accounts select it as payable, view for the parent accounts, Regular for the ‘Reserve & Surplus Account ‘and ‘Share capital’.
- Account type: select this as liability for child accounts and ‘liability view’ for view accounts.
* Tick the ‘reconcile’ field for the supplier accounts (Sundry creditor Accounts).
In this way we create as many Asset and Liability accounts as per the requirement of the User/ Company.
OpenERP functional consultant at E-nova Technologies