Configuring the Indian Balance sheet in OpenERP V6

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.

Chart Of Accounts OpenERP

As you can see above, Indian Chart of Accounts is mainly categorized into 2 categories. They are :

  1. Balance Sheet  &
  2. 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 :
    Accounting*Configuration*Financial Accounting*Accounts*Accounts

Click on new to open a new account. Account form is shown below:

Accounts OpenERP

Description of the fields :

  1. Name : Enter the name of the asset account
  2. Code : Enter the Account code.
  3. Parent : Select the parent account for this new account.
  4. 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.
  5. 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 :

Accounting*Configuration*Financial accounting*Accounts*Accounts
Click on ‘New’ to create a new account. Account form opens up as shown above.

Field Description to create new Liability account :

  1. Name : Enter the name of the Liability account.
  2. Code : Enter the account code to be used.
  3. Parent: Select the parent for this account.
  4. 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’.
  5. 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

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One Response to “Configuring the Indian Balance sheet in OpenERP V6”

  1. khalil from Agence Web Offshore says:

    Thank you for this excellent article on OpenERP. I think that the Indian Open ERP community should take advantage of those tools and create their own plugins and modules for this CMS.

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