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Account Tree

This article is protected against manual editing because it is automatically generated from Openbravo meta-data. Learn more about writing and translating such documents.
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Contents

Introduction

An account tree is the way Openbravo captures the chart of accounts of an Organization. The chart of accounts is a list of the accounts used in an organization's general ledger.

Some countries such as Spain or France require that a specific chart of accounts is used in the statutory books, therefore the authorities can see the same list of accounts and the same level of detail in the P&L and Balance Sheet. In that case Openbravo provides a "Localization Pack" which includes the Statutory Chart of Accounts.
For instance, the Spanish Localization Pack includes

After installation, the Charts of Accounts are available for selection during the Initial Client Setup and the Initial Organization setup.

On the other hand, some countries such as USA do not require that specific level of detail, each organization define the chart of accounts that best suits their practices.
In that case Openbravo provides a Generic Chart of Accounts module which delivers a standard list of accounts which can be evolve for the organization's needs. After installation, the generic Chart of Accounts is available for selection during the Initial Client Setup and the Initial Organization setup.

As explained in the Chart of Accounts Module article, a chart of accounts module basically includes a csv file which contains the account tree structure.
In Openbravo that creates:

It is important to remark that it is not possible to apply a Chart of Accounts in the Enterprise Module Management window because a Chart of Account is not a dataset but a csv file.

If the legal entity has already be created, the chart of accounts can be imported by using the Import Data module, this module allows to import products, business partners and accounts among others.

Additionally, a csv file can be imported while running the Initial Client Setup or while running the Initial Organization Setup if the checkbox "Include Accounting" is checked, therefore the csv file or accounting file can be selected.

Finally, a chart of accounts can also be created manually, regardless it is recommended to start from a sample chart of accounts like the generic one and evolve it for the company’s needs rather than starting from scratch.

Element

The account tree window allows to review and maintain the chart of accounts imported through a chart of accounts module as well as to create new ones from scratch.

If a Chart of Accounts module or an accounting csv file is installed and selected at client level through the Initial Client Setup process:

As a side note, this is not the preferred method but to install it at organization level, see next paragraph.

If a Chart of Accounts module is installed and then selected at organization level through the Initial Organization Setup process:

Element Value

Element value tab list every chart of account element from the chart of accounts headings to the sub-accounts.

Every Chart of Accounts in Openbravo contains different types of elements. There are four type of elements:

Besides, it is well known that every account, sub-account in Openbravo terms, needs to be included in a financial statement:

The best way to understand how a chart of accounts is captured in Openbravo is by pressing the "Tree" icon Tree icon.png which can be found in the "Toolbar".
For additional information please review the Tree Structure article.

Tree icon opens a new window which shows one tree branch per financial statement:

Element Value 01.png

Besides, each tree branch contains several elements inside structured in a hierarchical way, for instance:

Element Value 02.png

As shown in the image above "Assets" is also split into:

Same way "Equity" is also split into several accounts, in Openbravo terms "subaccounts", such as "Capital Stock" or "Retained Earnings".

Back to the "Element Value" tab, there are several basic fields which help to define each chart of account element:

WS132.png

Additionally, there are other advanced fields which also help to configure not that common scenarios. Those fields are:

Customized Elements

The customized elements tab allows to get an account tree element as a combination of a given list of existing elements.

Once the account tree elements have been selected in a new record and in the correct sequence order, it is not required to specify a sign but just the elements which are going to be included.

For instance the element "1900-Total Assets" is the sum up of three customized elements:

as shown in the image below.

Customized Elements.png

Translation

Account elements can be translated to any language required.

Account Tree creation

A chart of accounts creation from scratch implies to create each chart of accounts element one by one:

The steps to follow for the creation of a chart of accounts (CoA) are:

Move to "Element Value" tab.

The first thing to do in this tab is to create all the "Heading" elements one per each financial statement, for instance "Balance Sheet" and "Income Statement".

Balance Sheet Node:

Profit and Loss Node:

The next thing to do in this tab is to create one element value per each financial statement node:

Balance Sheet Elements

Let's focus first on explaining the creation of the nodes/elements of a Balance Sheet financial statement.

An organization's balance sheet shows its financial situation at a given point in time, the three sections of a balance sheet are:

therefore the next step to take is to create one chart of account element per each balance sheet node:

Assets Node:

It is recommended to use a number as that helps while creating new chart of accounts elements. The following rule is considered while creating new chart of accounts elements:
Openbravo first considers the elements in an alphanumerical order as a sorted list, find the position in that sorted list where the new element would need to be positioned, look at the element that precedes it and if that element is a summary element and the current element is not a summary one, adds the element as a children of that node otherwise add the element as a sibling of that node.

Once done drag and drop this node under the Balance Sheet node.

Liabilities Node:

Owners Equity Node:

This time there is no need to drag and drop these two last nodes as Openbravo does it according to the rule explained above.

Both the Liabilities Node and the Owner's Equity Node are summary nodes, therefore they are added as a sibling of the Asset Node (element that precedes them).

CoA Drag02.png

It is very common to break down assets and liabilities into current assets (or liabilities) and long-term assets (or liabilities).
Moreover, "Assets" can be split into "Cash", "Inventory" and "Accounts Receivable", "Liabilities" can be split into "Accounts Payable" and "Note Payable" and finally "Owner's Equity" can be split into "Common Stock" and "Retained Earnings" among others.
All of the above guides the creation of the following sub-nodes at a lower level underneath the heading nodes.

Current Assets Node:

Once done drag this node under the "1000-Assets" node.

Long-Term Assets Node:

This time there is no need to drag and drop this last node as Openbravo does it according to the rule explained above.

The Long-term Asset Node is a summary node, therefore it is added as a sibling of the Current Asset Node (element that precedes it).

Current Liabilities Node:

Once done drag this node under the "2000-Liabilities" node.

Long-Term Liabilities Node:

This time there is no need to drag and drop this last node as Openbravo does it according to the rule explained above.

The Long-term Liabilities Node is a summary node, therefore it is added as a sibling of the Current Liabilities Node (element that precedes it).

Cash Node:

Once done drag this node under the "1100-Current Assets" node.

Accounts Receivable Node:

This time there is no need to drag and drop this last node as Openbravo does it according to the rule explained above.

The Accounts Receivable Node is a summary node, therefore it is added as a sibling of the Cash Node Node (element that precedes it).

Cash Node needs to have sub-accounts elements underneath, for instance:

111200 Checking Account

111300 Checking In-Transfer

111400 Petty Cash

Above subaccounts are the ones used while posting ledger entries into the ledger.

There is no need to drag and drop the three subaccounts above into the corresponding node as Openbravo does it.

CoA Drag03.png

Accounts Receivable Node needs to have sub-accounts elements underneath, for instance:

112100 Trade Receivable

112200 Tax Receivables

Above subaccounts are the ones used while posting ledger entries into the ledger.

There is no need to drag and drop the two subaccounts above into the corresponding node as Openbravo does it as explained above.

CoA Drag04.png

The same steps need to be followed for the creation of other "Account" and "Subaccount" node types under the nodes:

Last but not least, it is required to create a node which summarizes assets, another one which summarizes liabilities and the last one which summarized owner's equity.
Let's take the creation of total assets node for instance:

Total Assets Node

CoA Drag05.png

Income Statement Elements

Now let's briefly explaining the creation of the nodes/elements of an Income Statement.

An organization's income statement shows the company's financial performance over a period of time (usually one year), therefore it has two main sections:

The income statement also takes into account the cost of the goods sold, therefore the gross profit refers to the sum of an organization's revenues minus the cost of goods sold.

Besides, it is very common to separate the "Operating Expenses" from the "Non-Operating Expenses", therefore it is possible to calculate the operating income as the difference between the gross profit and the operating expenses while the net income is the difference between the operating income and the non-operating expenses.

All of the above drives the creation of the nodes/ elements which once arranged will represent the structure of the organization's income statement.

The nodes to create for instance can be:

Temporary Elements

As already explained there is a close relationship between an account tree and the General Ledger configuration in Openbravo, as the Account Tree is a Dimension of the General Ledger.

The General Ledger configuration also includes a set of default accounts (or subaccounts in Openbravo terms) to use while posting certain type of transactions. Those accounts needs to be created in the account tree first and then be configured in the General Ledger Configuration tabs listed below:

Most of those defaults accounts are ledger accounts such as:

however there are few of them which are not ledger accounts but what we can call "Temporary" accounts such as the "Suspense Balancing" account.

There is no need to create default ledger account as those are created as part of the account tree.

However, temporary default accounts needs to be created in the account tree under a specific tree branch or node, in order to get that the balance of those temporary accounts is not taken while launching either the Balance Sheet or the Income Statement.

Therefore, a new "Heading" and "Summary" element needs to be created in the "Element Level" tab, that element can be named "Temporary Accounts".

CoA Temporary Node.png

Once created below accounts (subaccounts) can be created and move underneath it:

CoA Temporary Node 01.png



Full list of Account Tree window fields and their descriptions is available in the Account Tree Screen Reference.

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