Coworking:General Ledger Configuration

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Introduction

The general ledger configuration drives the way that the organization's financial transactions are going to be posted to the ledger.

A general ledger configuration is created whenever an accounting csv file or "Chart of Accounts" module reference data is selected while running the Initial Client Setup process or the Initial Organization Setup process.
The general ledger configuration created by default can afterwards be customized to meet the organization's needs.

If the accounting csv file or reference data is selected at client level the general ledger configuration is assigned to the organization (*) therefore it is available to any organization within the client.

If the accounting csv file or reference data is selected at organization level the general ledger configuration is assigned to the organization making it available to that organization and any of its descendents.

Besides a general ledger configuration those accounting files also creates:

• the organization's Account Tree or Chart of Accounts
• and the general ledger default accounts

Openbravo delivers accounting files through:

• the "Chart of Accounts" modules contained in a Localization Pack if available for your country
• and the Generic Chart of Accounts module

Additionally, a general ledger configuration can also be created manually but once the corresponding Account Tree has been created.

Finally, it is important to remark that the organization's general ledger configuration and the organization's account tree (or chart of accounts) are linked to each other because "Account" is a mandatory dimension of the general ledger configuration.

General Ledger Configuration

The General Ledger Configuration window allows to review and maintain defaulted general ledger configurations and to create new ones if needed.

A general ledger configuration created by default can be changed to meet the organization's needs by changing below features:

1. The Currency to use while posting transactions or journal entries to the ledger.

• The currency shown at first is taken from the currency entered in either the Initial Client Setup process or in the Initial Organization Setup process. This currency can be changed if needed before doing any posting.
  • An organization can have two general ledger assigned, one inherited from its parent in a given currency (i.e. USD) and its own one which can be defined in a different currency (i.e. EUR).
    That is for instance the configuration of the F&B España organization of the F&B sample client. This means that every time that an F&B España transaction is posted to the ledger Openbravo will show two "Journal Entries Report" windows one for each general ledger, as shown in the images below:
    
    

2. The Allow Negative check-box defines if negative posting is allowed or not while posting transactions to the general ledger.

Not to allow negative posting implies that a negative debit posting would turn into a credit posting and a negative credit posting would turn into a debit posting.

For instance, a purchase invoice generates below posting:

If that purchase invoice needs to be totally or partially voided or reversed, the posting will look like:

• in case of "Allow Negative" check-box enabled

• in case of "Allow Negative" check-box disabled

3. The general ledger can be set as "Centrally Maintained" or not in relation to the way that the Account Tree elements are going to be shown in the Balance Sheet and in the Income Statement

• If a general ledger is set as "Centrally Maintained":
  • the field "Account Sign" is hidden in the Element Value tab of the Account Tree window
  • therefore it is possible to define at general ledger level whether the balances of any account type are going to be shown as "Positive" or "Negative" in the financial statements.
    If the check-box "Central Maintenance" is selected :
    • the Debit balances of the "Asset" account type will be shown as "Positive" in the Balance Sheet.
      As a consequence of that if an "Asset" account type has a credit balance that will then be shown as "Negative" in the Balance Sheet.
    • the Credit balances of the "Liabilities" account type will be shown as "Positive" in the Balance Sheet. Same applies to "Owner's Equity" account types.
    • the Debit balances of the "Expense" account type will be shown as "Positive" in the the Income Statement
    • and finally the Credit balances of the "Revenue" account type will be shown as "Positive" in the Income Statement.

It is possible to uncheck any of the checkbox listed above. For instance an organization might want to show the Debit balances of the "Expense" account type as "Negative" in the Income Statement.

• If the general ledger is NOT set as "Centrally Maintained":
  • the field "Account Sign" is not hidden in the Element Value tab of the Account Tree window
  • therefore the account sign of each account tree element defines how the balance of that account is going to be shown in the financial statements.

Finally, it is important to remark that the "Central Maintenance" check-box is not selected by default for the general ledgers created by default as the corresponding accounting csv files or reference data imported have its own configuration through the "Account Sign".

Dimension

Dimension tab allows to configure the organization's general ledger dimensions or to add additional accounting dimensions do not centrally maintained in the client.

Openbravo allows to manage mandatory and not mandatory accounting dimensions to be entered in the Dimensions section of the documents which can be post to the ledger.

Mandatory dimensions can be filled in or not depending on the document category being created. For instance "Business Partner" and "Product" are mandatory dimensions that need to be filled in a purchase invoice but can be filled in a G/L Journal.

There are two "mandatory" dimension at organization's general ledger configuration level which are:

• the "Account" as any document/transaction posted to the ledger needs to be posted in a ledger account (or subaccount in Openbravo terms) of a given account tree or chart of accounts.
• and the "Organization" as any document/transaction posted to the ledger needs to be posted in an organization's general ledger.

Besides, if an organization belongs to a Client which centrally maintains the accounting dimensions it is possible to add in this tab other dimensions such as the ones listed below which can even set as "mandatory" for the organization:

• Activity
• Asset
• Campaign
• Location From
• Location To
• Sales Region

On the other hand, let's take for instance an organization's general ledger for which below dimensions have been selected in this tab because the organization belongs to a client which does not centrally maintain the accounting dimensions:

• Mandatory dimensions:
  • Organization
  • and Account
• Non mandatory dimensions which are set as "mandatory" in here:
  • Business Partner, Product and Project
• Non mandatory dimension:
  • Sales Region

Above configuration means that every time that a transaction of any kind (purchase invoice, sales invoice, G/L Journal) is posted to the ledger all the mandatory dimensions above must be entered while there is an option to enter sales region information if any.

Moreover:

• some dimensions appear on some transaction and some do not. That depends on the document being created. For instance:
  • the Account dimension always appears in the Lines tab of a G/L Journal, however it does not appear
    in the Lines tab of a purchase invoice as that data is automatically taken from the accounts (subaccounts) setup for the product, for the business partner and for the taxes if any.
• some dimensions appear either in the header and/or in the lines of the documents. That defaulted configuration can be changed only in the clients which centrally maintain the accounting dimensions and for the centrally maintained dimensions.

Active Tables

Active Tables tab allows to define which tables and therefore transactions are going to be post to the ledger and which ones not.

The tables listed below are the tables suitable to be posted:

For instance the records of the table "FinancialMgmtAmortization" are the amortization transactions which can be posted.

The way to get that the records of the tables above can be posted is to set the "Active" check-box of these tables as "Yes".

There is a flag named "Disable for Background" next to each table above which allows that a given table is not taken by the Accounting Background Process.

In other words it is possible to configure that the transactions related to a given "Table", for instance the "Invoice" table, are not taken by that process therefore will not be automatically posted.

Documents

Documents tab allows to define which document types of a table allow negative posting and if they use a different accounting process than the default one based on a given accounting template.

General Accounts

General accounts tab allows you to define the accounts to be used in balancing entries and in the end-year closing process.

The mandatory "Income Summary" account is populated by default as part of the general ledger configuration. That account is obviously part of the organization's chart of accounts.

If an accounting csv or reference data is not selected while running the Initial Client Setup process or the Initial Organization Setup process, this mandatory account needs to be manually entered here once the account tree and therefore the corresponding income summary (or net income) sub-account has been created.

The Income Summary account is used by the Close Year process as the P&L closing entry resets all revenue and expense account type and post the difference in this account.

This tab also contains a set of "Suspense" accounts which needs to be created under a specific account tree branch as explained in the Account Tree creation article.
Those accounts can also be provided by the accounting files, in fact the Generic CoA provides these accounts.

The Suspense Balancing account is shown if the check-box "Suspense Balancing Use" is selected. This account is used in those cases where an accounting entry can not be balanced while being posted. If there is no account in this field Openbravo shows an error.

The Suspense Error account is shown if the check-box "Suspense Error Use" is selected. This account is used in those cases where an exception or error happens preventing an accounting entry to be posted. If there is no account in this field Openbravo will shown an error.

Other accounts are:

• The Retained Earning account if any automatically gets the P&L closing balance of a given year. If there is no account in this field nothing will be automatically moved from the Income Summary account to the Retained Earning account.
• The Currency Balance account is shown if the check-box "Currency Balance Use" is selected. This account is used in those cases where there are currency rounding differences while posting a transaction. For instance, it could happen that the total invoice exchanged into a given currency do not 100% match to the sum of each invoice line exchanged into the same currency.
  

Finally, the Reverse Permanent Account Balances check-box allows to include or not an entry to reverse the balance sheet accounts balances during the end year closing process.

Defaults

Defaults tab allows to maintain or to add a set of default accounts to use while posting a certain type of transactions.

The mandatory "Default" accounts are populated by default as part of the general ledger configuration. That accounts are obviously part of the organization's chart of accounts.

If an accounting csv or reference data is not selected while running the Initial Client Setup process or the Initial Organization Setup process, these mandatory accounts need to be manually entered here once the account tree and therefore the corresponding sub-accounts have been created.

The accounts selected here are defaulted to every Business Partner Category or Product Category for instance by using action button "Copy Accounts".
Same way the accounts defaulted to every business partner category for instance, can be as well defaulted to every vendor or customer by using the action button "Copy Accounts" this time from the Business Partner Category window.
Finally it is possible to override these defaults at business partner category level allowing vendor liabilities and customer receivables for different business partners to be posted to different accounts.
This last configuration change needs to be done in the vendor and/or customer windows.

As shown in the image above "default" accounts are:

• Customer Receivables
• Customer Prepayments
• Write Off
• Write Off Revenue
• Vendor Liability
• Vendor Prepayment
• Non-Invoiced Receipts
• Bad Debt Expense Account
• Bad Debt Revenue Account
• Allowance for Doubtful Debt Account
• Doubtful Debt Account
• Product Asset
• Product Expense
• Product Deferred Expense
• Product Revenue
• Product Deferred Revenue
• Product COGS
• Product Revenue Return
• Product COGS Return
• Invoice Price Variance
• Warehouse Differences
• Inventory Revaluation
• Work in Progress
• The "Bank Asset" default account is populated as:
  • the Deposit Account
  • the Withdrawal Account
  • the Cleared Payment Account (Payment In)
  • the Cleared Payment Account (Payment Out)
• The "Bank In Transit" default account is populated as:
  • the In Transit Payment IN Account
  • the In Transit Payment OUT Account
• The "Bank Expense" default account is populated as:
  • the Bank Fee Account
• Bank Revaluation Gain Account
• Bank Revaluation Loss Account
• Tax Due
• Tax Credit
• Depreciation
• Accumulated Depreciation

These last ones belongs to the old financial flows so will be removed in further Openbravo 3 releases:

• Cash Book Asset
• Cash Book Differences
• Cash Transfer

Creation of a General Ledger Configuration

An Organization might have as many different General Ledgers as required.

By default an organization can have only one general ledger assigned for simplicity reasons unless:

• the organization has its own general ledger and another one inherited from its parent, that is for instance the case of "F&B España" sample organization
• or the advanced general ledger configuration is enabled at system level as explained in the Organization article.

It is recommended to create a new general ledger configuration and link it to an organization once the Account Tree to use while posting transactions to that new general ledger has been created.

It can happen that an organization might require the same account tree but different general ledgers, one of them in USD and the other one in EUR.

The steps to follow to configure a general ledger are:

• select the "Organization" for which the general ledger is going to be available, for instance "F&B US Inc."
• enter the "Name" of the General Ledger configuration, for instance "EUR General Ledger"
• select the "Accounting Standard" for instance "US GAAP".
  In the United States, "Generally Accepted Accounting Principles" (GAAP) is the name for the framework of accounting rules used in the preparation of financial statements.
  This data is just informative without any business logic behind it.
• select the "Currency" to use for posting transactions to the ledger.
  In the case of the F&B US Inc organization, the currency can be "EUR" therefore the F&B US Inc organization can get a double posting one in "USD" and the other one in "EUR".
• select the check "Allow Negative" in case negative posting is allowed as already described or not

Once done the newly created general ledger needs to be linked to F&B US Inc organization in the General Ledgers tab.

The organization of the example has now two general ledgers assigned:

• the inherited one (owned by its parent organization "F&B International Group") in "USD" currency.
• the newly created one in "EUR" currency

Back to the General Ledger configuration window the remaining steps to take to properly configure the general ledger are:

Navigate to the Dimension tab to add below listed mandatory dimensions:

• create a new record and enter Organization in the field "Name"
• select "Organization" in the field "Type"
• select "F&B US Inc" in the field "Trx Organization"
• select the checkbox "Balanced" and the checkbox "Mandatory"
• create a new record and enter Account in the field "Name"
• select "Account" in the field "Type"
• select the already existing "Account Tree" in the field "Account Tree"
• select the checkbox "Mandatory"

Non mandatory dimensions can also be created as described below in case it is required to save additional information such as the business partner or the project while posting journal entries or any transaction type:

- create a new record and enter "Business Partner" in the field "Name"

- select "Business Partner" in the field "Type"

- create a new record and enter "Project" in the field "Name"

- select "Project" in the field "Type"

Navigate to the Active Tables tab to review the tables which are going to generate accounting. It is possible to enable accounting for the ones do not active for accounting.

Navigate to the General Accounts tab to configure the mandatory general account (Income Summary) as well as the accounts to use in case of suspense balancing or suspense error among others. Those accounts needs to be previously created as described in the Account Tree creation article.

Finally navigate to the Defaults tab to configure the default accounts which needs to be copied to other accounting configuration tab such as:

• the Product Accounting tab
• the Financial Account Accounting Configuration tab
• the Tax Rate Accounting tab
• etc..

as every time that a transaction of any type is posted to the ledger, it will posted to the two general ledgers configured for the Organization.

Full list of General Ledger Configuration window fields and their descriptions is available in the General Ledger Configuration Screen Reference.

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