How To Set Up the Chart Of Accounts

Introduction

In Financial Accounting, a chart of accounts is a list of the accounts used by a business entity to define each class of items for which money or the equivalent is spent or received. It is used to organize the finances of the entity and to segregate expenditures, revenue, assets and liabilities in order to give interested parties a better understanding of the financial health of the entity.

The list can be numerical, alphabetic, or alphanumeric. The structure and headings of accounts should assist in consistent posting of transactions. Each nominal ledger account is unique to allow its ledger to be located. The list is typically arranged in the order of the customary appearance of accounts in the financial statements, balance sheet accounts followed by profit and loss accounts.

Statutory Char of Accounts

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 those cases Openbravo provides a localization pack including Statutory Chart of Account like the Spanish Chart of Accounts as a reference data set.

Non-Statutory Char of Accounts

On the other hand, some countries such as USA do not require that specific level of detail, therefore a "sample" Chart of Accounts to be changed as required by each company would be enough.


For those cases Openbravo will provide a generic or sample Chart of Accounts to be imported and then manually modified as required.

Activities

Step 1. Char of Accounts import.

In Openbravo statutory or non statutory chart of accounts can be manually created as required and later assigned to the corresponding organization or imported as:

• a csv file:
  • While creating a new Client by running the Initial Client Setup process.
In this case, the Chart of Accounts will be shared by all the organizations belonging to the client.
  • While creating a new Organization by running the Initial Organization setup process.
In this case, the Chart of Accounts can be shared by all the organizations belonging to the newly created organization, if needed.
  • Once the Organization has been created, installing the Import Data module, which allows to import products, business partners and financial accounts among others.
• a referece data set:
  • While running any of the process above mentioned.

Step 2. Char of Accounts maintenance.

After configure the Char of Accounts, you can go to the Account Tree window (Financial Management > Accounting > Setup > Account Tree) to review and maintain imported chart of accounts and to create new ones if needed.

Every Chart of Accounts can contain different types of Elements; those elements can be subaccounts or other grouping elements such as accounts and headings. This is explained in the wiki page for Element and Element Value but we will see a sample of this setting up:

Every Chart of Accounts can contain different types of elements, those elements can be subaccounts or other grouping elements such as accounts and headings.

From this tab (Element Value) it is possible to view the Chart of Accounts tree structure in a new window by pressing the action button "Tree" which can be found in the "Toolbar".

Chart of Accounts "Tree" view also allows to "drag and drop" each account tree element in order to locate it or re-locate it where required within either the Balance Sheet or P&L structure.

As already mentioned the Account Tree is the source for financial reporting.

In the wiki page for that window are the instructions to edit and maintain the different Account Elements and the right configuration for each case.