How to Create a Balance Sheet and Profit and Loss Statement

Contents 1 Introduction 2 Activities 3 Examples 3.1 Example 1 - Balance Sheet 3.2 Example 2 - Income Statement

Introduction

In financial accounting, a balance sheet or statement of financial position is a summary of the financial balances of a sole proprietorship, a business partnership, a corporation or other business organization. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A balance sheet is often described as a "snapshot of a company's financial condition". Of the four basic financial statements, the balance sheet is the only statement which applies to a single point in time of a business' calendar year. The four basic financial statements are:

1. Statement of Financial Position: also referred to as a balance sheet, reports on a company's assets, liabilities, and ownership equity at a given point in time.
2. Statement of Comprehensive Income: also referred to as Profit and Loss statement (or a "P&L"), reports on a company's income, expenses, and profits over a period of time. A Profit & Loss statement provides information on the operation of the enterprise. These include sale and the various expenses incurred during the processing state.
3. Statement of Changes in Equity: explains the changes of the company's equity throughout the reporting period
4. Statement of cash flows: reports on a company's cash flow activities, particularly its operating, investing and financing activities.

Income statement (also referred to as profit and loss statement (P&L), revenue statement, statement of financial performance, earnings statement, operating statement or statement of operations) is a company's financial statement that indicates how the revenue (money received from the sale of products and services before expenses are taken out, also known as the "top line") is transformed into the net income (the result after all revenues and expenses have been accounted for, also known as Net Profit or the "bottom line"). It displays the revenues recognized for a specific period, and the cost and expenses charged against these revenues, including write-offs (e.g., depreciation and amortization of various assets) and taxes. The purpose of the income statement is to show managers and investors whether the company made or lost money during the period being reported.

The important thing to remember about an income statement is that it represents a period of time. This contrasts with the balance sheet, which represents a single moment in time.

Activities

Step 1. Chart of accounts setup

The first important thing to understand is how the chart of accounts is configured in Openbravo. This is explained in the Account Tree window and in the wiki page How to Set Up the Chart of Accounts.

Step 2. Balance sheet and Income statement setup

After configure the account tree properly, go to Financial Management > Accounting > Analysis Tools > Balance sheet and P&L structure setup. In the wiki page for that window are the setup instructions:

• Balance sheet and P&L structure Setup

Step 3. Launch the Balance sheet and Income statement

Once the account tree is configured and the Balance sheet and Income statement structure have been configured, go to Financial Management > Accounting > Analysis Tools > Balance sheet and P&L structure window. In that window it is possible to launch the Balance sheet and Income statement (or P&L structure) as explained in the wiki page for that window:

• Balance sheet and P&L structure

Examples

Example 1 - Balance Sheet

One example of a Balance Sheet structure can be:

• Report Name: Balance Sheet
• Report Type: Point in Time
• Balanced: Yes
  • Grouping Category: Balance Sheet
    • Node: Balance Sheet

Above nodes must be part of the corresponding Account Tree and must be properly configured.

Once the Balance Sheet has been setup, go to lunch the Balance Sheet in the Balance sheet and P&L structure window:

As shown in the image above data to fill in is:

• the "General Ledger" from which accounting information needs to be obtained: F&B International Group USA/US Dollar.
• the "Accounting Report" to launch, in this case: Balance Sheet. This field lists the reports has been created and configured in the Balance Sheet and P&L structure setup window.
• the "Organization": F&B International Group. This field lists the organization for which the report has been configured in the Balance Sheet and P&L structure setup window.
  • if the report is configured for a "Legal with Accounting" organization type, only that one is shown in this field. The account's balances shown in the report will be a roll-up of the organizations which belong to it, if any.
  • if the report is configured for a "Generic" organization type, the organizations shown in this field are at least the generic organization and the legal with accounting organization type it belongs to, all of them linked to the general ledger selected.
• the "Account Level" which defines up to which detail level is going to be shown in the report: Subaccount is selected. The options available are the same as the account tree element levels:
  • Heading, only "heading" elements are shown including summarized accounting information up to that level
    • Account, in this case "heading" and "account" elements are shown including summarized accounting information up to each of those levels
      • Breakdown, in this case "heading", "account" and "breakdown" elements are shown including summarized accounting information up to each of those levels
        • Subaccount, in this case "heading", "account", "breakdown" and "subaccount" elements are shown including summarized accounting information up to each of those levels. It is important to recall that accounting entries are booked at subaccount level.
• "Show only accounts with value" flag allows to get that the report do not show account elements having a zero amount balance but elements defined as Title which are always shown regardless its balance amount. In the example is checked.
• "Show Account codes" flag allows to get that the report shows the Element Level Search Key or not. In the example is checked.

Under the "Primary Filters" section it is possible to specified:

• a Initial page number for the report, in case the report needs to be integer. It is going to be 1. This one is useful in case the report must be integrated as a part of a bigger report or document.
• a "Year" and a "Reference Year" in order to get a comparative report normally between the current "Year" and the previous one entered as "Reference Year". In the example, is 2012 for both fields.
• and finally "As of Date" (Date To) and "As of Reference Date":
  • In the case of Balance Sheet report a "Date To" value can be entered to get that the report shows account balance information up to that date to. For the example, it is 01/01/2012 and 05/31/2012 as reference.

Finally, press the PDF Format button and the next report it is displayed:

Example 2 - Income Statement

And an example for a Profit and Loss report would be:

• Report Name: Profit and Loss
• Report Type: Periodic
• Balanced: No
  • Grouping Category: Profit and Loss
    • Node: Profit and Loss

Above node must be part of the corresponding Account Element and must be properly configured.

As shown in the image above data to fill in is:

• the "General Ledger" from which accounting information needs to be obtained: F&B International Group USA/US Dollar
• the "Accounting Report" to launch, in this case: Profit & Loss
• the "Organization": F&B International Group.
• the "Account Level" which defines up to which detail level is going to be shown in the report: Subaccount is selected.
• "Show only accounts with value" flag: checked.
• Show Account codes flag: checked.

Under the "Primary Filters" section it is possible to specified:

• a Initial page number for the report: 1.
• a "Year" and a "Reference Year" : is 2012 for as year and 2011 as reference year.
• and finally "From Date – To Date" and "From Reference Date – To Reference Date":
  • In the case of P&L report a "Date To" and a "Date From" can be entered to get the report shows accounting information within that period of time (a year, a quarter, a month, etc). For the example, from 01/01/2012 to 05/31/2012 and 01/01/2011 to 05/31/2012 as reference.

Finally, press the PDF Format button and the next report it is displayed: