ManualDoc:T132

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

• "Heading", "Breakdown" and "Account" elements help to structure the chart of accounts in a way that the financial reports can be produced based upon that structure
• "Subaccount" element allows to post the transactions to the ledger

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

• "Asset", "Liability" and "Owner's Equity" account types needs to be included in the Balance Sheet
• while "Expense" and "Revenue" account types needs to be included in the Profit & Loss.

The best way to understand how a chart of accounts is captured in Openbravo is by pressing the "Tree" icon 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:

• Balance Sheet
• Profit & Loss
• and Temporary default accounts. This branch of the account tree gathers temporary defaults accounts which are not ledger accounts.

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

• Balance Sheet branch is split into:
  • Assets
  • Liabilities and Owner's Equity

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

• Current Assets
• Long term Assets
• and Accumulated Depreciation

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:

• the "Search Key" and the "Name" identifies the chart of account element.
  • The search key can either be a single letter, a word or a number, however it is important to be aware that the "Search key" field is is the field that Openbravo uses while helping the user to create an account tree element
• the Account Sign field is only shown and therefore editable if the general ledger configuration linked to the account tree is "NOT" set as "Centrally Maintained".
  In that case the account sign of each account tree element defines how the balance of that account is going to be shown in the financial statements:
  • if the account sign of an account tree element is "Debit", the balance of that account will then be shown as (Debit - Credit).
    • "Asset" accounts type are normally set as Debit, therefore its debit balance is shown as positive in the Balance Sheet.
      Same way its credit balance is then shown as negative in the Balance Sheet.
  • if the account sign of an account tree element is "Credit", the balance of that account will then be show as (Credit - Debit).
    • "Liability" account types are normally set as Credit, therefore its credit balance is shown as positive in the Balance Sheet. Same applies to the "Owner's Equity" account type.
    • "Revenue" account types are set as Credit, therefore its Credit balance is shown as positive in the P&L report.
    • "Expense" account types are set as Credit, therefore its Debit balance is shown as negative in the P&L report.
• "Element Level". As already mentioned there are four type of elements which help to structure a chart of accounts in a way that the financial reports can be produced right away based upon the chart of accounts structure.
  It is important to remark that it is not mandatory to use the four elements but just the ones which help us to properly structure the Chart of Accounts,
  having into account that the lowest one "Sub-account" is the only mandatory one because ledger entries are posted to the ledger through the sub-accounts.
  The four element types are:
  • Heading - the elements "B - Balance Sheet" and "1000-Assets" are heading type elements because those are at the top ones having other elements underneath.
  • Breakdown - the element "1100 - Current Assets" and "1500 - Long-term Assets" are a breakdown of the heading "1000-Assets".
    Often, the assets and liabilities on a balance sheet are broken down into current assets and long-term assets. Breakdown element type helps us to define this kind of situations.
  • Account - this level would helps to split the element "1100 - Current Assets" into "1110 - Cash", "1200 - Accounts Receivable", etc, as a way to distinguish between the different types of current assets.
  • Sub-account - this level is the lowest level of detail. For instance the account element "1110 - Cash" can be split into the sub-accounts "1120 - Checking Account" and "1140 - Petty Cash" sub-account to distinguish while posting to the ledger the transactions paid by check from the ones paid by petty cash.
• "Account Type". The options available are Asset, Liability, Owner's equity, Revenue and Expense.
  Asset, Liability and Owner's equity account types are included in the Balance Sheet as well as in the "balance sheet closing entry" as described in the Close Year article.
  Revenue and Expense account types are included in the Income Statement as well as in the "P&L closing entry" as described in the Close Year article.
• "Summary Level" defines if an account tree element groups other levels underneath or not, therefore heading, account and breakdown levels can be marked as summary levels while sub-account should not. There can be heading elements which groups other elements underneath, for instance the element "1000-Assets" while there can be heading elements which do not need to group other elements underneath but Customize Elements, for instance the element "1900-Total Assets". The first type need to be configured as "Summary Level", the second type do not need to. Moreover:
  • the amounts displayed in financial reports such as the Balance Sheet and the Income statement for a non-summary element is the sum of the debit and credit amounts posted to that account (sub-account).
    The balance of that particular subaccount will then be shown as either positive or negative depending on its account sign or depending on what is centrally configured in the General Ledger Configuration
  • the amounts displayed in financial reports such as the Balance Sheet and the Income statement for a summary element is the sum of the amounts of the elements underneath.
    The balance of that summary element will then be shown as either positive or negative depending on its account sign or depending on what is centrally configured in the General Ledger Configuration

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

• the "Show Value Condition" field defines if a chart of account element balance is going to be shown and taken into account in financial reports or not. The options available are:
  • Algebraic, the chart of account element will be shown anyway regardless the sing of its balance. This is the most commonly used.
  • Negative Only, it will be shown only in case its balance is negative
  • Positive Only, same as the previous one but just in case its balance is positive.
• "Element Shown" defines if an account tree element is going to be shown in the financial reports or not. This one can be used for elements used to execute calculations which do not need to be shown in a report.
• "Title Node" defines if an account tree element is going to be shown in the financial reports just as a "Title" without including its balance. This option works for heading account tree elements which balance is not 100% accurate for whatever kind of reason as there is another element which gets the correct balance value by using operations or customized elements between a set of given elements.