Financial section is used by ERP5 to determine the structure of Income statement (Profit and Loss) and Balance sheet reports. This How To will explain how to configure financial section category and accounts to configure these reports
Table of Contents
Financial Sections Explained¶
Unlike GAP categories which classify the accounts according to
legal obligations and Account Type which will imply specific behavior
for accounts ( such as "Receivable accounts have a break down by Organisations
in the trial balance" ), the Financial Section category is used to
represent a company specific vision of the Profit and Loss and Balance Sheet reports.
Profit & Loss and Balance Sheet reports in ERP5 ( reports from accounting module)
are simple reports that can be configured without programming, simply by
configuring the financial section category and accounts. The idea is that the
report just shows the hierarchy of financial sections and the total balance of
all accounts members of the respective category.
The configuration consists of two aspects. First, configure your Financial Section hierarchies, which will later be displayed in your customized financial report (balance sheet, profit and loss); Second, assign each of your Account to a certain Financial Section that you just configured.
Financial reports default structure¶
The default erp5 instance has already provided you financial reports with default structure. For example, Income statement (two column mode / single column mode) and Balance sheet.
Example Income Statement structure ( two column mode )¶
| INCOME |
EXPENSE |
- Revenue
- Non Operating Income
- Interest Income
|
- Operating Expenses
- ...............
- Cost of Sales
- Selling, General and Administrative Expenses
- Other
- Non Operating Expense
- Interest Expense
|
Example Income Statement structure ( single column mode )¶
Alternatively, the income statement can be configured to appear as only one column, with intermediate totals.
| Profit and Loss |
- Operating
- Revenue Sales
- Operating Expenses
- ...............
- Cost of Sales
- Selling, General and Administrative Expenses
- Other
- Total Operating
- Non Operating
- Non Operating Income
- Non Operating Expense
- Total Non Operating
- Financial
- Interest Expense
- Interest Income
- Total Financial
|
Example Balance sheet structure¶
| ASSET |
LIABILITY |
A- Long Term Assets
- ...............
- Fixed Assets
- ...............
- Deprecation of Fixed Assets
- Intangible Assets
- ...............
- Deprecation of Intangible Assets
- Financials Assets
- ...............
- Deprecation of Financials Assets
B- Current Assets
- ...............
- Inventories
- ...............
- Deprecation of inventories
- Trade and Other Receivables
- ...............
- Deprecation of Trade and Other Receivables
- Cash and Cash Equivalents
|
A- Equity
- ...............
- Share Capital
- Profit or Loss
B- Long Term Liabilities
- ...............
- Loans
- Others Liabilities
C- Current Liabilities
- ...............
- Accounts Payable
- Other Current Liabilities
|
Configure your own financial sections¶
You can directly using the default financial report structure as shown above, or you can start configure your own financial sections. You can start by preparing a spreadsheet for financial section structures, you must follow
some rules regarding the id of the categories.
Default Financial Section Category Spreadsheet
Rules to follow when customizing financial section¶
-
The first level categories cannot be changed. They must be
asset, equity and liability for
Balance Sheet, and income and expense for Profit
and Loss.
-
To have Profit and Loss displayed in single column mode, store all the
hierarchy in
income and leave expense empty.
Because expense accounts have a negative balance, they will naturally be
displayed with a negative sign and the summary levels will calculate
income - expense.
-
On balance sheet asset tab, the accumulated deprecation is displayed in a
separate column showing the corresponding accumulated deprecation next to
each asset category. The categories with id
amort will appear
in the column for deprecation for their parent category. For example we have
asset/fixed_assets for Fixed assets and asset/fixed_assets/amort
for deprecation of these fixed assets.
-
equity/net_profit has a special behavior that it will not only
show the balance of accounts member of this category, but also calculate
profit or loss for current period, by summing all accounts of financial section
income and expense.
-
Categories are sorted by alphabetical order of their title, or by their
Sort Index (
int_index) property.
- Categories can be translated using
erp5_content
Note that dynamic configuration such as “This account is asset if it has a debit
balance or liability if it has a debit balance” are not supported by this
report. One workaround is to use two accounts and make an adjustment accounting
transaction at the end of period.
Once these categories are created, you are ready to assign each of your Accounts to a certain financial section.
Assign Accounts a targeted financial section¶
Each country have its own Chart of Accounts, and each company will specify its own Accounts according to its business. You can create easily customized Accounts in erp5 Account Module, for each Account, you just need to pick out the targeted financial section you want to assign this Account to.
Tips: enable Financial Section as a column on account module to make sure you did not forget any of them.
After this step is completed, now you are able to produce your customized balance sheet and profit and loss report.
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