Set up CoA is the very first step to configure any Accounting system, and the same applied to the Odoo. The reason being that CoA is the pre-requisite to the creation of the Product (Income/Expense Account) and Customer/Vendor (Receivable/Payable Account), and the "brain" to the entire ERP.
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In Odoo, you may install the country specific CoA or migrate the CoA from the existing system.
To import chart of Account, just to the Accounting -> Configuration ->Chart of Account
Click Import. The migration template will look like the following.
Account Code is the unique code that representing the account.
Name is used to describe the type of the financial transactions classified under the Account.
Account Type in Odoo
It is essential to understand the Account type, prior to setting up of Chart of Account.
Account Type is the categorization of account and used to build P&L and Balance Sheet.
Allow Reconciliation is ticked if this account allows invoices & payments matching of journal items.
Relationship between Account Type to P&L and BS
Relationship between Chart of Account and Journal Type
The next step after importing CoA, is probably to configure the Journal.
A journal entries is the first place business transactions is entered into the accounting system.
A journal is often referred to as the book of original entry because it is the place the information originally enters into the system.
General Ledger in Odoo are categorized to 5 basic Journal type, which help to control the Journal entries in different ways, such as, control the number range of your documents, default credit & debit account, allow for journal cancellation, etc.
a) Sales - used for customer invoice and credit note journal entries
b) Purchase - used for vendor bill and vendor credit note journal entries
c) Bank - used for bank payment journal entries and associated with the bank account. Each bank will have its own journal.
d) Cash - used for Cash (eg, Petty Cash/daily cash transactions) journal entries
e) Miscellaneous - others (Adjustment, opening balance, stock inventory related, etc).
Some user may opt to use the Chart of Account Hierarchy app to group the related accounts to view the total credit and debit.
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