Accounting Entries: Managing Bank Statements
Accounting Entries: Managing Bank Statements
Accounting Entries: Managing Bank Statements
Accounting Entries
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Accounting Entries
Accounting Entries
Various methods can be used to create accounting entries. You have already seen how an invoice
creates its own entries, for example.
This section deals with
managing bank statements,
managing cash,
manual journal entries.
Here we will show you how to enter financial transactions. In OpenERP, you can handle bank statements
and also a cash register. Use different journals for these two kinds of transaction. According to the journal
type selected, you will have a different screen.For more information about creating journals, refer to the
Configuring Accounts from A to Z chapter.
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Data Entry Form for a Bank Statement
The statement reference Name and the Date are automatically suggested by OpenERP. The Name will be
filled with the statement number at confirmation of the bank statement. You can configure your own
reference by managing sequences in the Settings Technical Sequences & Identifiers Sequences menu.
Then select the correct Journal. Ideally, when you are configuring your company, you would create at
least one journal for each bank account and one journal for petty cash in your company. So select the
journal corresponding to the bank account whose statement you are handling.
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The currency that you are using for the statement line is that of the selected journal. If you are entering
statement lines for an account in American Dollars (USD), the amounts must be entered in USD . The
currency is automatically converted into the company's main currency when you confirm the entry, using
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the rates in effect at the date of entry. (This means that you would need valid currency conversion rates
(/trunk/web_kanban_sparkline/) to be created first. Go to Accounting Configuration Miscellaneous Currencies menu.)
web_graph (/trunk/web_graph/) OpenERP automatically completes the initial balance based on the closing balance of the preceding
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statement. You can modify this value and force another value. This lets you enter statements in the order
of your choice. Also if you have lost a page of your statement, you can enter the following ones
immediately and you are not forced to wait for a duplicate from the bank.
So, complete the closing balance which corresponds to the new value in the account displayed on your
bank statement. This amount will be used to control the operations before approving the statement.
Then you must enter all the lines on the statement. Each line corresponds to a banking transaction.
Enter the transaction line. You have two ways of entering financial transactions: manually or through the
Import Invoices button.
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Manual Entry
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When you type the Partner name, OpenERP automatically proposes the corresponding centralisation
account. The total amount due for the customer or supplier is pre-completed (Amount). This gives you a
simple indication of the effective payment. You must then enter the amount that appears on your
statement line: a negative sign for a withdrawal and a positive sign for a cash payment or deposit.
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Import Invoices
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Click the Import Invoices button, then click Add to select the invoices for which your payment will have to
be reconciled. Click select to confirm your selection; the statement line will automatically be added with
the corresponding reconciliation.
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Reconciliation from Data Entry of the Bank Statement
Note
Reconciliation
Other methods of reconciliation are possible: from accounting entries, when saving the payment directly
on an invoice, or using the automatic reconciliation tool.
You can carry out either a full or a partial reconciliation.
If you see a difference between the payment and the invoices to reconcile, you can enter the difference in
the second part of the form Write-off. You have to set an account for the adjustment. The main reasons
explaining the difference are usually:
profit or loss,
exchange differences,
discounts given for fast payment.
When the reconciliation is complete - that is, the payment is equal to the sum of the due payments and
the adjustments - you can close the reconciliation form.
The reconciliation operation is optional you could very well do it later or not do it at all. However,
reconciliation has got two significant effects:
marking that the invoices have been paid,
preventing the payment and invoice amounts from appearing on customer reminder letters. Unless
you have reconciled them, a customer will see the invoice and payment amounts on his reminder
letter (which will not alter the balance due since they will just cancel each other out).
Finally, once you have entered the complete bank statement, you can validate it. OpenERP then
automatically generates the corresponding accounting entries if the calculated balance equals the final
balance, indicated in the Closing Balance field. The reconciled invoices are marked as paid at that point.
You can also enter general accounting entries, for example, banking costs. In such cases, you can enter
the amounts directly in the corresponding general accounts.
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A user with advanced accounting skills can enter accounting entries directly into the bank journal from
Accounting Journal Entries Journal Items . The result is the same, but the operation is more complex
because you must know the accounts to use and must have mastered the ideas of credit and debit.
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Cash Management
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To manage cash, you can use the menu Accounting Bank and Cash Cash Registers . At the start of the
day you set the opening amount of cash in the entry (Opening Balance). Then click on button Open
CashBox, after you can start making entries from the Cash Transactions tab.
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Cash Control
You have to go menu Accounting Configuration Journals Journals and open the cash journal , then go to
the Cash Register tab of form and select option Opening With Last Losing Balance and Cash
Control.
Because if you do not select that options , than you will find Opening Cash Control field 0.00 of Cash
Register form. So first you have to configure Journal.
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Defining the Cash Register
All the transactions throughout the day are then entered in this statement. When you close the cashbox,
generally at the end of the day, enter the amounts on the Cash Control tab, in the Closing Balance section.
Then confirm the statement to close the day's cash statement and automatically generate the
corresponding accounting entries. Note that the Calculated Balance and the CashBox Balance need to be
equal before you can close the cashbox.
Tip
Confirming the Statement
Accounting entries are only generated when the cash statement is confirmed. So if the total statement
has not been approved (that is to say during the day, in the case of petty cash), partner payments will not
have been deducted from their corresponding account.
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Let us give the example of a purchase invoice. Note, however, that these entries are usually generated
automatically by OpenERP.
Click the Create button. Fill these fields manually in the following order:
Reference: reference from the invoice or entry,
Effective date: effective date of the entry, will be preset with today's date
Period: financial period, will be preset with the current period
Partner: partner concerned,
Account: general account (e.g. purchase account Products Purchase ),
Name: description of the invoice line (e.g. PC2 ),
Debit: here you type the debit amount.
Journal: here you select the journal in which you want to post.
Credit: here you type the credit amount, e.g. 1196 .
Press the Enter key on your keyboard to validate the first line. The next draft move number is assigned to
your accounting entry. Your line is then colored red and takes the Unbalanced state. When a line is in
the draft state, it is not yet reflected in the accounts. OpenERP will not validate that line until the
balancing entry is made (so the credit amounts must balance the debit amounts for that set of entries).
OpenERP now proposes the balancing accounting line to be filled in. If the account used (in this case
account 600000 ) includes taxes by default OpenERP automatically proposes taxes associated with the
amount entered. At this stage you can modify and validate this second line of the account, or replace it
with other information such as a second purchase line.
When you have entered all of the data from your lines, OpenERP automatically proposes counterpart
entries to you, based on the credit entries.
Tip
Completing a Balancing Entry
When an accounting entry is matched, OpenERP moves it to the Valid state automatically and
prepares to enter the next data. Do not forget to definitely post the valid entries by clicking the Action
button and selecting Post Journal Entries.
If you want to add some other balancing lines you can enter the number of the entry on the new line that
you are entering. In such a case the whole line stays Draft until the whole set balances to zero.
Reconciliation Process
The reconciliation operation consists of matching entries in different accounts to indicate that they are
related. Generally reconciliation is used for:
matching invoice entries to payments, so that invoices are marked as paid and customers do not
get payment reminder letters for those entries (reconciliation in a customer account),
matching deposits and cheque withdrawals with their respective payments,
matching invoices and credit notes to cancel them out.
A reconciliation must be carried out on a list of accounting entries by an accountant, so that the sum of
credits equals the sum of the debits for the matched entries.
Reconciliation in OpenERP can only be carried out in accounts that have been configured as reconcilable
(the Reconcile field).
Tip
Do not confuse account reconciliation and bank statement reconciliation
It is important not to confuse the reconciliation of accounting entries with bank statement reconciliation.
Account reconciliation consists of linking account entries with each other, while statement reconciliation
consists of verifying that your bank statement corresponds to the entries of that account in your
accounting system.
There are different methods of reconciling entries. You have already seen the reconciliation of entries
while doing data entry in an account. Automatic and manual reconciliations are described here.
Automatic Reconciliation
For automatic reconciliation, you will be asking OpenERP to search for entries to reconcile in a series of
accounts. OpenERP tries to find entries for each partner where the amounts correspond.
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Depending on the level of complexity that you choose (= power) when you start running the tool, the
software could reconcile from two to nine entries at the same time. For example, if you select level 5,
OpenERP will reconcile, for instance, three invoices and two payments if the total amounts correspond.
Note that you can also choose a maximum write-off amount, if you allow payment differences to be
posted.
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Form for Automatic Reconciliation
To start the reconciliation tool, click Accounting Periodical Processing Reconciliation Automatic
Reconciliation.
A form opens, asking you for the following information:
Add Accounts to Reconcile : you can select one, several or all reconcilable accounts,
Manual Reconciliation
For manual reconciliation, open the entries for reconciling an account through the menu Accounting
Periodical Processing Reconciliation Manual Reconciliation.
You can also call up manual reconciliation from any screen that shows accounting entries.
Select entries that you want to reconcile. OpenERP indicates the sum of debits and credits for the
selected entries. When these are equal you can click the Reconcile Entries button to reconcile the entries.
Note
Example Real Case of Using Reconciliation
Suppose that you are entering customer order details. You wonder what is outstanding on the customer
account (that is the list of unpaid invoices and unreconciled payments). To review it from the order form,
navigate to the Partner record and select the view Receivables and Payables . OpenERP opens a history of
unreconciled accounting entries on screen.
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After running the Reconcile Entries wizard, these lines can no longer be selected and will not appear
when the entries are listed again. If there is a difference between the two entries, OpenERP suggests you
to make an adjustment. This "write-off" is a compensating entry that enables a complete reconciliation.
You must therefore specify the journal and the account to be used for the write-off.
For example, if you want to reconcile the following entries:
Date
Ref.
Account Debit
12 May 11
INV23
Car hire
4010
544.50
25 May 11
INV44
Car insurance
4010
100.00
31 May 11
PAY01
Invoices n 23, 44
4010
Credit
644.00
On reconciliation, OpenERP shows a difference of 0.50. At this stage you have two possibilities:
do not reconcile, and the customer receives a request for 0.50,
reconcile and accept an adjustment of 0.50 that you will take from the P&L account.
OpenERP generates the following entry automatically:
Date
Ref.
Write-off account
Description
Account Debit
Credit
Date
Ref.
Description
Account
Credit
03 Jun 11
AJ001
4010
03 Jun 11
AJ001
XXX
Debit
0.50
0.50
The two invoices and the payment will be reconciled in the first adjustment line. The two invoices will then
be automatically marked as paid.
Payment Management
OpenERP gives you forms to prepare, validate and execute payment orders. This enables you to manage
issues such as:
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Once the payment order is confirmed, there is still a validation step for an accountant to carry out. You
could imagine that these orders would be prepared by an accounts clerk, and then approved by a
manager to go ahead with payment.
Tip
Payment Workflow
An OpenERP workflow is associated with each payment order. Select a payment order, and if you are in
the developer mode Click on Debug View# and then select print workflow to print the payment order
workflow.
You can integrate more complex workflow rules to manage payment orders by adapting the workflow. For
example, in some companies payments must be approved by a manager under certain cash flow or value
limit conditions.
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Payments Work flow
In small businesses it is usually the same person who enters the payment orders and who validates them.
In this case you should just click the two buttons, one after the other, to confirm the payment.
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Entering a Payment Order
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follows.
The date is particularly important for the preparation of electronic transfers, because banking interfaces
enable you to select a future execution date for each operation. So to configure your OpenERP, most
simply you can choose to pay all invoices automatically by their deadline.
You must then select the invoices to pay. They can be entered manually in the field Payment Line, but it is
easier to add them automatically. For that, click Select Invoices to Pay and OpenERP will then propose
lines with payment deadlines. For each deadline you can see:
the invoice Payment Date,
the reference Invoice Ref.,
the deadline for the invoice,
the amount to be paid in the partner's default currency.
You can then accept the payment proposed by OpenERP, or select the entries that you will pay or not
pay on that order. OpenERP gives you all the necessary information to make a payment decision for
each line item:
account,
supplier's bank account,
amount that will be paid,
amount to pay,
the supplier,
total amount owed to the supplier,
due date,
date of creation.
You can modify the first three fields on each line: the account, the supplier's bank account and the
amount that will be paid. This arrangement is very practical because it gives you complete visibility of all
the company's trade payables. You can pay only a part of an invoice, for example, and in preparing your
next payment order OpenERP automatically suggests payment of the remainder owed.
When the payment has been prepared correctly, click Confirm Payments . The payment then changes to
the Confirmed state and a new button appears that can be used to start the payment process.
You can print the payment order to send it to the bank by clicking the Print Payment Order at the top of
the screen.
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