Most Powerful Open Source ERP

How To Create and Enter Accounting Transactions

Walkthrough of creating and entering accounting transactions.
  • Last Update:2016-04-13
  • Version:001
  • Language:en

How to showing all steps related to creation of accounting transactions and entering all relevant data in ERP5.

Table of Contents

Entering accounting transactions

Entering transactions

Accounting transactions are located in the “Accounting” module. They are categorized in five types having similar behaviours.

Purchase Invoice Transaction

On creation, a Purchase invoice transaction looks this way:
The following information is available:
 
  • •Section: It is the entity concerned by this transaction; 
  • •Transaction Reference: Transaction reference given on transaction confirmation 
  • •Title: General title for this transaction; 
  • •Supplier: Invoice supplier; 
  • •Invoice Number: Supplier invoice number; 
  • •Currency: Invoice currency, may be different from account currency; 
  • •Accounting operation date: date on which this transaction was registered; 
  • •Comments: Add a transaction's description for internal purpose. It won't be printed on       any reports. 
Accounting transaction lines are visible at the screen bottom. Two lines are added on purchase creation, but it is possible to add more using “Action” menu. Lines allows you to enter following data:
  • •Accounting Account, choosing among validated accounts from account module ; 
  • •Analytic information, Funding, Activity and Project, may be defined on lines' level. They will take “Global” information as default; Note: ERP5 “system preference” has to be configured by the administrator for this to be enabled. 
  • •Line Debit or Credit amount; 
  • •A Title can also be provided on each line. The title displayed on account's abstracts will be this one, if none is provided transaction's Title will be used.    

Accounting Transaction       

 Miscellaneous transactions named Accounting Transaction in ERP5 are similar to purchase transactions, only difference in its view is the Causality (Invoices …) field which define which transactions will be affected by this one (i.e.: If you need to correct another transaction).
Another difference is a Third Party is not required here, unless a selected account has a Payable or Receivable Type.
 

Payment Transaction

A Payment transaction is used to register outgoing or incoming payments. A payment transaction is similar to a purchase transaction or a accounting transaction, but is possible to select which cash in hand or bank account will be used as Section Bank Account.
It is also possible to define a Payment Mode. It will be possible during Journal edition to do a selection by payment mode.
 
Causality (Invoices …) field is also present in payment transaction. If this field is filled, it will trigger automatic grouping, which will be described later in this manual.
Payment transactions can be directly created using “Add Payment Transaction” in accounting action menu or by using “Create Related Payment” action from a purchase or sale transaction.
Using this action, third party, amount and account information will be filled automatically from invoice transaction information. In the dialogue, the Account for Bank Line, the payment mode and the bank account can be chosen.
 
It is also possible to specify on which date this transaction must be registered, and to directly plan it on its creation. It is useful to create a due date on the invoice registration.  
Here this action was used on one invoice transaction, but can also be used on multiple invoice transactions form accounting module view by selecting a set of invoice transactions and using “Create Related Payments” action to create a payment transactions for selected invoices.

Sale Invoice Transaction

 
Sale invoice transaction is similar to Purchase invoice transaction and works the same way.
 

Workflow

 
Action
State after action
Description
Who
Plan
Planed
Plan transaction to anticipate it in accounting
Accountant
Confirm
Confirmed
Confirm transaction to confirm that a planned transaction will take place
Accountant
Journalise
Journalised
Journalise transaction to certify its existence in accounting, although it can still be modified.
Accountant
Post
Posted
Post transaction so it cannot be modified
Accountant
 
Modify
Journalised
Get back to Journalised state to modify transaction
Accountant
Close
Closed
Close transaction to impede modification in the future
Accountant
Cancel
Cancelled
Cancel transaction
Accountant
 

Constraints

A transaction must be balanced
Third party and Entity organisations must be validated.
Transaction date must be in an open accounting period.
Accounts used in transaction must be validated.
Bank accounts used in transaction must be validated.
If a transaction line uses an Asset/Receivable or Liability/Payable account type, a third party must be provided.
If a transaction line uses an Asset/Cash/Bank account type, cash in hand or bank account must be provided.
If a bank account is used in a transaction, transaction's currency must be the same as bank account's currency.

Transaction in foreign currencies

The accounting currency used by an entity is given in the “Financial Information” tab of this entity. If a transaction is made in another currency, then a “Source Conversion” tab will appear. In this tab, amounts converted in the accounting currency for the entity must be entered. Amount in the foreign currency must be provided in the “General” tab.
The following sreenshot display a transaction using USD whereas it was made for an entity which use EUR for its accounting.
Conversion tab contains amounts in USD (here 45,000) and allow us to fill converted amounts on each lines for debit and credit.
 
In order to automate amount conversions, Exchange rates can be defined in the Currencies module. And this action is available as “convert Source Price” in action menu in the transaction view.

Paperless attachment

It is possible to attach documents to transactions, such as a scanned invoice sheet. To attach a file to a transaction, use “Attach Document” button
 
 
A dialogue appear in which a user can upload a file from his computer.
 
Once the document is attached, it is displayed on the “Document” tab of the transaction. By clicking on the “Download” icon, it is possible to download the original document. And by clicking on the other columns it gives access to the document view in ERP5 and a preview of it.
The attachment is automatically given the “Released” status, and all users having access to the transaction will be able to consult it.
 

Searching for transactions

On the top of other search possibilities presented in the general presentation chapter, accounting module offer an advanced search tool for transactions. It is displayed this way:
 
From date and To date fields restrict search perimeter to transactions passed during the selected period
Section Category field restricts search perimeter to transactions related to the selected section. This field is used with Strict Section Category. If a group is selected as a category and this box is ticked, it will search for transaction concerning only the international entity whereas if not ticked it will search among all entities.
Amount field look for transaction having this amount value. Min Amount and Max Amount specified a search interval.
Created After and Created After allow using a transaction creation date as a search parameter.
 

Grouping

Grouping in ERP5 is used to reconcile invoices and their corresponding payments. Two methods are use for grouping: automatic or manual.
Automatic grouping is done when a transaction is posted. We saw previously in this manual in the part concerning payment and accounting transaction that it is possible to relate these transactions to related transactions with the Causality (Invoices ...) field. Transactions related together form a  transaction group. On each transaction validation, the system will check inside this group for a set of transaction lines using the same account, with the same third party and which amount sum of debit and credit is 0. In this case, these lines will be automatically grouped on the transition to the Posted state.
On going back to the journalise state, existing group is deleted due to the fact amounts can be modified in this state, assuring for the system that the total amount in a group is 0. Going back to posted state, automatic grouping will be applied once again and in most cases the group will be automatically re-formed.
Another method is grouping manually. Manual grouping is available on a third party view using the “Grouping Reference Fast Input Button” (1).
 
Grouping dialogue display all transaction lines not grouped yet for this third party. In this dialogue the account needing grouping can be selected (1), then transaction lines needing grouping are selected in the left column by ticking their box (2), then click on Grouping Reference Fast Input (3) button. Grouping will be possible only if Total Selected Amount (4) is equal to 0.
 
If grouping has been possible, status message displayed grouped line number, and these lines has been given a letter.  
 
 
Update button can be used any-time to update Total Selected Amount.
 
It is also possible to ungroup lines grouped earlier. In order to do so the manual grouping tool must be used in Ungroupingmode (1), which list lines which are already grouped. In this mode select a line (2) and click on Grouping Reference Fast Inputbutton to delete grouping on all lines having the same grouping.
 
After operation, a status message display number of line ungrouped.
 
 
The Aged Balance report is based on this information to show outstanding invoices, it only takes into account recievable or payable lines that have not been grouped already.
The General Ledger and Account Statement reports have an option to hide all the lines which already have a grouping reference, to display only lines that are not grouped.
 

Reversals

From a transaction, it is possible to create a reversal transaction. It might be done in order to correct a transaction in the closed state (in other states transaction can be modified, so no need in these cases) or to reverse a adjustment transaction made at the end of a period.
From a transaction view it can be done by using “Create Reversal Transaction” in action menu.
 
This dialogue appears:
 
It is possible to do the reversal with Use Negated Quantities: if this box is ticked, for a line of 10 in credit a line of -10 in credit will be created; if this box is not ticked, the created line will be of 10 but in debit. Difference between a negative credit and a debit is in the evaluation of balance for credit and debit (negative credit change the credit balance) but the account balance is the same in both cases.
The transaction can be planned by ticking the Plan Transaction box and be passed on the date specified in the Date field. If no date is given the reversal transaction will use the same date as the original one.
This action is also available from the accounting module in order to create a reversal transactions for several transactions at the same time.
 

How preference are used in accounting

In the “Accounting Preferences” tab,  user can define an Organisation (1) used as default entity in new transactions. DefaultCurrency (2), Reference Perimeter (3) and the Funding source (4) can also be set for transaction creation.
 
 

Using transactions templates

If a user needs to enter the same kind of transactions on a regular basis, it is possible to create a template. First create a transaction and enter basic information. When done use “Make Template” from action menu.  
Once the template created, it is available in action menu in accounting module.
 
Template name, here Phone invoice, is defined by the title of the accounting transaction used to create the template.
In order to modify the template, use once again the action “Make a Template” from a transaction having the same title as the template. In this case the existing template will be replaced.
Transaction templates are stored in User Preferences and can be deleted from there by displaying the embedded list in list mode (as seen earlier in this manual) and deleting from this mode.

 

Related Articles