Account Groups are the aggregation of similar ledger accounts into a single group.
These account groups are intended to demonstrate the hierarchy of ledger accounts.
This hierarchy of ledger accounts will be very useful for generating appropriate
reporting. The generally used account groups in Odoo are Regular, Payable, Receivable,
and Liquidity. Each of these account ledgers is described under the defined groups:
| Sl.No | Account Name | Nature | Group Under | Affect in Reports | | 1 | Receivable | Asset | Receivable | Balance Sheet |
| 2 | Bank and Cash | Asset | Liquidity | Balance Sheet |
| 3 | Current Assets | Asset | Regular | Balance Sheet |
| 4 | Non-Current Assets | Asset | Regular | Balance Sheet |
| 5 | Prepayments | Asset | Regular | Balance Sheet |
| 6 | Fixed Assets | Asset | Regular | Balance Sheet |
| 7 | Payable | Liability | Payable | Balance sheet |
| 8 | Credit Card | Liability | Liquidity | Balance sheet |
| 9 | Current Liabilities | Liability | Regular | Balance sheet |
| 10 | Non-Current liabilities | Liability | Regular | Balance sheet |
| 11 | Equity | Equity | Regular | Balance sheet |
| 12 | Current Year Earnings | Equity | Regular | Balance sheet |
| 13 | Income | Income | Regular | Profit & Loss |
| 14 | Other Income | Income | Regular | Profit & Loss |
| 15 | Expenses | Expense | Regular | Profit & Loss |
| 16 | Depreciation | Expense | Regular | Profit & Loss |
| 17 | Cost of Revenue | Expense | Regular | Profit & Loss |
Let us have a look at each of them.
1. Receivables (Debtors)
Account Receivables can be defined as the amount of money needed to pay for products
or services received but not yet paid. The receivables are also known as debtors.
These accounts are very convenient for registering all the receivables from the
side of customers. When we consider the nature of the receivables, they will come
under the Assets. Considering a Sale, based upon the increasing of receivables,
the receivable accounts get debited.
2. Bank and Cash
The nature of the Bank and Cash type is Asset, and every bank and cash account of
the organization will come under the Bank and Cash type. To give an example, suppose
an organization forms a cash payment in favor of a credit purchase and considers
the amount that gets transferred from the bank account. The bank account will be
credited since the asset decreases.
3. Current Assets
Current assets are the cash and other assets that are expected to be converted to
cash within one year. So this account type will be very advantageous for recording
short-term assets. The assets like inventory, short-term investments, prepaid expenses,
etc., can be considered in this type. The bank deposits, loans, and advances offered
to the employees come under this category.
Stock valuation accounts, Stock input accounts, Stock Output Accounts, Deferred
Expense Accounts, and many more are General accounts. Ledgers of type ‘Current Assets’
used in Odoo and the entries of this type affect the Balance Sheet since its nature
is an asset.
4. Non-Current Assets
The non-current assets are considered as an asset that the organization obtains
or invests. However, the amount of that investment does not revert within an accounting
year. So this investment type will bear for a long time, and this extensive type
cannot be simply liquidated into cash. Examples of this type of asset are buildings,
vehicles, insurance, etc. The total esteem can not be calculated within the accounting
year. All of them are listed in the balance sheet.
5. Prepayments
Prepayments can be illustrated as prepaid expenses. In this case, the cost has already
occurred for the products and services, but they are not to be received yet consumed.
When taking an example, Odoo considered Deferred Expenses or Prepaid expenses as
this type.
For example, if there is insurance with a payment of $ 24000 for one year. The
organization
will not be able to enter the whole expense in the profit and loss report for the
current year. The organization must divide the amount over one year. So 200$ will
be consumed monthly, and the expense will be posted. The payment will be of the
‘Asset’ nature, and the asset will decrease each year. As a result, the payment
account will get credited, and the expense account will get debited just as the
expense gradually decreases.
6. Fixed Assets
The Fixed Assets account type is very comfortable for capturing the details of every
fixed asset transaction, such as machinery, vehicles, land, buildings, furniture,
and many more. We can include all the items the company or business aims to use
for a long period. Further, the fixed assets come under the Assets nature. Because
when we purchase, the fixed asset will increase, the fixed asset account will debit,
and the fixed assets will be listed in the balance sheet.
7. Payables
The Payables account type is also known as Creditors. It is the total unpaid amount
of an organization to any individual or anyone. The payable accounts are suitable
for keeping a record of every payable amount to the suppliers or vendors. In addition,
the payable account is credited as the type of liability on a vendor bill.
8. Credit Cards
Credit Card is also a type of account, and the nature of the account is Liability.
The credit card is documented on the balance sheet. In the case of credit cards,
the amount of money expended using the credit card for any purpose, such as a purchase
or any other payment for other expenses through the credit card, will cause some
debts, and we should refund within a period of time, almost less than two months
or close to.
9. Current Liabilities
Current liabilities can be termed as short-term liabilities, which are supposed
to be settled within a year. The following categories can be listed under the Current
liability account type. Which are bank overdrafts, short-term loans, taxes and duties,
salary payables, payroll taxes, accrued expenses, income taxes, and much more.
10. Non-current liabilities
Non-current liabilities are long-term liabilities that can be referred to as long-period
debts or financial commitments that are due a year or more and are listed on the
balance sheet. Long-term loans, deferred tax liabilities, long-term lease obligations,
and pension benefit obligations are some examples of non-current liabilities.
11. Equity
Equity account type can be considered as the financial depiction of the proprietary
of an organization or business. It represents the amount of money the employers
endowed for initiation and initial functioning. Equity can arise from the payments
to a business from the owners' side or the residual earnings formed by a business.
In other words, we can say that Equity is an amount of assets when every liability
is settled and listed in the balance sheet. Common stock, contributed surplus, treasury
stock, common and preferred stocks, other extensive earnings, etc., come under this
account type. When we consider the nature of equity, it will come under Asset type.
The equity will be directly proportional to the invested money. That means equity
will increase when any investor invests money in that. As a result, the capital
account will be credited with the increased equity.
12. Current year earnings
The ‘Current Year Yearning” account type belongs to the equity-based account type
that represents the net profit and loss for the current fiscal year for balance
sheet purposes. If the sales or any other transaction has impacted on the income
and expense account, the current year's earnings will also be affected. This will
also be listed in the balance sheet.
13. Income & Other Income
The Income & Other Income account type is very beneficial for the business to
demonstrate
company’s income or revenue. The account's nature is income, which will be recorded
under the profit and loss reports. The profit from the company's core business
activities
(selling of products and services) is considered as the Income, and the other income
is not the direct revenues. Examples of other income are the interest amount, rent
amount, etc.
14. Expenses
Expenses accounts are the account types that record all the details of the amount
an organization expenses on everyday costs during an assigned accounting period.
This expense account type includes delivery expenses, income tax expenses, expenses
for the production of goods and services, salary expenses, advertising expenses,
repairs expenses, promotion expenses, rent expenses, etc. come under this category.
The nature of the Expenses accounts type is surely expense, and it will be listed
under the income statement/profit and loss report.
15. Depreciation
The Depreciation account types are commonly referred to as the amount that an
organization's
assets are depreciated for a single period. Normally, this account type is used
for recording fixed asset depreciation. In the case of Fixed assets, some depreciation
will be noted occasionally, and certainly, the value of fixed assets will decrease
in each period. So this type of depreciation will be linear or digressive. Also,
there will be a book value and the salvage value at the time of asset creation.
The book value stands for the original cost. In the case of Salvage value, it is
the amount that the organization will obtain the moment when selling that fixed
assets after all the depreciations are expensed. Further, the expense will be divided
over a certain period rather than including the overall expenses to the current
year based on the depreciation method applied. So the depreciation accounts debit
an expense account credit.
16. Cost of Revenue
The cost of revenue is directly related to the direct expenses generated with the
goods and services offered by the company. Which means it is the total cost of
manufacturing
and delivering a product or service to its customers. It is directly associated
with the income statement, so it is more comfortable to represent the direct cost
related with the goods and services. It includes the manufacturing cost of the product
and the cost of delivering them to the customers. The nature of this account type
(Cost of revenue) is the expense, and the account type will impact on the gross
profit.
Account Ledgers
An Account ledger is nothing but an account or record capable of managing bookkeeping
entries for balance sheet and income statement transactions, such as opening and
closing balance in debit or credit. This type of book or digital record encompasses
bookkeeping entries and detailed transaction information, including routine business
operations such as a bank or cash transactions, stock valuation, invoicing customers,
vendor invoices records, salary expenses, and many more. The ledgers include all
the essential information required for preparing financial statements.
Every transaction has a reference number that will be advantageous to them to determine
why and how that specific transaction was done.
Different account ledgers used in Odoo are as follows:
- Income account
- Expense account
- Stock input account
- Stock output account
- Stock valuation account
- Price difference account
- Account Receivable
- Account Payable
- Fixed Asset Account
- Depreciation Account
- Revenue Account
- Deferred revenue account
- Expense account
- Deferred Expense Account
- Suspense Account
- Outstanding Receipts Account
- Outstanding Payments Account
- Transfer Accounts