Anglo-Saxon Accounting

For tiny areas, such as those found in the United States, United Kingdom, Ireland, Canada, Australia, and many other nations, Anglo-Saxon Accounting is applicable. Odoo 17 only offers Anglo-Saxon accounting in the enterprise edition. There are numerous contrasts between the two accounting systems, Continental and Anglo-Saxon. We talked about how a purchase affects the expense account in Continental Accounting. However, in Anglo-Saxon accounting, after executing a sale order has an impact on the expense account.

You must enable Anglosaxon accounting from the Odoo Accounting Configuration Settings if you wish to use all of its features, and you should activate the developer mode. The cost distinctions between Account and Stock account properties when the inventory valuation is automated is another important aspect of the Anglo-Saxon accounting system. To track the price difference between the vendor bill and the purchase cost, use the price difference account.

Transactions in Anglo-Saxon Accounting

1. Purchase Process

In some cases, the expense won't register when it is made. The purchases could be made in bulk and consumed over a lengthy period of time. Therefore, including them as an expense in financial entries will have a bigger effect on the company's profit and loss. It is, therefore, common practice to record acquired products as assets and costs at the moment of use in order to handle those scenarios. Ledgers contain the cost of spent assets.

We will start by making a product purchase.

Purchase Order: Purchase orders do not impact any accounting ledgers; they just produce a valid document for receiving products or services from the vendor.

Purchase Receipt: After the goods' receipt has been acknowledged, the arriving assets must be added to stock. As a result, both stock input accounts and stock valuation accounts are impacted by stock.

When stock is received and recorded in the "Stock input account," it is thought of as an asset until it is sold or consumed at which point it becomes a liability. So, it might be either assets or liabilities. [Liability = -Assets] as either the liability or the asset changes.

Purchase Return: There is occasionally a chance that the purchased item can be returned because of a quality problem or product damage. As a result, stock accounts are reversed, and the stock move is exactly the opposite of the incoming.

Purchase Bill:Posting the purchase bill follows completion of the purchase receipt. As was already indicated, in Anglo-Saxon, the direct expense will be recorded as an asset rather than at the time of purchase. As a result, once a bill is generated, "Account Payable" and "Stock interim accounts" are impacted. The amount to be paid to the vendor is noted in Account Payable. As a result, when a bill is generated, the amount owed to the vendor rises, increasing the company's liability and crediting the Account Payable.

Register Payment: Making a payment or sending money to the vendor is known as registering it. 'Account Payable' and 'Outstanding Payment Accounts' are impacted by this process. The company's liability decreases as a result of payments made to the vendor. The company's payable liabilities are recorded in account payable. As a result, Account Payable, which by definition is a liability, is debited when the liability diminishes.

The Outstanding Payment account serves as a middleman for holding unreconciled outbound payments alongside cash and bank journals. Rather than using the Account Payable, these outstanding payment accounts are used to reconcile with the bank statement. As a result, whenever a payment is registered, the "Outstanding Payments" account is credited.

Reconciliation: The bank statement and vendor payment must match because that is the next step. The 'Outstanding Payment' and 'Bank' accounts are thus impacted by reconciliation.

During this procedure, it will be noted that the vendor has finally received payment from the bank account. As a result, the asset in "Bank" decreases, which credits "Bank," and the liability in "Outstanding Payment" reduces, which debits "Outstanding Payment."

The table below displays the total journal entries made during the buying process.

2. Sales Process

The sales transaction entails a number of procedures, including the establishment of the order, the handling of the product delivery to the customer, the generation of the invoice, as well as its payment and reconciliation.

Sale Order: A sales order is made when a customer specifies the goods and services they need, the quantity they need, the confirmed pricing, etc. There is no impact on any accounts.

Delivery Note: After an order is accepted, the items must be delivered to the consumer. The attributes of the stock account will change once delivery has been authenticated. The stock that was supplied to the customer is tracked in the "Stock Output Account." A "Stock Output Account" is an expense by nature, and in this case, the expense value rises and is debited. Additionally, the value of all the stock or assets in the warehouse declines and is recorded in the "Stock Valuation Account." So, a credit is made to the stock valuation account.

Sales Return:Sales Return: Take into account a customer returning goods for any reason. In this manner, the stock is likewise inverted.

Sales Invoice: The 'Income Account' and 'Account Receivable' are impacted when creating a sales invoice for a customer. While "Account Receivable" refers to assets, "Income Account" refers to income. Thus, as assets grow and income rises, the "Income Account" is credited, and the "Account Receivable" is debited. Additionally, two other ledgers—the "Stock Output Account" and the "Expense" Account—are also impacted because, according to Anglo-Saxon accounting, the expense is impacted as soon as the acquired item is used up or sold out.

Payment Registering: The 'Account Receivable' and 'Outstanding Receipts' accounts are impacted once payment has been received from the customer and has been registered in Odoo17.

The amount that has to be collected from the customer is recorded in the receivable accounts. 'Account receivable' is an asset by definition. As the client pays, assets are depleted and credited. Following a temporary storage period in the "Outstanding Receipts" account, the incoming funds were later reconciled with the "Bank." Assets are the basis for the Outstanding Receipts account, which is debited as the asset value rises.

Reconciliation: When a payment is compared to a bank statement, the asset in the bank grows, which results in a debit to the bank. Additionally, there is the parallel outstanding receipts account, where assets decline and are credited.

Sales Return: Products returned have an impact on stock, and if the invoice has been paid, the refund must be recorded with a credit note.

The entire journal entry is listed below.

Storno Accounting

Storno is the Italian word for "cancellation" or "writing off." Therefore, under this technique of accounting, the original journal entries will be reversed using negative credit or debit amounts that have been recorded in your account. A bookkeeper can remove a file that has inaccurate accounting information about the recorded amount with the use of this procedure.