Odoo 17 primarily concentrates on three kinds of accounting practices. Accounting can be divided into two categories: "Anglo-Saxon accounting" and "Continental Accounting."
Odoo launched Storno Accounting, which employs negative credit/debit values for reverse entries.
Continental Accounting
The Odoo system and continental accounting, which is the most widely practiced accounting, and Odoo17 strongly support these ideas. This accounting practice is available both in the Enterprise and Community edition of Odoo 17. When making a purchase, this accounting will have an influence on the expense account. As soon as a product is found in stock, the expense of that item is therefore taken into account. Continental accounting is used by the Odoo17 platform by default. The stock can also be manually or automatically validated. The stock is unaffected if it is done manually, but the information must be manually posted at the end of each month or year.
Select the "Automated" inventory valuation technique if the stock valuations must be recorded as the stock is taken in and taken out.
Numerous beneficial effects of Continental accounting's long history can be seen in your company's accounting. Consequently, we may examine how various transactions or procedures in continental accounting are impacted by the ledgers.
Transactions in Continental Accounting
The financial activity that has a direct impact on a company's financial situation and financial statements is known as an accounting transaction. Basically, we may include any kind of money exchange under this category. These transactions are handled differently by different organizations or companies. So that we can examine some of the fundamental accounting transactions.
1. Purchase Process
The financial transactions that are necessary for the business to buy the goods or services needed to generate sales are referred to as purchases. All transactions related to purchases are referred to as "purchase journals" on the Odoo17 platform. The purchase voucher contains a record of all these transactions related to purchases. It is the transaction handled by the seller of a good or service bought, and it could even be a good or service bought, as well as any other asset bought. An entire series of transactions, including purchase order, material receipt, rejection out, purchase invoice, and purchase return, are included in a purchase.
Purchase Order: An official document produced by a buyer committing to pay the seller for the sale of a specific good or service that will be provided in the future is known as a purchase order. For the required sum, a buy order can be made for any products or services from a vendor. The beginning of a purchase order does not immediately affect the ledgers for either stock or accounts.
Material Receipt: The next operation is called Material receipt, and it deals with details like product quantities and lot numbers in regard to the goods that are intended for the employees' on-site job. The inventory item must be received and added to the inventory if the supplier supplies the product. The inventory will be updated with the quantities. Therefore, only the stock accounts are impacted by Material Receipt.
The "Stock Valuation Account" and "Stock Input Account" in the Odoo17 platform are impacted when the product is received.
| Accounts | Nature | Increasing Or Decreasing | Credit Or Debit |
| Stock valuation account | Asset | Increasing | Debit |
| Stock Input account | Liability | Increasing | Credit |
Rejection Out (Purchase Return): The organization frequently returns the products it has purchased even before making the payment. It might be for any cause. The product will be rejected if it becomes damaged. Similar to how there will be several factors involved in the rejection. The stock will consequently reverse. In this instance, only the stock will be impacted; the accounts won't change. The stock value will likewise drop as a result.
| Accounts | Nature | Increasing Or Decreasing | Credit Or Debit |
| Stock valuation account | Asset | Decreasing | Credit |
| Stock Input account | Liability | Decreasing | Debit |
Purchase Bill Creation: The payable account and the expense account will be impacted if you create a bill for the purchase order. Due to the fact that the payable account's nature is "Liability," it will be credited. On the other hand, because the expense account is an "expense" account, it is debited.
| Accounts | Nature | Increasing Or Decreasing | Credit Or Debit |
| Account Payable | Liability | Increasing | Credit |
| Expense Account | Expense | Increasing | Debit |
Registering Payment: The payable account and the outstanding receipt account are both impacted when you generate a payment. The liability will be reduced if the payment has been made. Consequently, a debit will be made from the payable account. In the bank and cash journals of Odoo 17, a temporary account called outstanding payments is used to store unreconciled inputs. The kind of outstanding payment is "Asset." Therefore, the outstanding payment account is credited as the assets decrease.
| Accounts | Nature | Increasing Or Decreasing | Credit Or Debit |
| Accounts payable | Liability | Decreasing | Debit |
| Outstanding Payments | Liability | Decreasing | Credit |
Reconciling: The sum will be transferred to the bank account after it is compared or reconciled to the bank statement. As a result, the account for outstanding payments is debited, and the bank is given credit.
| Accounts | Nature | Increasing Or Decreasing | Credit Or Debit |
| Outstanding Payments | Liability | Decreasing | Debit |
| Bank Account | Asset | Decreasing | Credit |
The term "purchase return" refers to when a customer returns a product to a seller for a refund, store credit, or any other reason based on the seller's duty. The occasional return of a purchase will also happen. For instance, if the buyer is dissatisfied with the product, if they purchased it in error, if the merchant sent them the incorrect product, or even if they purchased more products than they actually needed. When a purchase is returned, the stock is reduced, and the paid amount needs to be refunded because it occurs after the invoice. Therefore, both the stock accounts and the accounts will be impacted by the purchase return. Reverse journal entries that are appropriate should be created to make up for this.
The table below lists each purchase transaction's journal entries in detail.
| Operation | Accounts Affected | Debit | Credit |
| Purchase order | No Accounts Affected | | |
| Material Receipt | Stock Valuation Account | XX | |
| Stock Interim Account | | XX |
| Purchase Bill | Expense Account | XX | |
| Account Payable | | XX |
| Registering Payment | Account Payable | XX | |
| Outstanding Payments | | XX |
| Reconciling | Outstanding Payments | XX | |
| Bank Account | | XX |
2. Sales Process
Sales transactions include any sale, contract, or other transfers that include the disposal of goods, services, or other assets, both tangible and intangible. Here, we may talk about how the Odoo17 platform can help you handle sales transactions, the operations that go along with them, and how that affects the journal entries. Operations like Sales Orders, Delivery Notes, Rejection IN (Sales Return), Sales Invoices, and Invoice payment are all part of a sales transaction. We might start by examining the following operations of sales transactions.
Sales Order: A sale order is essentially a document created by the seller to gather details regarding the goods or services the customer has requested. Every detail is included in the sales order, including information on the product or service, the price, the quantity, the terms and conditions, and many other things. The selling order is, therefore, solely intended for the creation of orders since it has no effect on inventories or accounts.
Delivery Note: An element connected to the shipment or delivery of goods is a delivery note. This will include the specifics of the goods, how many there are, and how much they cost. Dispatch Note and Goods Received Note are other names for the Delivery Note. The stock value reduces as a confirmed order is fulfilled from the inventory and delivered to the customer. Two accounts, the "Stock Valuation Account" and the "Stock Output Account," are impacted by the delivery of goods to customers.
| Accounts | Nature | Increasing Or Decreasing | Credit Or Debit |
| Stock valuation account | Asset | Decreasing | Credit |
| Stock Output account | Liability | Decreasing | Debit |
Rejection IN (Sales Return): Numerous times, buyers return products even after being billed. Adjustments are made to stock and accounts as a result of this form of sales return. They will also have reverse journal entries created for them. For keeping track of the products that customers have rejected or returned, a Rejection IN is a very helpful feature. If the goods are returned prior to billing, just the stock will be impacted; the accounts are unaffected. Additionally, the stock value rises when the product is added back to the inventory.
| Accounts | Nature | Increasing Or Decreasing | Credit Or Debit |
| Stock valuation account | Asset | Increasing | Debit |
| Stock Output account | Liability | Increasing | Credit |
Sales Invoice Creation: A type of accounting document called a sales invoice is sent to a buyer by a vendor of products or services. Everything will be mentioned, including the service provided, the product provided, the price the buyer must pay, the mode of payment, and more. It is necessary for bigger transactions and is a legally binding agreement between the company and the customers.
Both the Receivables Account and the Income Account will be impacted in this situation. The Account Receivable is labeled as an "Asset," and the Income Account is labeled "Income" when we analyze the characteristics of these accounts. In this instance, the revenue is rising while the asset is decreasing. As a result, the Income Account is debited, and the Account Receivable is credited.
| Accounts | Nature | Increasing Or Decreasing | Credit Or Debit |
| Income Account | Income | Increasing | Credit |
| Account Receivable | Asset | Increasing | Debit |
Registering Payment: On payment registration, a temporary account called Outstanding Receipts is used. Due to payment registration, a journal entry is produced with Accounts Receivable and Outstanding Receipts.
| Accounts | Nature | Increasing Or Decreasing | Credit Or Debit |
| Accounts Receivable | Asset | Decreasing | Credit |
| Outstanding Receipts | Asset | Increasing | Debit |
Reconciliation: After reconciliation, the sum will be transferred to the bank account after it is compared to the bank statement. As a result, the bank is debited, and the account for outstanding receipts is credited.
| Accounts | Nature | Increasing Or Decreasing | Credit Or Debit |
| Outstanding Receipts | Asset | Decreasing | Credit |
| Bank account | No Accounts affected | | |
You can see a breakdown of all the sales transactions' journal entries by looking at the table below.
| Operation | Accounts Affected | Debit | Credit |
| Sales order | No Accounts affected | | |
| Delivery Note | Stock valuation account | | XX |
| Stock valuation account | XX | |
| Customer Invoice | Income Account | | XX |
| Account Receivable | XX | |
| Registering Payment | Accounts Receivable | | XX |
| Outstanding Receipts | | XX |
| Reconciling | Outstanding Receipts | XX |
| Bank Account | XX | |
Finally, using the double-entry bookkeeping method, the total of the credits will equal the total of the debits.
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. Odoo17 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.
| Accounts | Nature | Increasing Or Decreasing | Credit Or Debit |
| Stock valuation account | Asset | Increasing | Debit |
| Stock Input account | Asset | Decreasing | Credit |
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.
| Accounts | Nature | Increasing Or Decreasing | Credit Or Debit |
| Stock Valuation Account | Asset | Decreasing | Credit |
| Stock Input Account | Asset | Increasing | Debit |
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.
| Accounts | Nature | Increasing Or Decreasing | Credit Or Debit |
| Account Payable | Liability | Increasing | Credit |
| Tax Account | Asset | Increasing | Debit |
| Stock Input account | Asset | Increasing | Credit Or Debit |
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.
| Accounts | Nature | Increasing Or Decreasing | Credit Or Debit |
| Accounts Payable | Liability | Decreasing | Debit |
| Outstanding Payments | Liability | Increasing | Credit |
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.
| Accounts | Nature | Increasing Or Decreasing | Credit Or Debit |
| Outstanding Payments | Liability | Decreasing | Debit |
| Bank Account | Asset | Decreasing | Credit |
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.
| Operation | Accounts Affected | Debit | Credit |
| Purchase order | No Accounts Affected | | |
| Material Receipt | Stock Valuation Account | XX | |
| Stock Valuation Account | | XX |
| Purchase Bill | Stock Valuation Account | XX | |
| Account Payable | | XX |
| Tax Account | XX | |
| Registering Payment | Account Payable | |
| Outstanding Payments | XX | |
| Reconciling | Outstanding Payments | | XX |
| Bank Account | XX | |
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.
| Accounts | Nature | Increasing Or Decreasing | Credit Or Debit |
| Stock Valuation Account | Asset | Decreasing | Credit |
| Stock Output Account | Expenses | Increasing | Debit |
Sales Return:Sales Return: Take into account a customer returning goods for any reason. In this manner, the stock is likewise inverted.
| Accounts | Nature | Increasing Or Decreasing | Credit Or Debit |
| Stock Valuation Account | Asset | Increasing | Debit |
| Stock Output Account | Expenses | Decreasing | Credit |
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.
| Accounts | Nature | Increasing Or Decreasing | Credit Or Debit |
| Income Account | Income | Increasing | Credit |
| Account Receivable | Asset | Increasing | Debit |
| Tax Account | Liability | Increasing | Credit |
| Stock Output Account | Expenses | Decreasing | Credit |
| Expense Account | Expenses | Increasing | Debit |
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.