Conclusion:

1. Modify the initial balance by excluding the relevant amounts from AR, AP, and Equity.

2. Incorporate the outstanding invoices by utilizing the product sales (income) account, allowing Odoo to display this amount in the unallocated earnings of the previous year in the equity section. This is the reason for eliminating the relevant amount in step 1 from the equity amount. 

3. Import the outstanding bills by using the expense account. This enables Odoo to reflect this amount in the unallocated earnings of the previous year in the equity section.

4. Comparison between cash basis and accrual basis.
On a cash basis, open invoices and bills are recorded under income and expense accounts.
On an accrual basis utilizes AR clearing and AP clearing accounts.

Video: https://drive.google.com/file/d/1W_2_Atknmg6V6Ns2uA3RmYYiWRKemMc

Workflow:

1.      Assume the fiscal year is January 1st. The initial trial balance is as follow:

2.      The resolution to implement the cash basis is to eliminate the $8000 debit from accounts receivable (AR) and deduct a total of $8000 from equity. However, considering the initial balance, we will deduct $6000 from net income and $2000 from the capital. The outcome is as follows:

 3.      After addressing the outstanding receivables, it is necessary to eliminate the $2000 credit from the accounts payable. In turn, we should record a $2000 credit in the capital. Consequently, the capital will reflect a total credit of $4000. The outcome is presented below.

4.      The outstanding invoices will directly utilize the AR and Income account, which will be reflected in the equity section of Odoo. This is because of the connection between the P&L and Balance sheet in Odoo. The net income from the P&L will automatically be reflected in the equity section of the balance sheet using the 99999 undistributed profits/losses account. Let's assume that there are three outstanding invoices totaling $8000.

5.      Open bill as follows:

 6.      After all the steps, the open balance on 1/1/2024 will result to step1.