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v9 Enterprise: Without an Opening Period, or even Opening Entries, how can I bring forward balances and post profit/loss to start a year??

By
Ray Carnes
on 8/10/16, 9:36 PM 529 views

The purpose of the opening entry was to bring forward Asset, Liability and Equity account balances; reset Revenue and Expense account balances; and post the profit (or loss) of previous fiscal year to the retained earnings account.

I don't understand how retained earnings are managed and how the balances are moved forward or reset if I don't post a Journal Entry to do this.

5

Ray Carnes

--Ray Carnes--
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--Ray Carnes--

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I have over 20 years of experience empowering and enabling users with enterprise information systems that make a real and measurable difference in their ability to proactively manage their businesses and organizations. 

Ray Carnes
On 8/10/16, 9:40 PM

The requirement to create an Opening Entry has been removed from Odoo at v9 in order to simplify the user experience; to have users able to review correct reports without needing to reply on specialized accounting expertise; and to allow users to work without worrying if the previous year was 'closed'.

  • Profit and Loss Accounts don't have to be reset.

  • Balance Sheet Accounts don't have to be brought forward.

  • Current Year Earnings are computed automatically.

 Several things have been implemented to this end.

1. You can set the "Fiscal Year Last Day" in Accounting --> Configuration --> Settings.

The opening account balances will be computed automatically (carried forward or reset) based on account type and this date. This is done without actually creating a Journal Entry to change balances. It is only at the reporting level, not at the general ledger level. For Balance Sheet accounts, the computation starts from the first day data was entered into Odoo. For Profit and Loss accounts, the computation is based on the start of the new fiscal year.

2. On the balance sheet, a virtual calculation (not stored in the general ledger) for 'CURRENT YEAR EARNINGS' is computed.

This is also based on the Fiscal Year Last Day. This is the sum of all Journal Items with an account on the Profit and Loss statement from the first day data was entered into Odoo.

3. To close a year:

1. Allocate the Current Year Earnings amount (for the year to close, the previous year) to "Undistributed profit/loss" or your renamed "Current Year Earnings" account.

2. Verify Current Year Earnings is $0 for the current year, or is correct if you have already started transactions.

3. Set the Lock Date to match the last date of the Fiscal year so no changes can be made.

Please review:

https://www.odoo.com/documentation/user/9.0/accounting/others/adviser/fiscalyear.html

https://www.odoo.com/documentation/user/9.0/accounting/others/reporting/main_reports.html

0
Ken Woychesko
On 9/9/16, 11:45 AM

In regards to 3.1 (Allocate the Current Year Earnings amount... to "Undistributed profit/loss" or your renamed "Current Year Earnings" account): What would you use for the balancing account? For example: if I have a Net Profit of $2,000, I will Credit "Undistributed profit/loss", but what do I Debit? I've watched all of the accounting videos and read the docs from Odoo but don't see this answered anywhere.

Side note: If I should have posted this as a separate question, please let me know (learning the forum rules). My gut tells me to "Comment" on your answer, but for some reason it takes more Karma to do that than post a new Answer...

See my post at https://github.com/odoo/odoo/issues/8820 for details.

Bista Solutions US, Ray Carnes
on 9/9/16, 12:28 PM

Yeah, it looks like you've got the same question as me when you ask: "(Note: NOT SURE OF THE CORRECT CREDIT ACCOUNT TO USE HERE – SOMETHING FOR EQUITY?)" (i.e. we know one account to use, which is the other one?)

Ken Woychesko
on 9/9/16, 2:40 PM

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Asked: 8/10/16, 9:36 PM
Seen: 529 times
Last updated: 9/10/16, 8:19 AM