243 lines
8.6 KiB
ReStructuredText
243 lines
8.6 KiB
ReStructuredText
:classes: stripe
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====================================
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Accounting Memento For Entrepreneurs
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====================================
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.. rst-class:: intro-list
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* .. rst-class:: intro-p-l
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The **Profit and Loss** (P&L) report shows the performance of the company
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over a specific period (usually the current year).
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* .. rst-class:: intro-gross-profit
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The **Gross Profit** equals the revenues from sales minus the cost of goods
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sold.
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* .. rst-class:: intro-opex
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**Operating Expenses** (OPEX) include admininstration, sales and R&D
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salaries as well as rent and utilities, miscellaneous costs, insurances, …
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anything beyond the costs of products sold.
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* .. rst-class:: intro-balance
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The **Balance Sheet** is a snapshot of the company's finances at a specific
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date (as opposed to the Profit and Loss which is an analysis over a period)
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* .. rst-class:: intro-assets
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**Assets** represent the company's wealth, things it owns. Fixed assets
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includes building and offices, current assets include bank accounts and
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cash. A client owing money is an asset. An employee is not an asset.
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* .. rst-class:: intro-liabilities
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**Liabilities** are obligations from past events resulting in future use or
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transfer of current assets (utility bills, debts, unpaid suppliers).
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* .. rst-class:: intro-equity
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**Equity** the amount of the funds contributed by the owners (founders or
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shareholders) plus previously retained retained earnings (or losses).
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A difference is made between buying an assets (e.g. a building) and expenses
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(e.g. fuel). Assets have an intrinsic value over time, versus expenses having
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value in them being consumed for the company to "work".
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Assets have necessarily been financed via liabilities or equity: a company can
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buy work space through profits, debts or injected capital (fund raising).
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.. highlights:: What is owned (assets) has been financed through debts to
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reimburse (liabilities) or equity (profits, capital).
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.. h:div:: force-right accounts-table
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.. placeholder
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Chart of Accounts
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=================
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The **chart of accounts** lists all the accounts used by the company, whether
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they are balance sheet accounts or P&L accounts. Every financial transaction
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(e.g. a payment, an invoice) impacts accounts by moving value from one account
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(credit) to an other account (debit).
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.. rst-class:: force-right
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Balance = Debit - Credit
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------------------------
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.. h:div:: chart-of-accounts
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.. placeholder
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Journal Entries
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===============
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Every financial document of the company (e.g. an invoice, a bank statement, a
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pay slip, a capital increase contract) is recorded as a journal entry,
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impacting several accounts.
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For a journal entry to be *balanced*, the sum of all its debits must be equal
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to the sum of all its credits.
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Companies can triage entries in various journals based on their nature or
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context. Common journals are:
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* a sales journal with all customer invoices and refunds
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* a purchase journal with all supplier bills
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* a bank journal for bank statements
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* a cash journal for cash operations
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.. h:div:: force-right journal-entries
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examples of accounting entries for various transactions. Example:
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Example 1: Customer Invoice:
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Explanation:
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- You generate a revenue of $1,000
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- You have a tax to pay of $90
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- The customer owes $1,090
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Configuration:
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- Income: defined on the product, or the product category
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- Account Receivable: defined on the customer
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- Tax: defined on the tax set on the invoice line
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The fiscal position used on the invoice may have a rule that
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replaces the Income Account or the tax defined on the product by another
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one.
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Example 2: Customer Payment:
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Explanation:
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- Your customer owes $1,090 less
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- Your receive $1,090 on your bank account
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Configuration:
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- Bank Account: defined on the related bank journal
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- Account Receivable: defined on the customer
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Reconciliation
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==============
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At a financial level, journal entries (and the corresponding operations in a
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company's account) are independent from one another: the invoices a company
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emits and the payments it receives are separate journal entries.
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It's thus easy to know how much was sold (by tallying the income account) and
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how the company is still owed overall (receivables) but not how much a
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specific client owes or which specific invoices are still unpaid (in order to
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send reminders for instance).
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Reconciliation is the process of correlating and linking journal items,
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matching the credits and debits of a specific account:
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* within a single account, look for all non-reconciled items (usually with a
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specific second party, e.g. all operations on *Accounts Receivable*
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concerning the same client)
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* link debiting items with crediting items, each side (debiting and crediting)
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can have multiple items.
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The system can then use reconciliation to automatically mark invoices as paid
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(or partially paid), prepare and send reminders, flag accounting issues, …
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.. rst-class:: force-right
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Example
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-------
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Reconciling on *Accounts Receivable* with all operations involving that
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specific customer will result in:
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.. rst-class:: table-condensed d-c-table
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+-------------------------+-------------------------+-------------------------+
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|Accounts Receivable |Debit |Credit |
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+=========================+=========================+=========================+
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|Invoice 1 |100 | |
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+-------------------------+-------------------------+-------------------------+
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|Payment 1.1 | |70 |
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+-------------------------+-------------------------+-------------------------+
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|Invoice 2 |65 | |
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+-------------------------+-------------------------+-------------------------+
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|Payment 1.2 | |30 |
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+-------------------------+-------------------------+-------------------------+
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|Payment 2 | |65 |
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+-------------------------+-------------------------+-------------------------+
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|Invoice 3 |50 | |
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+-------------------------+-------------------------+-------------------------+
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| | | |
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+-------------------------+-------------------------+-------------------------+
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|Total To Pay |50 | |
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+-------------------------+-------------------------+-------------------------+
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Bank Reconciliation
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-------------------
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Bank reconciliation is the process of finding and explaining the differences
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between the bank statements provided by banks and the company's own
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accounting. It is used to both import the bank's operations into the internal
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books (e.g. banking or overdraft fees) and discover issues (missing records,
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checks not passed to banks, operation inversions, …).
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There are two main ways to perform bank reconciliation:
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Intermediate account
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~~~~~~~~~~~~~~~~~~~~
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Bank statements can be encoded in a dedicated "bank" account, which is then
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reconciled normally.
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.. h:div:: force-right
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* encode a check being sent:
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.. rst-class:: table-condensed d-c-table
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+--------------------+-----+------+
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| |Debit|Credit|
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+====================+=====+======+
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|Accounts Payable |121 | |
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+--------------------+-----+------+
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|Emitted Checks | |121 |
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+--------------------+-----+------+
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* get the bank statement and encode it:
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.. rst-class:: table-condensed d-c-table
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+-----------------+-----+------+
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| |Debit|Credit|
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+=================+=====+======+
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|Emitted Checks |121 | |
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+-----------------+-----+------+
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|Bank | | 121 |
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+-----------------+-----+------+
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* reconcile on the Emitted Checks account, it is a normal reconciliation
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process between two journal items
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Bank reconciliation
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~~~~~~~~~~~~~~~~~~~
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The operation can also be implemented specifically, this is used e.g. in the
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US. In that situation, each act having to do with a potential bank account
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operation (bank transfer, check, payment notification) is immediately encoded
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to a journal entry and when the bank statement is received its entries are
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correlated to the previously encoded entries.
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In that case, the bank statement does not generate entries, it only points
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to/validates previously created entries.
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.. note:: In Odoo, that would be Pay Invoice -> Import Bank Statement, only
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added to master mid-january.
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