documentation/index.rst

:classes: stripe

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Accounting Memento For Entrepreneurs
====================================

.. h:div:: intro-list

   .. rst-class:: intro-p-l

   The **Profit and Loss** (P&L) report shows the performance of the company
   over a specific period (usually the current year).

   * .. rst-class:: intro-gross-profit

     The **Gross Profit** equals the revenues from sales minus the cost of
     goods sold.

   * .. rst-class:: intro-opex

     **Operating Expenses** (OPEX) include administration, sales and R&D
     salaries as well as rent and utilities, miscellaneous costs, insurances,
     … anything beyond the costs of products sold.

   .. rst-class:: intro-balance

   The **Balance Sheet** is a snapshot of the company's finances at a specific
   date (as opposed to the Profit and Loss which is an analysis over a period)

   * .. rst-class:: intro-assets

     **Assets** represent the company's wealth, things it owns. Fixed assets
     includes building and offices, current assets include bank accounts and
     cash. A client owing money is an asset. An employee is not an asset.

   * .. rst-class:: intro-liabilities

     **Liabilities** are obligations from past events that the company will
     have to pay in the future (utility bills, debts, unpaid suppliers).

   * .. rst-class:: intro-equity

     **Equity** is the amount of the funds contributed by the owners (founders
     or shareholders) plus previously retained earnings (or losses).

.. h:div:: force-right accounts-table

   .. placeholder

What is owned (an asset) has been financed through debts to reimburse
(liabilities) or equity (profits, capital).

A difference is made between buying an assets (e.g. a building) and expenses
(e.g. fuel). Assets have an intrinsic value over time, versus expenses having
value in them being consumed for the company to "work".


.. rst-class:: force-right

.. highlights:: Assets = Liabilities + Equity

Chart of Accounts
=================

The **chart of accounts** lists all the accounts, whether they are balance
sheet accounts or P&L accounts. Every financial transaction (e.g. a payment, an
invoice) impacts accounts by moving value from one account (credit) to an other
account (debit).

.. h:div:: force-right

   .. highlights:: Balance = Debit - Credit

   .. h:div:: chart-of-accounts

      .. placeholder


Journal Entries
===============

Every financial document of the company (e.g. an invoice, a bank statement, a
pay slip, a capital increase contract) is recorded as a journal entry,
impacting several accounts.

For a journal entry to be *balanced*, the sum of all its debits must be equal
to the sum of all its credits.

.. h:div:: force-right journal-entries

   examples of accounting entries for various transactions. Example:

   Example 1: Customer Invoice:

   Explanation:

     - You generate a revenue of $1,000
     - You have a tax to pay of $90
     - The customer owes $1,090

   Configuration:

     - Income: defined on the product, or the product category
     - Account Receivable: defined on the customer
     - Tax: defined on the tax set on the invoice line

     The fiscal position used on the invoice may have a rule that
     replaces the Income Account or the tax defined on the product by another
     one.

   Example 2: Customer Payment:

   Explanation:

     - Your customer owes $1,090 less
     - Your receive $1,090 on your bank account

   Configuration:

     - Bank Account: defined on the related bank journal
     - Account Receivable: defined on the customer


Reconciliation
==============

Reconciliation is the process of linking journal items of a specific account,
matching credits and debits.

Its primary purpose is to link payments to their related invoices in order to
mark invoices that are paid and clear the customer statement. This is done by
doing a reconciliation on the *Accounts Receivable* account.

An invoice is marked as paid when its Accounts Receivable journal items are
reconciled with the related payment journal items.

Reconciliation is performed automatically by the system when:

* the payment is registered directly on the invoice
* the link between the payment and the invoice is detected at the bank matching
  process


.. rst-class:: force-right

Example
-------

.. rst-class:: table-condensed d-c-table

+-------------------------+-------------------------+-------------------------+
|Accounts Receivable      |Debit                    |Credit                   |
+=========================+=========================+=========================+
|Invoice 1                |100                      |                         |
+-------------------------+-------------------------+-------------------------+
|Payment 1.1              |                         |70                       |
+-------------------------+-------------------------+-------------------------+
|Invoice 2                |65                       |                         |
+-------------------------+-------------------------+-------------------------+
|Payment 1.2              |                         |30                       |
+-------------------------+-------------------------+-------------------------+
|Payment 2                |                         |65                       |
+-------------------------+-------------------------+-------------------------+
|Invoice 3                |50                       |                         |
+-------------------------+-------------------------+-------------------------+
|                         |                         |                         |
+-------------------------+-------------------------+-------------------------+
|Total To Pay             |50                       |                         |
+-------------------------+-------------------------+-------------------------+