The following are the key insights that answer your question about understanding the Accounting concept behind the Odoo (most preferably and effective Accounting Package):-
Odoo comes with a standard COA that list all the accounts in which you can classify every financial operation. It is more flexible that can be designed to fit your financial rules and recording as you can add as many accounts as your business operates.
This means that nothing will be lost, all the records will be recorded and reported on your financial statements.
Odoo automatically creates all the behind-the-scenes journal entries for each of your accounting transactions: customer invoices, point of the sale order, expenses, inventory moves, etc. Odoo uses the rules of double-entry bookkeeping system: all journal entries are automatically balanced (sum of debits = sum of credits).
Odoo supports both accrual and cash basis reporting. This allows you to report income/expense at the time transactions occur (i.e., accrual basis), or when payment is made or received (i.e., cash basis).
By default, Odoo uses a single account for all account receivable entries and one for all accounts payable entries. You can create separate accounts per customers/suppliers, but you don’t need to.
As transactions are associated with customers or suppliers, you get reports to perform analysis per customer/supplier such as the customer statement, revenues per customers, aged receivable/payables.
With Bank reconciliation, all your bank statement lines, as supplied by the bank, will be matched to all of your accounting transactions in the general ledger. Odoo makes bank reconciliation easy by frequently importing bank statement lines from your bank directly into your Odoo account. This means you can have a daily view of your cash flow without having to log into your online banking or wait for your paper bank statements.
Odoo speeds up bank reconciliation by matching most of your imported bank statement lines to your accounting transactions. Odoo also remembers how you’ve treated other bank statement lines and provides suggested general ledger transactions.
Odoo totals all your accounting transactions for your tax period and uses these totals to calculate your tax obligation. You can then check your sales tax by running Odoo’s Tax Report.
Odoo supports both periodic (manual) and perpetual (automated) inventory valuations. The available methods are standard price, average price, LIFO (for countries allowing it) and FIFO.
Odoo allows you to manage several companies within the same database. Each company has its own chart of accounts and rules. You can get consolidation reports following your consolidation rules. A real good feature for Group Of Companies
Users can access several companies but always work in one company at a time.
Every transaction is recorded in the default currency of the company. For transactions occurring in another currency, Odoo stores both the value in the currency of the company and the value in the currency of the transaction. Odoo can generate currencies gains and losses after the reconciliation of the journal items.
Currency rates are updated once a day using a xe.com online web-service.
Odoo accounting supports more than 50 countries. The Odoo core accounting implements accounting standards that are common to all countries. Specific modules exist per country for the specificities of the country like the chart of accounts, taxes, or bank interfaces.In particular, Odoo’s core accounting engine supports:
Anglo-Saxon Accounting (U.S., U.K and other English-speaking countries including Ireland, Canada, Australia, and New Zealand) where costs of good sold are reported when products are sold/delivered.
- European accounting where expenses are accounted at the supplier bill.
Wide range of financial reports
With Odoo, All financial reports are generated in real-time, As these reports are very important into understanding and getting a clear picture of the company positions as well as performance. Odoo’s reports range from basic accounting reports to advanced management reports. These are:-
- Performance reports - Profit and Loss, Budget Variance
- Position reports - Balance Sheet, Aged Payable, Aged Receivables
- Cash reports - Bank Summary
- Detail reports - Trial Balance and General Ledger
- Management reports - Budgets, Executive Summary
Easily retained earnings
In simple language, Retained earnings are the portion of income retained by your business. Odoo Automatically calculates your current year earnings in real-time so no year-end journal or rollover is required. This is calculated by reporting the profit and loss balance to your balance sheet report automatically.