Accounting Structures in

ADempiere
DOCUMENT SUMMARY SHEET

Document Type: How To

Document Title: Accounting Structures in ADempiere
Document Summary: This is the Adaxa HowTo Template which is used for the
creation of HowTo documents. Proposals, white papers,
reports, etc. will use the Adaxa Report Template
File Name:
Created on: Wednesday, 11 April 2012
Created by: Martin Fuggle
Last Modified on:
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NOTES

1. Responsibility is disclaimed for any loss or damage (including but not limited to damage resulting from
the use by the client of the document) suffered by any other person for any reason at all including but
not limited to negligence by ADAXA Pty Ltd (ADAXA).

2. Whilst this document is accurate to the best of our knowledge and belief, ADAXA cannot guarantee the
completeness or accuracy of any description or conclusions based on the supplied information.

3. The recommendations contained in the document are advisory and ADAXA has no responsibility for the
management or operation of any recommendations that may be implemented by the client.

4. This document is licensed under the terms shown at http://creativecommons.org/licenses/by-nc-

nd/3.0/au/legalcode.

2010 Adaxa Pty Ltd Page 1

Table of Contents
Accounting Structure

1.1 The 'Account'................................................................................................................ iii

1.2 Elements with Account Information...............................................................................iii
1.3 Accounting Schema Accounts....................................................................................... v
1.4 Accounting Rules......................................................................................................... vi
1.5 Account Masking.......................................................................................................... vi
1.6 Base Rules................................................................................................................... vi
1.7 Tax Rules..................................................................................................................... vii
1.8 Costing Rules.............................................................................................................. vii
Accounting Rule Details

2.1 Base Rule Set............................................................................................................. viii

2.1.1 Sales related Transactions.............................................................................................. viii
2.1.2 Material related Transactions............................................................................................ ix
2.1.3 Purchase related Transactions.......................................................................................... x
2.2 Enhanced Accounting Rule Set.................................................................................... xi
2.3 Optional Accounting Rule Set...................................................................................... xii
2.4 Heading 2.................................................................................................................... xii
2.4.1 Heading 3......................................................................................................................... xii
Adaxa's Offices and Contacts

3.1 Australia..................................................................................................................... xiv

3.2 New Zealand.............................................................................................................. xiv
3.3 United States of America............................................................................................ xiv

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 1 Accounting Structure

1.1 The 'Account'

We refer to Account as the fully qualified valid combination of information structure segments:

In the Information Structure of your Accounting Schema you selected segments you want to report
on. The mandatory elements are: Company and Natural Account, optional elements are for
example, Business Partner, Product, Project, etc.

If an element is mandatory, it must be specified for the combination to be fully qualified.

1.2 Elements with Account Information

The objective is to generate all accounting transaction entries. Consequently, all accounts are
predefined. For example, if you sell a product, the revenue account defined with the product is
used. This allows you to define just once what accounts should be used and not worry about
accounting while entering transactions. To ease the data entry for accounts, all accounts have
defaults defined at the Accounting Schema. The defaults for Products come from their Product
Category - the defaults for Business Partners come from their Group.

Then the accounting rules determine based on the transaction context and rule set, what accounts
(and amounts) to use:

Element Account Default

Business Partner - Customer Receivables Business Partner Group

Customer Prepayment

Business Partner - Vendor Liability Business Partner Group

Liability (Services)
Vendor Prepayment

Business Partner Group Receivables Accounting Schema

Customer Prepayment
Payment Discount Exp
Receivables Write-Off
Liability
Liability (Services)
Vendor Prepayment
Payment Discount Rev
Unrealized Currency Gain
Unrealized Currency Loss
Realized Currency Gain

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 Realized Currency Loss
Withholding
Not invoiced Receipts
Unearned Revenue
Not invoiced Receivables
Not invoiced Revenue

Business Partner - Employee Expense Accounting Schema

Prepayment

Product Revenue Product Category

Product Inventory
Product Cost Difference
Expense
Cost of Goods Sold

Product Category Revenue Accounting Schema

Product Inventory
Product Cost Difference
Expense
Cost of Goods Sold

Warehouse Inventory (Asset) Accounting Schema

Inventory Differences
Inventory Revaluation

Project Project Asset Accounting Schema

Work in Progress

Tax Tax Due Accounting Schema

Tax Liability
Tax Credit
Tax Receivables
Tax Expense

Bank Cash In Transit Accounting Schema

Bank Asset
Bank Expense
Interest Expense
Interest Revenue
Unallocated Cash
Unidentified Cash
Settlement Currency Gain
Settlement Currency Loss
Revaluation Gain
Revaluation Loss
Payment Selection

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 Cash Book Cash Asset Accounting Schema
Cash Transfer
Cash Difference
Cash Expense
Cash Receipt

Withholding Withholding Accounting Schema

Charge Expense Accounting Schema

Revenue

Company... Company Due To GL Defaults

Due From

You can reset or overwrite the account settings from the default screen, Example: from the
Account Schema Default screen, you can overwrite the accounts used in the Product Categories,
from there you can overwrite the Product Account settings. This is useful, if you change your
accounting structure, but overwrites individual settings.

1.3 Accounting Schema Accounts

In addition to default accounts, the following General Ledger accounts are defined for every
accounting Schema:

Account Description Comment

Suspense Bal- Source Currency differences in documents used only when enabled - if not, the
ancing document is not posted

Suspense Er- Accounts are not valid used only when enables - if not, the
ror document is not posted

Currency Bal- Accounting Currency (rounding) differ- used only when enabled - if not, the
ancing ences in documents after conversion biggest line amount is corrected

Retained Earn- Year End Processing

ing
Income Sum-
mary

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1.4 Accounting Rules
Accounting rules allow creation of "natural" accounting entries - in the way you see them in
accounting text books. Compared with most applications, this reduces the number of accounting
lines and makes the accounting easier to understand, check and audit.

ADempiere can have different accounting rules. Advanced users can change the rules to reflect
country or company specific procedures.

1.5 Account Masking

The actual account used in the transaction depends often on the context. There are several
situations, that the Company segment is overwritten:

Product Inventory - Company segment from warehouse, remainder from product

Liability/Receivables - Company segment from transacting organization, remainder from business

partner

As ADempiere maintains the information on detail level, the available context information is filled
in (e.g. business partner, project, etc.).

1.6 Base Rules

Base Rules cannot be modified or overwritten and protect the integrity of the system. They
basically ensure balanced accounting entries.

Rule Description

rejectUnbalanced Reject, if the entry is not balanced and suspense balancing is not en-
createSuspenseBalan- abled. If suspense balancing is enabled, an additional source line is cre-
cing ated

rejectError Reject, if the account is invalid and suspense error is not enabled. If sus-
createSuspenseError pense error is enabled, the account in error is replaced

rejectUnconvertible Reject, if the document currency cannot be converted to the accounting

currency

rejectPeriodClosed Reject, if the accounting date is in a closed period.

balanceCurrency The accounting entry is balanced either via posting the difference to the
Currency Balancing account or correcting the largest balance sheet ac-
count amount.

multiOrg Transaction entries for multiple organizations: due to - due from

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1.7 Tax Rules
Most tax entries are created by the transaction. Tax rules create correcting tax entries for Sales Tax
and VAT systems. The main areas are prorating tax entries for payment discounts and write-offs as
well as tax treatment of prepayments.

1.8 Costing Rules

Different Costing Methods post to different accounts using different amounts. For details see
ADempiere Costing.

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 2 Accounting Rule Details

2.1 Base Rule Set

This describes the generated accounting entries using the basic accounting rule set. All entries are
actual balance type posting entries for accrual based accounting. All reversal entries are on the
same side (i.e. Dr/Cr), but with reversed sign (this ensures correct Cr/Dr totals).

2.1.1 Sales related Transactions

Transaction Account Dr Cr

Customer Invoice Receivables Invoice Total

Tax Due (per rate) Tax Amt

Product Revenue (per line) Line Amt

Customer Credit Memo Receivables Total

Tax Due (per rate) Tax Amt

Product Revenue (per line) Line Amt

Payment Receipt Bank In Transit Receipt Amt

Unallocated Cash Receipt Amt

Payment Allocation Unallocated Cash or Receipt Amt

Cash Transfer

Discount Exp Discount Part

Write-off Write-off Part

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 Tax Due (per tax rate) Tax Part

Realized Gain/Loss Loss Gain

Receivables Assigned Amt

Bank Statement Bank Asset Stmt Amt

Bank Charge Charge Part

Tax Credit/Expense Tax Part

Bank Interest Interest Exp Interest Rev

Bank In Transit Receipt Amt

2.1.2 Material related Transactions

Transaction Account Dr Cr

Vendor Receipt Product Inventory Product Cost

Not Invoiced Receipts Product Cost

Customer Shipment Product Cost of Good Sold Product Cost

Product Inventory Product Cost

Invoice Matching Not Invoiced Receipts Product Cost

Invoice Price Variation Difference

Product Expense Invoice Price

PO Matching Purchase Price Variance Difference

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 PPV Offset Difference

Inventory Move Product Inventory Product Cost

Product Inventory Product Cost

Inventory Count Product Inventory Product Cost - or -Cost

Inventory Differences - or - Cost Product Cost

Inventory Revaluation Product Inventory Lower Cost or

Price difference

Inventory Revaluation Lower Cost or

Price difference

2.1.3 Purchase related Transactions

Transaction Account Dr Cr

Vendor Invoice Tax Credit/Exp (per rate) Tax Amt

Product Exp (per line) Line Amt

Payables Invoice Total

Vendor Credit Memo Payables Total Amt

Product Expense Line Amt

Tax Credit/Exp (per rate) Tax Amt

Payment Payment Select Pay Amt

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 Bank In Transit Pay Amt

Payment Allocation Unallocated Cash or Paid Amt

Cash Transfer

Discount Revenue Discount Part

Tax Credit (per tax rate) Tax Part

Realized Gain/Loss Loss Gain

Liability Assigned Amt

Bank Statement Bank Charge Charge Part

Tax Credit/Exp Tax Part

Bank Interest Interest Exp Interest Rev

Bank In Transit Payment Amt

Bank Asset Stmt Amt

2.2 Enhanced Accounting Rule Set

The enhanced accounting rule set replaces certain basic accounting rules. They usually provide
more detailed accounting allowing advanced financial reporting.

Transaction Account Dr Cr

Customer Invoice Receivables Invoice Total

Tax Due (per tax rate) Tax Amt
Product Revenue (per line) Discount List Amt

Revenue Recognition

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2.3 Optional Accounting Rule Set
This describes the generated accounting entries using the optional accounting rule set. In contrast
to the standard rules, these rules have to start explicitly in period end procedures or need to be
enabled. The balance type of these posting entries is either actual, budget or commitment
(encumbrance).

Transaction Account Dr Cr

Order Commitment (commitment)

Order Entered

Order Commitment (commitment)

Invoice Generated

Purchase (COMMITMENT )
Requisition created

Purchase (commitment)
Purchase Order created

Purchase (commitment)
Invoice created

Not Invoiced Revenue (actual)

Unearned Revenue (actual)

Unrealized Gain/Loss (actual)

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 3 Adaxa's Offices and Contacts

Information of a general nature about Adaxa and its services can be found at www.adaxa.com or obtained by
sending an email to info@adaxa.com with a description of the information that you would like to receive. If
you are an existing client and wish to initiate a request for software support please send an email to
helpdesk@adaxa.com with as much detail as possible about the nature of your support request.

For all other information please contact the Adaxa office nearest to you.

3.1 Australia
Address: 10 Kylie Place, Melbourne, Victoria, 3192, Australia

Contacts: Office

1300 990 120 (Within Australia)

+613 9510 4788 (Outside of Australia)

3.2 New Zealand

Address: 73 Boston Road, Mt Eden, Auckland, 1023, New Zealand

Contacts: Office

0800 232 922 (Within New Zealand)

+649 9744 600 (Outside of New Zealand)

3.3 United States of America

Address: 4400 NE 77th Ave, Suite 275, Vancouver, WA 98662, USA

Contacts: Office

+1 760 576 5115

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