In Odoo there are two various methods used to record accounting transactions like Case basis and Accrual basis accounting. Odoo accounting handle both accrual and cash basis reporting.
How to manage cash basis and accrual basis accounting in odoo
1.
2. How to Manage Cash Basis and Accrual Basis Accounting
in Odoo
In Odoo there are two various methods used to record accounting transactions like
Case basis and Accrual basis accounting. Odoo accounting handle both accrual and
cash basis reporting. Income or revenue is recorded when payments are received. The
key difference between the two methods is in the timing of transaction recordation.
In Odoo Cash accounting observes revenue and expenses only at the same time
money changes hands, but Odoo Accrual accounting observes revenue at the same
time it’s earned, and expenses when they’re billed.
Now Lets’ see the difference between of Odoo Cash basis accounting and
Accrual basis accounting:
1.Cash basis accounting:
In Cash Basis Accounting, Revenue is recorded only subsequently payment received
and expenses are recorded at the same time payments are made.
3. Income or revenue is recorded at the same time payments are received. The cash
basis of accounting does not recognize accounts receivable or accounts payable.
Various companies select to use the cash basis of accounting. because it is easy to
maintain. In this type of accounting, you can easily find out at the same time a
transaction has to appear. It is simple and easy to understand.
2.Accrual Basis accounting:
In Accrual basis accounting, revenue is accounted for at the same time it is earned.
This type of accounting includes all-expense and all income. Typically, revenue is
recorded before any money changes hands. The accrual basis provides a more
businesslike idea of income and expenses over a period of time. It is complex and
difficult to understand.
Now Lets’ see how to configure cash basis taxes in Odoo
Firstly, you can install the accounting module in your database.
4. Now enable the checkbox of a tax cash basis. Go to Accounting -> Configuration ->
Settings -> Tax Cash Basis and click on the Save button.
At the same time, this is done, now you can configure your taxes in accounting
module. Go to Accounting -> Configuration -> Taxes.
5. You can open a tax and in the Advanced Options tab, you will see the checkbox Use Cash
Basis. You will then have to define the Tax Received Account.
Now go to the tax in Accounting module and select the Advanced Options at that time you
will view the checkbox of Use Cash Basis then you will have to enter the Tax Received
Account.
6. In Odoo you can use only one account for all account receivable entries and another for
all accounts payable entries. At the same time transaction is associated with
client/customer you.
7. We can create a cash basis transaction and check the reports to understand how it
works. Now you can create an expense like Maintenance expense that is paid by the
company.
8. Now Go to Accounting -> Reports -> Profit and Loss and select the option of ‘Cash
basis method’, at that time, you can view the expense that is paid by the company.