Is there any plans to added additional root accounts to the chart of accounts
eg Cost of Sales
This would allow the gross profit/margin to be calculated within the P&L report.
I note it can be done in an adhoc way with the use of cost centres, however, that is not an optimum solution.
Some accounting standards have this as a reporting option.
Am interested to know under which IFRS article does this come. For academic purpose only. Thank you.
For Root Types - You can choose Add an account with a Root Type of
To get a root type Account, Click on the Top of the Chart of Accounts Tree (Company Name) and Choose Add Child. At Account Entry, Click Is Group and you can choose the Root Type
You can actually have several Asset Roots, etc.
For me, A use case was, the Company was shifting to a new Chart of Accounts.
So, I prefixed the previous 5 Root Type Accounts with the number 8
Previously, I prefixed the 5 Root Type Accounts of ERPNext with the number 9.
Then, I typed (actually imported using Data Import - Excel) the new Chart of Accounts with Asset starting with 100, Liability - 200, Equity 300, Income - 400, Expense - 500 accdg to the new Chart of Accounts.
Then, we simply changed the Parents of the Non-Group Account. Voila - New Chart of Accounts, without retraining.
Your Cost of Goods should have a parent whose root type is Expense
as Countries adopt there own standards, usually based on international standards the answer should probably be two parts in a simplistic form. now that is assuming the standard(s) apply to the reporting entity. firstly IAS1 and then a specific country, eg Australia AASB101 which includes a modification.
option 1
Revenue
Other income
Changes in inventories of finished goods and work in progress
Raw materials and consumables used
Employee benefits expense
Depreciation and amortisation expense
Other expenses
Total expenses
Profit before tax
option 2
Revenue
Cost of sales
Gross profit
Other income
Distribution costs
Administrative expenses
Other expenses
Profit before tax
having the parent child relationship of Expense > COGS was not the desired accounting outcome,
it was:
Asset
Liability
Equity
Income
COGS
Expense
however my experience is the reporting setup can be more complex under this type of scenario
Thanks for your interest, however, the answer is not really relevant to my initial question.
For the interest of anyone else that may search this topic I will clarify.
Currently when a standard chart of accounts, with or without numbers, is activated the primary root accounts are fixed programically/coded from my understanding and testing.
These root accounts are:
The ERPnext forms (program) does not provide a method to use a supplied form to add to this list of root accounts. i.e. you can only become a child of one of the fixed root accounts, which are the parent/group account.
As I mentioned thanks for your interest, however the coments are not relevant to the question.
I will stay on topic thanks.
I am not sure I really understood your issue. But these five roots will be the normal account roots.you can have the cogs seperate. But the root of that will be expense. Right? So instead of income and expenses, you will have income, cogs & expense as heading in your p&l report. You can upload chart of accounts to have this.
I think what is meant here is how to produce Financial Statement Reports, which can be done by coding query_reports with this structure.
Accounting-wise these are the root types (note that they are not necessarily the root accounts). First 3 are for Balance Sheet and the last 2 are for Profit/Loss Statement. Anyone (or any country) may have other names but they are the root types.
Anyway, if one wants other names than those 5, maybe can use custom translation to rename them.
Or maybe for reports, we can arrange to only display 2nd-level accounts?
Yes, but account type should be at account level not at first parent level, in my country we use different account grouping so parent folder not necessary have common account type for all its childs. Now parent folder enforce the account type to all its child, which not valid in my place.
How is that grouping different than available in ERPNext?
For example we have a group name called third parties includes suppliers, customers and gov accounts, you can see asset accounts and liability are together in the same group.
Is it by law to group that way?
Because every business would have supplier, customer, and third parties.
Usually they are grouped under their purpose: suppliers under payable, customer under receivable, etc.
Also a possibility is to have other third party giving loan so it will be grouped under liabilities; or that you get interest from bank account so you group the bank under Other Income; etc.
My original questions was to enquire if there was plans to allow additional root accounts by way of standard function within the package.
For example some accounting packages allow a gross margin to be calculated within the P&L.
It was looking for any alternative to having COGS directly under expenses.
Yes this grouping is imposed by gov.
Same in my country, Spain. Trying to figure out what to do, though I’m still a newbie, so … I’ll keep looking.
I have a workaround contact me for details on whats app 0021692389677
Yes,
Just for the shake of illustrating the issue of grouping and how you can have accounts from the same group/subgroup with different root types (root types being one of the five: asset, liability, equity, income and expense). I will show a couple of pictures:
(sorry if they are big pictures, I’ll gladly share the whole pdf, in Spanish, and the calc sheet with all the accounts and groups).
Also, some translation to English:
Activo - Asset
Pasivo - Liability
Patrimonio - Equity
So the first picture is the balance sheet and we can see all the account numbers involved.
The second picture is a piece of the account catalog from erpnext, (as an example)
If you compare both pictures and take notice, you’ll see lots of examples, being the main groups 1, 2, 3, 4, 5, 6, 7, 8 and 9. with subgroups 10, 20, 30, … 90,… and so on.
So there is in the left side:
B) Activo Corriente → Current Asset
5304, 540, 543,…
Also, on the right side:
C) Pasivo Corriente → Current Liabilities
5211, 5212, 5213,…
If you look you’ll see there are many examples of this, members of the same group/subgroup with different root types.
The second picture is the full catalog inside the ERPNEXT, this is to be expected to see for an accountant in Spain, all the groups, subgroups and accounts, I only have expanded the 5 group and some subgroups, otherwise it will be to large, well structured according to law and regulation.
Now, the images:
and
So, I’ll look forward a good solution.
I’m a freelance, I can use the ERPNEXT default template for accounts and then manually create a few subroups and accounts (with the number in the name) since I believe I will be using just a few of the whole of them. I’m pretty sure it will get the job nicely done for my purpose and fill my needs.
But If I want to showcase ERPNEXT to a small business and do some sort of advocacy I shall import the whole thing, the calc sheet has 961 rows with groups, subgroups and accounts. So, here it is the structure properly formed inside ERPNEXT:
