Configuring the General Ledger

You would usually not need to configure your organization's general ledger and accounting from scratch. opentaps provides you with a template in hot-deploy/mycompany/ to help you set up your organization. All you have to do is edit the XML files to fill in the name and address of your company.

Setting up the Organization

The first step to configuring the ledger is to set up your company as an internal organization and configure its accounting preferences. You can create your company as a Party Group in the Party Manager and then associate a Role of "Internal Organization" (INTERNAL_ORGANIZATIO) with it.

Next, you would configure the following accounting preferences for your company:

• Tax form of choice
• Cost of Goods Sold (COGS) method: LIFO, FIFO, or average cost. COGS method should be consistent with the inventory reservation method of the product stores associated with this party.
• Base currency

Once configured, the system does not allow you to change key accounting practices such as COGS method or default currency right now. If you’ve made a mistake, use [Web Tools] > [Entity Data Maintenance] to correct it.

All the warehouses which may hold inventory for your company should have its ownerPartyId ("Owner") field set to your company's partyId. This can be done in the Warehouse application's Configuration screens.

Finally, you must configure your company's Accounting Time Periods. At a minimum, you should configure fiscal years for your company.

Setting up the Chart of Accounts

The second step is to set up the chart of accounts for your company. This can be done by editing the chart of accounts file in hot-deploy/mycompany and loading it or by using the Financials application's [Chart of Accounts] tab, where you can create a new account.

There are two fields on the GL account which are important: glAccountClassId and glAccountTypeId. They are both used to classify the GL account. Currently, glAccountClassId classifications are used for financial reporting purposes (balance sheet, income statement, statement of cash flows), while glAccountTypeId is used for internal classifications and reports such as AR/AP balances, inventory valuation, and aging.

Special Note: Inventory variance GL accounts must be set up not as a “NON-CASH EXPENSE” but as a “INVENTORY_ADJUST” gl account class. The reason is that for a statement of cash flow, changes to inventory are considered “non-cash” and added back to operating cash flow. If the offsetting account is also a “non-cash” account, it would cause double counting.