Setting Up accounting module

Hello everyone!
I’m new in Dolibarr’s world and I’m using the last version.

I’m setting up the accounting module and I can’t find the way to set up the Cost of Goods Sold account.

Could anybody help me with this topic?

thanks a lot

Hi Santobrie,

Did you have a look at this page ?
https://wiki.dolibarr.org/index.php/Module_Double_Entry_Accounting

If you have added the accounts in your chart of accounts, then you can set it on the product card ot set a default value in Accountancy/Setup/Default accounts.

Regards,
Marc

Hi Marc!
yes, I’ve taken a look at this link but I still can’t find the way to set up the Cost of Goods Sold account.
I already created the model of chart of accounts, checked it and set up the default accounts.
I made some invoices to test the accounts. The incomes and expenses accounts are ok but I don’t have the cost of goods sold.

I don’t know what I have to do…

Please, could you help me with this?

Regards.

Santiago

Hi Santiago,

Sorry, my first answer was obviously out of scope…

However, I am afraid your question is not understandable as it is. At least not to me. Could you elaborate more on what you are expecting here ?
If this is analytical accounting, you need a different approach such as using projetcs to gather related costs.
If you want to evaluate costs of goods, this is not the purpose of financial accounting, but rather managerial accounting, which to my knowledge is out of the scope of this module. Maybe modules were written for that, but a quick search does not pope anything relevant. You should first write down the rules you need to account for to properly estimate the cost of goods, then confront to available features in Dolibarr to implement these rules. Maybe it is simple sql query (you have tools for that), maybe you need extra fields, custom functions, etc.

Regards,
Marc

Hi Marc,
I’ll try to explain it as best as I can.

In financial accounting (the module that I have installed) when I make an invoice must be four accounting movements. First, there’s a debit to the bank account (current assets) and a credit to the sales account (income).
Those movements are being made with the sale price of the product but I don’t have a problem with that.
After that, must be two more movements, a credit to the goods account (current assets) and a debit to the cost of goods sold account (expenses). Those movements are not being recorded automatically and must be done with the purchasing price.

Each product has three accounts to set up, one for income other for expenses and the third for exports so, I don’t know where or how I should make the cost of goods sold account work.

I hope now you could undertand what I need.

Regards

Santiago

Hi Santiago,

I am afraid this is beyond my understanding as I disagree with the number of movements you mention when you make an invoice.

I propose we take it from my view of accounting and of this module at least.

  1. I buy goods (make a supplier invoice) : there will be a debit to my cost of goods (and to the VAT account) and a credit to the supplier. Here the relevant product accounting account will be be one for “purchase”.
  2. I pay the bill (make a payment) : there will be a debit to the supplier and a credit to the bank
  3. I sell goods (make a customer invoice) : there will be a credit to my goods assets (and to the VAT) and a debit to the customer. Here the relevant product accounting account will be be either the one for “sale” (regular, within the country), “sale intra-Community” (for intra EU business, when you are within EU), “sale export” (for export to non EU country, when you are in EU)
  4. I receive the payment (enter payment) : there will be a debit to the customer and a credit to the bank

These are four independent steps and are done when registering in the general ledger (accountancy menu). You can see in the accountancy module that registration in the ledger is performed separately for sales/purchases and banking.

Does this make it more clear to you, or am I still out of scope ?

Regards,
Marc

Hi Marc.

It is not me who says that there are four movements when you make an invoice, it is the accounting and it’s the same in all countries.

I buy goods (make a supplier invoice) : there will be a debit to my cost of goods (and to the VAT account) and a credit to the supplier. Here the relevant product accounting account will be be one for “purchase”.

I pay the bill (make a payment) : there will be a debit to the supplier and a credit to the bank

THIS IS CORRECT but not what follow next

I’m going to make an example

I buy a product to my supplier at $400 (make a supplier invoice): there will be a debit for $400 to the merchandise account (current assets) and a Credit for $400 in the supplier account (current liabilities). When I pay the bill (make a payment): there will be a debit for $400 to the supplier account (current liabilities) and a Credit for $400 to the bank account (current assets).
Now, I sell that product but not at the same price, I sell it at $600.
I make the customer invoice: there will be 4 accounts movements. First, a Credit for $600 in the Sales account (Income) and a Debit for $600 in the customer account (current assets). After that, there will be a Debit for $400 in the Cost of goods sold account (expenses) and a Credit for $400 in the merchandise account (current assets).
Then, I receive the payment from the customer: there will be a Debit for $600 in the bank account (current assets) and a Credit for $600 in the customer account (current assets).

when you make the balance, you have to sum income (sales account, etc.) minus expenses (cost of goods sold, etc.).
$600 - $400 = $200 and that is your profit

That is the correct circuit in accounting.

I hope you could understand and could help me with that.
I don’t know about programming but I know a little bit about accounting.
Maybe, dolibarr is not prepared to do that and the accounting module needs updating.

Regards

Hi Santiago,

I think I got your point now. Dolibarr is not doing cost of goods accounting, this is not part of our accounting rules (in France) and I am not aware of anybody having implemented this feature.

So what you can have is evaluation of margin (which gives you your profit on sales (margin takes care of the cost of goods you can define as fixed, buying price or average buying price)). You can also have sales - expenses balance.

However Dolibarr is registering all stock movements and you can thus evaluate your in-stock value anytime by performing inventories. That’s what we do at closing to account for the in-stock value on the balance sheet.

More generally, my view is don’t take Dolibarr as a full accounting software, it is an operational tool to manage your purchases, sales, stock movements and will allow you to export all related data in formats suitable to specialized accounting software. Still it is sufficiently elaborated to provide real time dashboard of how your business is running and compute monthly or quaterly sales tax amounts which is often sufficient on a daily basis.

Regards,
Marc

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OK, I understand.
I supposed that the accounting module was a complete tool.
Now I know what I have to do.

Thanks for your help.

Regards

Your point of view is very much valuable to me, answered long standing question (do i need specialised accounting system with Dolibarr? ) which was the cause to delay implementing Dolibarr after long experimentation period .

I would much appreciate if you could advised (already integrated) system to use from your experience

Hi Aymangabir,

Sorry, I have never found anything fully satisfactory. You may have a look to Noalyss which is to my knowledge the most advanced tool. It is very flexible but will require significant configuration.
My customers have their own accountant to whom they export as much usable data as possible (general ledger). Accountants usually rely on certified commercial software. You have many export formats for a number of these softwares. In my experience however, the difficulty is not software integration but produce data compatible with the accountant expectations (eg a dedicated product accounting account per VAT rate, use of transfer accounts instead of direct bank accounts, …) so that each case require some adjustments.

I know I am not very helpful with that, I hope you are successful in finding the right system !
Regards,
Marc

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Much appreciated Sir