In this article we will record accounting transactions in OFBiz for Kristine’s Biz, a fictitious sole trader created to represent the company used in Chapter 3: Section 4: Example 1 of Open Tuition’s FA Lecture Notes.
For this series of articles we will work through examples from Open Tuition’s excellent materials for the ACCA FA exam. If you are new to the principles of bookkeeping, it is recommended that you spend some time going through the video lectures on the subject by John Moffat of Open Tuition.
The example scenario for this article is taken from Chapter 3: Section 4: Example 1 of Open Tuition’s FA Lecture Notes.
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Prerequisites
You need to have created the accounting organisation for Kristine’s Biz, the sole trader company belonging to our example business owner, Kristine.
Follow the steps in article OFBiz from scratch: Create a company with basic accountancy preferences to create Kristine’s Biz’ account organisation.
The global chart of accounts
Before we can assign GL Accounts (aka General Ledger Accounts / T-Accounts) to Kristine’s Biz, we need to create the Global Chart of Accounts.
Accountancy firms will normally have template libraries of Charts of Accounts that they use for various types of companies, with each chart consisting of numerous accounts intended to handle all manner of scenarios.
In our case we will create a minimal chart of accounts, one account at a time, as needed to satisfy the Open Tuition example.
Creating a global account
Follow this process for each GL Account to be added to the global Chart of Accounts.
Open the accounting application by visiting: https://localhost:8443/accounting
On the accounting app navigation bar, click the Global GL Setting button. The Global GL Settings screen is shown as below.
Click on the Navigate Accounts button to open the Edit GL Account screen. On this screen, enter details for the GL Account to be added to the Global Chart of Accounts. Throughout this article we will give you the values to enter on this screen.
For example, to create a Capital GL Account, set fields as follows:
Gl Account Type ID | Not Applicable |
Gl Account Class ID | Owners Equity |
Gl Resource Type ID | Not Applicable |
Gl Xbrl Class ID | Leave blank |
Account Code | CAPITAL |
Account Name | Capital |
Description | Owner capital |
The GL Account Class ID is an important field to set correctly as it determine how the account will affect reports such as the Statement of Financial Position and Statement of Profit or Loss.
Account Type ID is not relevant for this scenario. Account types tend to be used by OFBiz to identify the appropriate account to apply automatically generated transactions to. Examples of automatic transactions are those that occur when inventory is booked into the organisation.
Leave any other fields blank.
Once you have entered the GL Account details, click the Add button to add it to the Global Chart of Accounts.
Assign a global GL Account to an accounting organisation
To assign a global GL Account to an accounting organisation, access the organisation’s Accounting Setup screen by visiting https://localhost:8443/accounting and navigating to the Organisation GL Setting screen.
You then see a list of all accounting organisations configured in OFBiz. Click the Setup button for Kristine’s Biz.
On the accounting setup screen, click the Chart of Accounts button.
The Chart of Accounts screen shows all GL Accounts currently assigned to Kristine’s Biz from the Global Chart of Accounts. In the screenshot below, No Records Found indicates that no accounts have yet been assigned to the company.
To assign a GL Account to the company, select the relevant GL Account from the drop-down selection field, enter the date from which the account should be part of Kristine’s Biz’ chart of accounts and then click the Create Assignment button.
The screen is then updated to show the Capital account in the list of accounts currently assigned to the company’s chart of accounts.
Recording transactions
All the configuration in the above steps, and in the prerequisite articles has been to get us ready to enter bookkeeping transactions for Kristine’s Biz.
Let’s take the transactions from Open Tuition’s example ( Chapter 3: Section 4: Example 1 of Open Tuition’s FA Lecture Notes) and add some transaction dates covering the first month of trading.
Example Transaction | Date | Description |
A | 2023-01-02 | Kristine starts a business and pays in $5,000 as capital |
B | 2023-01-04 | The business buys a car for $1,000 cash |
C | 2023-01-05 | They buy goods for resale for $500 cash |
D | 2023-01-10 | They buy more goods for resale for $600 on credit from Mr A |
E | 2023-01-13 | They pay rent of $200 cash |
F | 2023-01-16 | They sell half the goods for $800 cash |
G | 2023-01-19 | They sell the remaining goods on credit for $900 to Mrs X |
H | 2023-01-20 | They pay $400 cash on account of the amount owing to Mr A |
I | 2023-01-27 | They receive $500 from Mrs X |
J | 2023-01-31 | Kristine withdraws $100 cash from the business |
A: 2023-01-02, Kristine starts a business and pays in $5,000 as capital
Before working through the steps and adding entries into OFBiz, it is worth watching the corresponding lecture from Open Tuition where the various T-Accounts (General Ledger Accounts) that need to be used are identified and explained.
Example transaction A will debit the Cash account and credit the Capital account with $5000.
We already created the Capital account in the above steps, however we still need to create the Cash account.
Using the steps above in sections Creating a global account and Assign a global GL Account to an accounting organisation, create a new global account with the following details and assign it to Kristine’s Biz:
| Gl Account Type ID | Not Applicable |
| Gl Account Class ID | Current asset |
| Gl Resource Type ID | Not Applicable |
| Gl Xbrl Class ID | Leave blank |
| Account Code | CASH |
| Account Name | Cash |
| Description | Cash on hand and at the bank |
Set the From Date of the assignment to 2023-01-01.
To enter the transaction into OFBiz, visit the Organization GL Settings main screen and click the Accounting button for Kristine’s Biz.
Next, at the Accounts Summary screen for Kristine’s Biz, click on the Create a Gl Transaction button.
On the Accounting Transactions screen, click the Create an Accounting Transaction button.
On the Create an Accounting Transaction screen, enter the following details and click the Create button, leaving all other fields blank or set to their default values.
| Acctg Trans Type | Not Applicable |
| Transaction Date | 2023-01-02 |
| Is Posted | No |
| Description | Kristine pays in $5,000 as capital |
We are now shown the Edit Transaction screen where we can enter details of the affected GL Accounts.
In the Add Transaction Entry part of the screen enter the following details for the debit to the cash account and click the Create button.
| Gl Account ID | CASH |
| Debit Credit Flag | Debit |
| Orig Amount | 5000 |
| Description | Kristine pays in $5,000 as capital |
The screen will update to show the transaction entry.
We now need to enter the second entry for the transaction. In the Add Transaction Entry part of the screen enter the following details for the credit to the capital account and click the Create button.
| Gl Account ID | CAPITAL |
| Debit Credit Flag | Credit |
| Orig Amount | 5000 |
| Description | Kristine pays in $5,000 as capital |
After clicking create the screen will update to show both entries related to this transaction.
Finding and viewing transactions
The above screenshot section shows the entries for a transaction.
To find a transaction for viewing or editing, visit the Organization GL Settings screen and click the Accounting button for Kristine’s Biz.
Click the Accounting Transactions button.
Enter any search critieria, or leave blank to find all transactions, and click the Search button.
The overall transaction has an Is Posted value of No, meaning that it is essentially in a draft mode and won’t yet contribute to any reporting calculations. To post the transaction, click the Post Transaction button.
Once the transaction is posted, neither the transaction or its entries can be altered.
B: 2023-01-04, The business buys a car for $1,000 cash
Example transaction B will credit the Cash account and debit the Car account with $1000.
Using the steps earlier in this article, create a new global GL Account with the following details and assign it the Kristine’s Biz.
Gl Account Type ID | Not Applicable |
Gl Account Class ID | Long Term Asset |
Gl Resource Type ID | Not Applicable |
Gl Xbrl Class ID | Leave blank |
Account Code | CAR |
Account Name | Car |
Description | Car |
Set the From Date of the assignment to 2023-01-01.
When creating example transaction A earlier, we first created the Transaction ‘header’ and then created the GL Account entries related to the transaction. For that transaction, we created two entries but OFBiz allows us to add as many entries as we want. We just need to ensure the total debits for the transaction equals the total credits otherwise OFBiz will report an error when we try and post the transaction.
For transactions where we only need to make two GL account entries, we can instead use the Quick Create an Accounting Transaction function. Using this function we will create the transaction header and both GL account entries in a single step, avoiding the possibility of creating a transaction with unequal debits and credits.
From the summary screen shown after we posted the previous transaction, click the Accounting Transaction button in the button bar and then click the Quick Create an Accounting Transaction button.
Fill in the transaction details according to the following table and click the Create button.
Acctg Trans Type | Not Applicable |
Debit Gl Account ID | CAR |
Credit Gl Account ID | CASH |
Amount | 1000 |
Transaction Date | 2023-01-04 |
Description | Business buys car for $1000 |
Clicking the Create button will cause the transaction and its two GL account entries to be created.
The created transaction is left in the unposted (i.e. draft) state. When viewing the transaction, click the Post Transaction button.
C: 2023-01-05, They buy goods for resale for $500 cash
Create a new global GL Account with the following details:
Gl Account Type ID | Not Applicable |
Gl Account Class ID | Cost of Goods Sold Expense |
Gl Resource Type ID | Not Applicable |
Gl Xbrl Class ID | Leave blank |
Account Code | PURCHASES |
Account Name | Purchases |
Description | Goods purchased for resale |
Assign the new Purchases GL Account to Kristine’s Biz, setting the From Date of the assignment to 2023-01-01.
Quick Create a new transaction with the following details, posting the transaction once created.
Acctg Trans Type | Not Applicable |
Debit Gl Account ID | PURCHASES |
Credit Gl Account ID | CASH |
Amount | 500 |
Transaction Date | 2023-01-05 |
Description | Business buys goods for resale for $500 |
D: 2023-01-10, They buy more goods for resale for $600 on credit from Mr. A.
Buying goods on credit means we haven’t paid any cash so therefore we cannot credit the cash account. Instead we create a Payables account to represent we owe another party.
Create a new global GL Account with the following details to account for Payables:
Gl Account Type ID | Not Applicable |
Gl Account Class ID | Current Liability |
Gl Resource Type ID | Not Applicable |
Gl Xbrl Class ID | Leave blank |
Account Code | PAYABLES |
Account Name | Payables |
Description | Payments owed |
Assign the new Payables GL Account to Kristine’s Biz, setting the From Date of the assignment to 2023-01-01.
Quick Create a new transaction with the following details, posting the transaction once created.
Acctg Trans Type | Not Applicable |
Debit Gl Account ID | PURCHASES |
Credit Gl Account ID | PAYABLES |
Amount | 600 |
Transaction Date | 2023-01-10 |
Description | Goods for resale purchased on credit from Mr A |
E: 2023-01-13, They pay rent of $200 cash
We need a rent expense account to record payments of rent.
Create a new global GL Account with the following details to account for Rent payments:
Gl Account Type ID | Not Applicable |
Gl Account Class ID | Selling, General and Administrative Expense |
Gl Resource Type ID | Not Applicable |
Gl Xbrl Class ID | Leave blank |
Account Code | RENT |
Account Name | Rent |
Description | Rent expenses |
Assign the new Rent GL Account to Kristine’s Biz, setting the From Date of the assignment to 2023-01-01.
Quick Create a new transaction with the following details, posting the transaction once created.
Acctg Trans Type | Not Applicable |
Debit Gl Account ID | RENT |
Credit Gl Account ID | CASH |
Amount | 200 |
Transaction Date | 2023-01-13 |
Description | Rent payment of $200 |
F: 2023-01-16, They sell half the goods for $800 cash
Create a new global GL Account with the following details to account for Sales:
Gl Account Type ID | Not Applicable |
Gl Account Class ID | Revenue |
Gl Resource Type ID | Not Applicable |
Gl Xbrl Class ID | Leave blank |
Account Code | SALES |
Account Name | Sales |
Description | Sales |
Assign the new Sales GL Account to Kristine’s Biz, setting the From Date of the assignment to 2023-01-01.
Quick Create a new transaction with the following details, posting the transaction once created.
Acctg Trans Type | Not Applicable |
Debit Gl Account ID | CASH |
Credit Gl Account ID | SALES |
Amount | 800 |
Transaction Date | 2023-01-16 |
Description | Sale of half goods for $800 |
G: 2023-01-19, They sell the remaining goods on credit for $900 to Mrs X
Selling on credit means we cannot debit the cash account. We therefore need a new account to track money owed to the business. Create a new global GL Account with the following details to account for Receivables:
Gl Account Type ID | Not Applicable |
Gl Account Class ID | Current Asset |
Gl Resource Type ID | Not Applicable |
Gl Xbrl Class ID | Leave blank |
Account Code | RECEIVABLES |
Account Name | Receivables |
Description | Money owed to the business |
Assign the new Receivables GL Account to Kristine’s Biz, setting the From Date of the assignment to 2023-01-01.
Quick Create a new transaction with the following details, posting the transaction once created.
Acctg Trans Type | Not Applicable |
Debit Gl Account ID | RECEIVABLES |
Credit Gl Account ID | SALES |
Amount | 900 |
Transaction Date | 2023-01-19 |
Description | Sale of remaining goods on credit for $900 |
H: 2023-01-20, They pay $400 cash on account of the amount owning to Mr A
This transaction will spend cash to reduce a debt the company owes. We have all the accounts we need to record this transaction so no need to create any more.
Quick Create a new transaction with the following details, posting the transaction once created.
Acctg Trans Type | Not Applicable |
Debit Gl Account ID | PAYABLES |
Credit Gl Account ID | CASH |
Amount | 400 |
Transaction Date | 2023-01-20 |
Description | Pay $400 cash of amount owed to Mr A |
I: 2023-01-27, They receive $500 from Mrs X
Whenever anything is withdrawn from a sole trader business by the owner, this is recorded in a Drawings account.
Create a new global GL Account with the following details to account for Drawings:
Gl Account Type ID | Not Applicable |
Gl Account Class ID | Equity |
Gl Resource Type ID | Not Applicable |
Gl Xbrl Class ID | Leave blank |
Account Code | DRAWINGS |
Account Name | Drawings |
Description | Withdrawals from the business by owners |
Assign the new Drawings GL Account to Kristine’s Biz, setting the From Date of the assignment to 2023-01-01.
Quick Create a new transaction with the following details, posting the transaction once created.
Acctg Trans Type | Not Applicable |
Debit Gl Account ID | DRAWINGS |
Credit Gl Account ID | CASH |
Amount | 100 |
Transaction Date | 2023-01-31 |
Description | Kristine withdraws $100 cash from business |
J: 2023-01-31, Kristine withdraws $100 cash from the business
Whenever anything is withdrawn from a sole trader business by the owner, this is recorded in a Drawings account.
Create a new global GL Account with the following details to account for Drawings:
Gl Account Type ID | Not Applicable |
Gl Account Class ID | Equity |
Gl Resource Type ID | Not Applicable |
Gl Xbrl Class ID | Leave blank |
Account Code | DRAWINGS |
Account Name | Drawings |
Description | Withdrawals from the business by owners |
Assign the new Drawings GL Account to Kristine’s Biz, setting the From Date of the assignment to 2023-01-01.
Quick Create a new transaction with the following details, posting the transaction once created.
Acctg Trans Type | Not Applicable |
Debit Gl Account ID | DRAWINGS |
Credit Gl Account ID | CASH |
Amount | 100 |
Transaction Date | 2023-01-31 |
Description | Kristine withdraws $100 cash from business |
