Contra Revenue & Expense Accounts

ERPNext Accounting
1

Working on retail installations of ERPNext. Looking for guidance on “contra” accounts. Specifically contra-Revenue and contra-Expense accounts.

Revenue example:
Gross sales less - Returns & Allowances, Discounts, Fees & Commissions, etc. which would result in Net Revenue

In new revenue account creation I see no mechanism or option for setting up a contra account (would have a debit balance vs. normal revenue credit balance).

Expense example:
Cost of Goods Sold (COGS) less - Purchase Returns & Allowances, Purchase Discounts, etc which would result in actual cost of goods.

In creating new expense account I see no options for a contra-expense account.

In Account Type list I see we have Accumulated Depreciation and Depreciation options for setting up a contra-asset account but I see no options for contra revenue & expenses.

I also don’t see the normal contra asset accounts for Allowance for Doubtful Accounts or Allowance for Estimated Uncollectible Debts.

By way of background I am new to ERPNext but I have many years experience in for-profit and non-profit businesses as CFO working with Quickbooks & other industry specific accounting software packages. I am looking forward to understanding ERPNext and hopefully contributing to the success of this endeavor.

I have searched on the forum without success so I now publish this for everyone’s input which I very much appreciate. Thank you in advance!

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2

You would have to define such accounts in the Chart of Accounts. Maybe the link here would be helpful.

3

Thank you for responding Pawan. I checked out the link. I don’t see any information regarding modifying or adding “account types” which is needed to add the contra accounts.

I would think that most companies looking to employ an ERP system would need that accounting functionality that I have mentioned. I’m guessing/hoping that it is buried somewhere within ERPNext. I’m still trying to work through the dysfunctional navigation system…in other words learning what I need to search for in the search window. That said, the beauty of ERPNext is that someone is working on that UI to make it more usable and functional (Desk 2.0).

4

@Pawan Are you suggesting that we set set up regular accounts and use negative numbers to achieve the correct balance, or do you think that we are missing something and we can create true Contra Accounts?

5

I think while setting up Accounts you have the ability to restrict balance of an account to debit/credit. Maybe this can be used judiciously to achieve what you are looking for.

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