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[Launchpad Bug Tracker <784339@xxxxxxxxxxxxxxxxxx>]

You have been subscribed to a public bug by Vinay Rana (openerp) (vra-openerp):

If you look at the section where it calculates sum_dr and sum_cr it is
incorrect.  Well it is technically correct, but in the sense of having a
balance sheet that balances it is incorrect.

Take the accounting equation property = property rights expanded to
assets = liabilities + equity

In the case of a net profit we incorrectly add the result to sum_dr, our
equity has increased afterall, so sum_cr should increase, (this
behaviour is correct, except the function is named wrong) however in the
case of a net loss we subtract the amount from sum_cr (which should be
sum_dr) which is incorrect as our equity has reduced.

However here is the first bug - sum_dr and sum_cr are around the wrong
way - sum_cr is increased for asset accounts, and sum_dr is increased
for liabilities - it should be the other way around

Put another way, for a balance sheet, we don't really want the totals to
be the sum of dr's and cr's, we want it to be the total of the stuff on
the left (Assets) and the total of the stuff on the right (Property
Rights).

So in the case of a Net Profit we must increase equity (credit) and in
the case of a net loss we must reduce equity (credit).  At no point
should we be changing debits.  The value of our Assets has not changed
(in so far that a net loss already reduces our assets), it is our equity
that has reduced.

Now to make this one step more confusing, and for some unknown reason it
has been decided to leave liabilities as a negative balance, and then on
the report use absolute value which is also incorrect.  Many assets and
liabilities should have a balance opposite of the standard, Accumulated
depreciation for example in Assets,  VAT Paid in Liabilities, Bank
Accounts temporarily in overdraft.

In my own parser, which I have written, to resolve this we declare a
dictionary called signs and at the point we compute the account.balance
we multiple it by the sign.

        sign = {
            'fixed_asset': 1,
            'asset': 1,
            'liability': -1,
            'fixed_liability': -1,
            'equity': -1,
            }

We use more types than standard but you get the idea.  Assets are their
balance, liability is their balance *-1.

Then all we do in the for account in accounts loop is make the balance:
account.balance * sign[typ]

So in summary
sum_dr and sum_cr are round the wrong way.
Adding a net loss to Assets is incorrect - it should be subtracted from Equity.
values (already reported bug) should not be absolute, but rather their inverse for liability and equity accounts.

** Affects: openobject-addons
     Importance: Undecided
         Status: Opinion

-- 
[stable 6.0.2] Account Balance Sheet parser logic error leads to incorrect totals amounts and developer confusion
https://bugs.launchpad.net/bugs/784339
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