The chart of accounts It is a list created with the names of the accounts that a company has identified with an account number, and that it has made available to record the transactions in its general ledger. A company has the total flexibility to adapt the chart of accounts.
The intent of this adaptation is that the plan can better fit your needs, including adding or removing accounts as needed. Regardless of the size of the business, industry or type of organization, all entities use a chart of accounts.
In some countries the charts of accounts are defined by the accountant based on a standard general design, such as the BAS in Sweden, or as regulated by law. However, in most countries it is up to each accountant to design the specific chart of accounts for the company..
The list can use numeric, alphabetic, or alphanumeric identifiers. However, in many computerized environments - such as the SIE format - only numerical identifiers are allowed..
Article index
The chart of accounts serves as the basis for a company's financial record keeping system. Provides a logical structure that makes it easy to add new accounts and delete old accounts.
An important goal of the chart of accounts is to organize the company's own finances quite simply so that reporting makes more sense, segregating income, expenses, liabilities, and assets, in order to give stakeholders a lot of understanding. better on the situation of a company in the financial field.
An organized system is created for reading finances. Without the chart of accounts you would still have the same information, but it would be very difficult to decipher.
A well-designed chart of accounts not only meets the information needs of management, but also helps a company meet financial reporting standards..
When keeping track of accounting, whether you are using the old-fashioned pen and paper or using a software accounting, you need to know where the money is coming from and where it is going.
The chart of accounts is simply the organizational system used to maintain this information globally..
Some large companies will use a detailed version of the chart of accounts, while most small companies may use a much shorter version, but they are all similar..
Therefore, this is not specific to any type of industry or organization, but it is the same for all companies..
The structure and names of the accounts should help to have a consistent posting of transactions. Each nominal ledger account is unique, which allows it to be located in the general ledger.
Within the chart of accounts, the list is organized in the order in which the accounts usually appear in the financial statements: first the balance sheet accounts, followed by the profit and loss statement accounts.
- Assets.
- Passives.
- Equity of the owners (shareholders).
- Organizational chart.
- Operating expenses.
- Non-operating income and profit.
- Non-operating expenses and losses.
Within the categories of operating income and expenses, the accounts could additionally be organized by business function (production, sales, administration, finance) and / or by divisions, product lines, etc..
A chart of accounts is likely to be as large and complex as the business itself. An international corporation with multiple divisions may need thousands of accounts, while a small local retailer may need as few as a hundred accounts..
The organization chart of a company can serve as an outline for the chart of accounts..
For example, if a company divides its business into ten departments (production, marketing, human resources, etc.), each department is likely to account for its own expenses (salaries, supplies, telephone, etc.). Each department will have its own account for telephone expenses, salary expenses, etc..
In the chart of accounts, each account is generally assigned a name and a unique number by which it can be identified. Account numbers are typically five or more digits in length, with each digit representing a company division, department, account type, etc..
As you will see, the first digit could mean if the account is an asset, liability, etc. For example, if the first digit is "1", it is an asset. If the first digit is "5", it is an operating expense.
An empty space between account numbers allows you to add accounts in the future. The following is a partial list of a sample chart of accounts.
10100 Cash-Checking Account.
10200 Cash-Payroll Account.
10600 Petty Cash Fund.
12100 Accounts receivable.
12500 Allocation of doubtful accounts.
13100 Inventory.
14100 Supplies.
15300 prepaid insurance.
17000 plots of land.
17100 Buildings.
17300 teams.
17800 Vehicles.
18100 Accumulated depreciation-Buildings.
18300 Accumulated depreciation-Equipment.
18800 Accumulated depreciation-Vehicles.
20140 Notes Payable-Credit Line 1.
20 240 Notes Payable-Credit Line 2.
21,000 Accounts Payable.
22100 Wages payable.
23100 Interest payable.
24,500 unearned income.
25100 Mortgage loan payable.
25,600 Bonds payable.
25650 Discount on bonds payable.
27100 Common shares.
27,500 Retained earnings.
29,500 Treasury shares.
31010 Sales - Division 1, Product Line 010.
31022 Sales - Division 1, Product Line 022.
32019 Sales-Division 2, Product Line 015.
33110 Sales - Division 3, Product Line 110.
41010 CMV-Division 1, Product Line 010.
41022 CMV-Division 1, Product Line 022.
42019 CMV-Division 2, Product Line 015.
43110 CMV-Division 3, Product Line 110.
50100 Marketing department. Wages.
50150 Marketing department. Payroll taxes.
50200 Marketing department. Supplies.
50600 Marketing department. Telephone.
59100 Payroll Department. Wages.
59150 Payroll department. Payroll taxes.
59200 Payroll Department. Supplies.
59600 Payroll Department. Telephone.
91800 Gain on sale of assets.
96 100 Loss on sale of assets.
Yet No Comments