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What is chart of account and how many charts of accounts can
be assigned to a company?
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Answer Posted / arun
SEAMLESS ERP – CHART OF ACCOUNTS
Chart of Accounts is a list of all G/L Accounts used by one
or several company codes. For G/L Account, the chart of
accounts contains the account number, account name, and the
information that controls how an account functions and how
a G/L account is created in a company code. The chart of
accounts is the operating chart of accounts and used for
the daily postings in the company.
A chart of accounts (COA) is a list of all accounts tracked
by a single accounting system, and should be designed to
capture financial information to make good financial
decisions. Each account in the chart is assigned a unique
identifier, typically an account number. Each account in
the chart is classified into one of the four categories:
assets, liabilities, income and expenses.
Within the chart of accounts you will find that the
accounts are typically listed in the following order:
Balance sheet accounts Assets
Liabilities
Income statement accounts Incomes
Expenses
A company's organization chart can serve as the outline for
its accounting chart of accounts. For example, if a company
divides its business into Different Business Units with
deferent Location will likely be accountable for its own
expenses (salaries, supplies, phone, etc.). Each Business
Units and Locations will have its own phone expense
account, its own salaries expense, etc.
Sample COA
Each account in the chart of accounts is typically assigned
a name and a unique number by which it can be identified.
Account numbers are often five or more digits in length
with each digit representing a division of the company, the
department, Business Units , Location , the main
Accounts , and its Sub accounts.
Usually COA Starts with Balance sheet items like Assets and
Liabilities and then followed by Income and Expenses
As you will see, the first digit might signify if the
account is an asset, liability, etc. For example, if the
first digit is a "1" it is an asset. If the first digit is
a "3" it is an Liability, If the first digit is a 5 it is
an Income and If the first digit is a "7" it is an Expense
A gap between account numbers allows for adding accounts in
the future. The following is a partial listing of a sample
chart of accounts.
Assets: 10000 to 29999
Liabilities: 30000 to 49999
Incomes: 50000 to 69999
Expenses: 70000 to 99999
| Is This Answer Correct ? | 23 Yes | 3 No |
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