If you have more than one division and multiple departments it is recommended you pre-add your accounts in the chart of accounts. Remember to set up departments in Admin>>update system information>>key gl accounts>>second screen.
The highest level in the accounting structure is company. Your business can be one company, multiple divisions or multiple companies each with a division etc.
There are several different types of Account Groups common to general accounting (ex. Assets, Liabilities, etc). Each one of these Account Groups is broken down into smaller categories and groupings that identify a sub-grouping within the basic Account Group.
Here is an example of the Account Groups according to the Chart of Accounts business system has created.
Assets |
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10000 - 19999 (Normal balance is DEBIT, except for Accumulative Depreciation accounts) |
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Debit Increases |
Credit Decreases |
Liabilities |
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20000 - 29999 (Normal balance is CREDIT) |
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Debit Decreases |
Credit Increases |
Sales |
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30000 - 39999 (Normal balance is CREDIT) |
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Debit Decreases |
Credit Increases |
Cost of Sales |
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40000 - 49999 (Normal Balance is DEBIT) |
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Debit Increases |
Credit Decreases |
Other Income & Deductions |
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50000 - 54499 (Normal Balance is CREDIT) |
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Debit Decreases |
Credit Increases |
55000 - 59999 (Normal Balance is DEBIT) |
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Expenses |
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60000 - 69999 (Normal Balance is DEBIT) |
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Debit Increases |
Credit Decreases |
Balance Sheet Accounts
Assets
Current Assets
Long Term Investments
Property, plant and equipment
Other Assets
Liabilities
Current Liabilities
Non Current Liabilities
Deferred credits
Stockholders' Equity
Paid in Capital
Retained Earnings
Treasury Stock
Income Statement Accounts
Operating Revenues
Operating Expenses
Nonoperating revenues and gains
Nonoperating expenses and losses
The business system has provided a suggested Chart of Accounts for you. If your company already has a Chart of Accounts, please contact a business system tech support assistant before modifying the included Chart of Accounts.
Each digit of an account number represents a certain type of account. Here is an average breakdown of an account number so that you will understand how the numbers are assigned and which number you will need to assign to a certain item or transaction. Generally, the account number consists of five (5) digits. However, sometimes the division number is added to the beginning of the number and or a department is adding at the end, therefore, making it nine (9) digits. The following examples consists of the account number structures.
Example:
Account # - 12900
The 1 represents the Asset account group that this number is assigned.
The 129 indicates that this number is part of the Inventory Base account group which is an Asset.
The 00 simply means that anything assigned to this number will be posted to the Inventory Base Account and that it will not be broken down into subledger accounts. The subledger accounts are not included as defaults in the system; however, if your company finds it necessary to keep a detailed inventory, you can create them.
Example:
Account # - 32001
The 3 indicates that the account is part of the Sales account group.
The 320 indicates that this number is part of the New NH Tractor Sales Base account group within the Inventories General account group.
The 01 identifies this particular account as a subledgered account, thus providing a further breakdown of the 320 base account. On financial statements and some other reports, the value of this account may be included in the amount shown for the base account rather than the subledgered accounts being shown separately.
Example:
Account # - 02-67100-01
The 02 indicates division 02 within a company.
The 6 indicates that the account is part of the Expense account group.
The 671 indicates that this number is part of the Telephone account group within expenses account group.
The 00 simply means that anything assigned to this number will be posted to the expense Base Account and that it will not be broken down into subledger accounts.
The last 01 indicates this will be further broken down by department 01 and those are user definable and pre-set in the general ledger.
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If you have more than one division and multiple departments it is recommended you pre-add your accounts in the chart of accounts. Remember to set up departments in Admin>>update system information>>key gl accounts>>second screen.
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Accounting - process of identifying, measuring, and reporting financial information of an entity
Accounting Equation - assets = liabilities + equity
Accounts Payable - money owed to creditors, vendors, etc.
Accounts Receivable - money owed to a business, i.e. credit sales
Accrual Accounting - a method in which income is recorded when it is earned and expenses are recorded when they are incurred, all independent of cash flow
Accruals - a list of expenses that have been incurred and expensed, but not paid or a list of sales that have been completed, but not yet billed
Amortization – gradual reduction of amounts in an account over time, either assets or liabilities
Asset - resources with a cash value that is owned by a business or individual
Audit Trail – a record of every transaction, when it was done, by whom and where, used by auditors when validating the financial statement
Auditors – third party accountants who review an entity’s financial statements for accuracy and provide a statement to that effect
Balance Sheet - summary of a company's financial status, including assets, liabilities, and equity
Bookkeeping - recording financial information
Budgeting – the process of assigning forecasted income and expenses to accounts, which amounts will be compared to actual income and expense for analysis of variances
Capital Stock – found in the equity portion of the balance sheet describing the number of shares sold to shareholders at a predetermined value per share, also called “common stock” or “preferred stock”
Capital Surplus – found in the equity portion of the balance sheet accounting for the amount shareholders paid that is greater or lesser than the “capital stock” amount
Capitalized Expense – expenses that are accumulated, not expensed as incurred, to be amortized over a period of time; i.e. the development cost of a new product
Chart of Accounts - a listing of a company's accounts and their corresponding numbers
Cash-Basis Accounting - a method in which income and expenses are recorded when they are paid.
Cash Flow - a summary of cash received and disbursed showing the beginning and ending amounts
Closing the Books/Year End Closing – the process of reversing the income and expense for a fiscal or calendar year and netting the amount into “retained earnings”
Cost Accounting - a type of accounting that focuses on recording, defining, and reporting costs associated with specific operating functions
Credit - an account entry with a negative value for assets, and positive value for liabilities and equity.
Debit - an account entry with a positive value for assets, and negative value for liabilities and equity.
Departmental Accounting – separating operating divisions into their own sub entities on the income statement, showing individual income, expenses, and net profit by entity
Depreciation - recognizing the decrease in the value of an asset due to age and use
Dividends – amounts paid to shareholders out of current or retained earnings
Double-Entry Bookkeeping - system of accounting in which every transaction has a corresponding positive and negative entry (debits and credits)
Equity - money owed to the owner or owners of a company, also known as "owner's equity"
Financial Accounting - accounting focused on reporting an entity's activities to an external party; ie: shareholders
Financial Statement - a record containing the balance sheet and the income statement
Fixed Asset - long-term tangible property; building, land, computers, etc.
GAAP - Generally accepted accounting principles; accounting standards including industry practices.
General Ledger - a record of all financial transactions within an entity
Goodwill – an intangible asset reflecting the value of an entity in excess of its tangible assets
Income Statement - a summary of income and expenses
Inventory – merchandise purchased for resale at a profit
Inventory Valuation – the method to set the book value of unsold inventory: i.e. “LIFO,” last in, first out; “FIFO,” first in, first out; “average,” an average cost over a given period, “last cost,” the cost based on the last purchase; “standard,” a “deemed” amount related to but not tied to a specific purchase, “serialized,” based on a uniquely identifiable serial number or character of each inventory item
Invoice – the original billing from the seller to the buyer, outlining what was purchased and the terms of sale, payment, etc.
Job Costing - system of tracking costs associated with a job or project (labor, equipment, etc) and comparing with forecasted costs
Journal - a record where transactions are recorded, also known as an "account"
Liability - money owed to creditors, vendors, etc
Liquid Asset - cash or other property that can be easily converted to cash
Loan - money borrowed from a lender and usually repaid with interest
Master Account – an account on the general ledger that subtotals the “subsidiary accounts” assigned to it; i.e. Cash might be the master account for a list of depository accounts at banks
Net Income - money remaining after all expenses and taxes have been paid
Non Cash Expense - recognizing the decrease in the value of an asset; i.e. depreciation and amortization
Non-operating Income - income generated from non-recurring transactions; ie: sale of an old building
Note - a written agreement to repay borrowed money; sometimes used in place of "loan"
Operating Income - income generated from regular business operations
Other Income - income generated from other than regular business operations, i.e. interest, rents, etc.
Owner's Equity - A sole proprietorship's assets minus liabilities
Payroll - a list of employees and their wages
Posting – the process of entering then permanently saving or “archiving” accounting data
Profit - see "net income"
Profit/Loss Statement - see "income statement"
Reconciliation – the process of matching one set of data to another; i.e. the bank statement to the check register, the accounts payable journal to the general ledger, etc.
Retained Earnings – the amount of net profit retained and not paid out to shareholders over the life of the business
Revenue - total income before expenses.
Shareholder Equity - the capital and retained earnings in an entity attributed to the shareholders
Single-Entry Bookkeeping - system of accounting in which transactions are entered into one account
Statement of Account - a summary of amounts owed to a vendor, lender, etc.
Subsidiary Accounts – the subaccounts that are totaled on the financial statement under “master accounts;” i.e. “Cash-ABC Bank” might be one of several subsidiary accounts that are subtotaled under “Cash”
Supplies – assets purchased to be consumed by the entity
Treasury Stock – shares purchased by the entity from shareholders, reducing shareholder equity
Write-down/Write-off – an accounting entry that reduces the value of an asset due to an impairment of that asset; i.e. the account receivable from the bankrupt customer