Chart of Accounts
The chart of accounts (COA) is part of the application that needs to be planned carefully before implementation. A well-planned COA provides better insight into the financial matters of an organization. A separate COA is created for each company; however, you can create a COA for one company—the master COA—and then copy it to the others using the Copy COA utility as developed in the next chapter. The accounts created here are selected for each transaction during voucher generation, report calls, and preparation of financial statements. Because this setup is similar to the cost center setup, you will use the copy utility to save some time. The account code used in this setup uses the format 9-99-999-99999, which contains four separate number groupings or levels. The first level defines the nature of account, while the next three levels act as its subcategories. Each account specified on the first level belongs to one of the following natures: equities, liabilities, assets, revenues, and expenses. The initial three levels are called group levels, whereas the bottom level (in other words, level 4) is called the transaction level because accounts from this level are selected to generate transactions in the vouchers interface. The group-level accounts are used in trial balance and financial statement reports to extract summarized group-level information.