|What Did We
The Introduction defined,
explained, and discussed what the chart of accounts is, how it's
organized by major account types and balance sheet and income
statement accounts and its purpose. In addition, codes were
introduced and defined.
Lesson 1 - How Codes Are Used
in Conjunction with Building The Chart Of Accounts introduced
you to how to use account numbering or account identifiers to
uniquely identify the accounts that make up the chart of
Lesson 2 - Types of Coding
Systems defined,explained, and illustrated some of the
different types of coding systems that are used in conjunction with
the chart of accounts.
Lesson 3 - Importance of the
Chart Of Accounts discussed and explained why the chart of
accounts is so important and what needs to be considered in
planning and setting up a good chart of accounts.
Lesson 4 - Show Me
presented an example of commonly used Balance Sheet and Income
Statement accounts that are included in a Chart Of Accounts as a
guide to use in developing your own. Also, you were introduced to
how the chart of accounts is used with accounting and bookkeeping
software and what to look for, and where to find additional
What Should You
Now Know ?
Putting together all that we just
discussed, you should now understand or at least be familiar
- What the chart of accounts
As stated earlier, The Chart Of
Accounts is a listing of all the individual
accounts in the general ledger that contains the
account's name, a brief description of the account, and optional
other identifiers (codes) or a coded account number assigned to aid
in recording, classifying, summarizing, and reporting
- A chart of accounts can range
from very simple to very complex.
- What codes are and how they're
used to assign information and build a Chart Of Accounts.
The brain of your Chart Of Accounts is your coding system.
It determines what information and reports you can and can not
produce. Just like your own brain, a good coding system allows you
to organize, process, store, and retrieve needed
- What to consider and think about
when setting up a chart of accounts.
- How the chart of accounts is
closely related to the Balance Sheet and Income
- Where to find samples and
- If nothing else, the
importance of setting up a good chart
of accounts for your business !!!!!
||My Last Words
Setting up your chart of accounts
for a reasonably complex business by hand, as well as recording and
classifying your daily business transactions, are time consuming
tasks if you choose a manual accounting system. The tasks become
much easier if you use accounting software to set up and do your
bookkeeping. As I mentioned earlier, many of accounting software
programs have a number of "canned" chart of accounts to choose
In addition, for a task this
important, it doesn't hurt to consult with your friendly
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Cartoons in this tutorial
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