What Did We Cover ?
The Introduction defined, explained, and discussed what the chart of accounts is, how it's organized by major account types, 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 accounts.
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 help.
What Should You Now Know ?
Putting together all that we just discussed, you should now understand or at least be familiar with:
- What the chart of accounts is.
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 transactions.
- 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 information.
- 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 Statement.
- Where to find samples and additional help.
- If nothing else, the importance of setting up a good chart of accounts for your business !!!!!
My Last Words Of Advice
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.
My congratulations to all you Yogi Bears (Smarter Than The Average Bear) For those of you too young to remember, Yogi Bear is a cartoon character created by William Hanna and Joseph Barbara who always claimed to be smarter than the average bear. Hopefully, if I did my job, when it comes to bookkeeping, you can now claim to be smarter than the average bear. No I didn't say you're ready for the CPA exam yet !
What's Next ?