A Chart of Accounts is the list of GL accounts used in one or more Company Codes. All the GL accounts in a chart of accounts will have an account number, account name, and some control information. The control information decides how the GL account can be created.
A Chart of Accounts includes the following components:
- Chart of account key
- Maintenance language
- The GL Account Number
- Controlling integration
- Group chart of accounts (consolidation)
- Block indicator
A Chart of accounts is a whole list of a business’s classification groups for accounting purposes. Because everything revolves around them the chart of accounts may be the anchor of an accounting system. Every report chosen has a basis for tracking that particular accounting advice.
The Chart of Accounts may be the basis for a company’s financial accounting system. It’s useful for recording transactions within the general ledger to be able to supply better comprehension of the fiscal well-being of the company and also to aid the company comply with financial reporting standards. In other words, the Graph of Accounts is listing of all individual accounts within the General Ledger which are utilized to arrange your monetary transactions.
It’s an index of all reports where the firm files away its financial advice. Before you create your general ledger you create a graph of accounts. There are lots of things to consider when making your chart of accounts such as the kind of industry your firm is really in. Each industry has standard accounts especially picked to help track the regions that matter for a firm in that industry. Once these accounts are chosen you need to establish safeguards in position to make sure they remain the same and new accounts aren’t created unless approved. Creating sub accounts can become a fantastic method for businesses to break up how they monitor specific accounting information instead of creating every time to a fresh report.
Both CO and FI utilize a graph of accounts. It’s compulsory the graph of accounts be assigned to an Organization Code. One Chart of accounts could be assigned to several Business Codes. But, the reverse isn’t possible; I.e., you won’t be able assign greater than one chart of accounts to an individual Business Code.