What is a chart of accounts?
A chart of accounts is a listing of all the company’s accounts, intended to provide a general overview of the financials. The chart groups together entries that are similar onto their separate accounts. The more accounts a company has, the more precisely it can view the distribution of various expenses. This categorization allows distinguishing between various expenses, enabling the company to easily see costs related to, for instance, marketing and rent. Ultimately, the chart of accounts offers better clarity when, for example, annual financial statements and annual reports are being prepared.
You can create and mantain your charts of accounts as you desire with Acubiz
With Acubiz, you can create and maintain your charts of accounts exactly as you desire. You even have the option to utilize a dimension-driven chart of accounts, which increases the level of detail and provides further clarity.
Structure of a chart of accounts
The structure of the chart of accounts can vary. Its construction mainly depends on the accountant the company employs and potentially the accounting software this accountant uses. Additionally, charts will differ depending on the company, as every enterprise has different needs and different financials. Some businesses need more subdivisions than others, so the number of accounts on the chart can vary.
Use a standard chart of accounts
Businesses have the option to use the Business Authority’s standard chart of accounts as a basic structure. It can be particularly useful in situations where a company is still working on understanding the structure they want for their chart.
It’s advisable to use a standard chart of accounts if the company is not yet familiar with the relevant legal areas. Mistakes in the chart can lead to errors in the financial statements and reports to the Tax Authority, which can result in additional fines and costs.
Acubiz and charts of accounts
At Acubiz, we work extensively with charts of accounts, as they are essential for users to make the correct choices. It’s the chart of accounts that users allocate their expenses to. The number of accounts should not be too many nor too few, but fundamentally, it varies from company to company what makes sense. It’s essential to define the right cost structure and name the items in a way that’s clear for employees. Most employees are not part of the finance department and don’t understand terms like “freight with VAT” or “freight without VAT”. It’s better to describe “what you spent money on” rather than “which account to book on”.
Want to know more?
If you need advice on how to make all subprocesses concerning expense and cost handling more efficient and flexible, please feel free to contact us. We have over 20 years of experience in optimizing the discipline of Expense Management.