Chart of Accounts

The Chart of Accounts (COA) is the foundation of your financial system, providing the structure for recording and reporting all financial transactions.

Understanding Chart of Accounts

Account Structure

A well-designed COA follows a logical hierarchy:

1000 - Assets
  1100 - Current Assets
    1110 - Cash and Cash Equivalents
      1111 - Petty Cash
      1112 - Checking Accounts
      1113 - Savings Accounts
    1200 - Accounts Receivable
      1210 - Trade Receivables
      1220 - Employee Receivables

Account Types

Balance Sheet Accounts

Assets (1000-1999)

• Current Assets
• Fixed Assets
• Intangible Assets
• Other Assets

Liabilities (2000-2999)

• Current Liabilities
• Long-term Liabilities
• Provisions

Equity (3000-3999)

• Share Capital
• Reserves
• Retained Earnings

Income Statement Accounts

Revenue (4000-4999)

• Sales Revenue
• Service Revenue
• Other Income

Expenses (5000-7999)

• Cost of Goods Sold
• Operating Expenses
• Administrative Expenses
• Financial Expenses

Setting Up Your COA

Initial Configuration

1. Navigate to Finance → Chart of Accounts
2. Choose setup method:
   • Import Template: Use industry-standard
   • Copy Existing: From another company
   • Manual Creation: Build from scratch

Account Creation

Creating Individual Accounts

1. Click New Account
2. Enter account details:
   • Account Code: 1112
   • Account Name: Checking Account - Operations
   • Account Type: Bank
   • Currency: USD
   • Parent Account: 1110

Account Properties

• Active Status: Enable/disable
• Allow Manual Posting: Yes/No
• Reconciliation Required: For bank/AR/AP
• Currency Specific: For foreign currency
• Tax Configuration: Default tax codes

How-To Guides

How to Design Your COA Structure

Planning Considerations

1. Business Requirements

   • Industry standards
   • Reporting needs
   • Legal requirements
   • Management analysis

2. Coding System

   • Numeric vs alphanumeric
   • Number of digits
   • Segmentation logic
   • Growth allowance

3. Hierarchy Levels

   • Main categories (4)
   • Sub-categories
   • Detail accounts
   • Sub-accounts

Best Practice Structure

Assets (1000-1999)
  Current Assets (1000-1499)
    Cash (1100-1199)
    Receivables (1200-1299)
    Inventory (1300-1399)
  Fixed Assets (1500-1799)
  Other Assets (1800-1899)

How to Set Up Multi-Company COA

Shared Structure

1. Create master COA template
2. Define common accounts:
   • Group-level accounts
   • Standardized coding
   • Consistent naming
3. Allow company-specific:
   • Local requirements
   • Additional detail
   • Regional accounts

Consolidation Mapping

1. Go to Consolidation Setup
2. Map local accounts to group:
   • Company A: 1112 → Group: 1110
   • Company B: 1115 → Group: 1110
3. Define elimination rules
4. Test consolidation

How to Configure Account Permissions

Role-Based Access

1. Navigate to Settings → Financial Security
2. For each role, define:
   • View permissions
   • Posting rights
   • Approval limits
   • Account ranges

Account Restrictions

Set controls per account:

• Posting Period: Current month only
• User Restrictions: Specific users
• Amount Limits: Maximum posting
• Approval Required: Over threshold

How to Manage Account Dimensions

Setting Up Dimensions

Beyond basic accounts, add analysis dimensions:

1. Cost Centers

   • Departments
   • Locations
   • Projects

2. Product Lines

   • Categories
   • Brands
   • Segments

3. Custom Dimensions

   • Regions
   • Channels
   • Campaigns

Dimension Rules

Configure posting requirements:

• Mandatory dimensions
• Valid combinations
• Default values
• Inheritance rules

How to Handle Multi-Currency Accounts

Foreign Currency Setup

1. Create currency-specific accounts:
   • USD Bank Account
   • EUR Bank Account
   • GBP Receivables
2. Link to base currency account
3. Configure revaluation:
   • Frequency
   • Rate source
   • Gain/loss accounts

Exchange Rate Management

• Daily rate updates
• Month-end rates
• Average rates
• Fixed rates for budgets

Advanced Features

Account Templates

Creating Templates

1. Build standard account sets
2. For common needs:
   • New department
   • New location
   • New project
3. Include:
   • Account structure
   • Permissions
   • Dimensions
   • Settings

Using Templates

1. Select scenario
2. Choose template
3. Customize as needed
4. Bulk create accounts

Automated Account Creation

Rules-Based Creation

Configure automatic account generation:

• New customer → AR sub-account
• New project → Project accounts
• New location → Location P&L

Account Analysis

Account Usage Reports

• Transaction volume
• Balance trends
• Posting patterns
• User activity
• Error frequency

Optimization Tools

• Identify unused accounts
• Suggest consolidation
• Highlight duplicates
• Recommend archives

Maintenance & Control

Periodic Review

Quarterly Tasks

• Review account usage
• Validate hierarchies
• Check permissions
• Update descriptions
• Archive inactive

Annual Tasks

• Full COA audit
• Restructuring assessment
• Compliance check
• Documentation update
• Training review

Change Management

Account Modifications

1. Document change request
2. Impact analysis
3. Approval process
4. Update systems
5. Communicate changes

Version Control

• Track all changes
• Maintain history
• Rollback capability
• Audit trail
• Documentation

Best Practices

Design Principles

• Keep it simple
• Plan for growth
• Maintain consistency
• Document thoroughly
• Review regularly

Naming Conventions

• Clear descriptions
• Consistent format
• Avoid abbreviations
• Include key details
• Update promptly

Security & Control

• Limit creation rights
• Regular audits
• Approval workflows
• Change documentation
• Access reviews

Configuration

COA Settings

Navigate to Settings → Finance → Chart of Accounts:

• Account Length: 4-10 digits
• Separator: Use of segments
• Auto-Numbering: Next available
• Validation Rules: Format checks
• Required Fields: Mandatory data

Integration Settings

• Sub-ledger links
• Dimension requirements
• Posting controls
• Consolidation rules
• Report mappings

Troubleshooting

Common Issues

Cannot create account

• Check numbering sequence
• Verify parent exists
• Review permissions
• Check active periods

Posting errors

• Verify account active
• Check posting rights
• Review period status
• Validate dimensions

Report discrepancies

• Check account mapping
• Verify hierarchies
• Review formulas
• Validate periods

Next Steps

Learn about Journal Entries to begin recording transactions.