The chart of accounts is an integral part of the work of an accountant, both with experience and a beginner. In fact, all accounts used to reflect the organization’s operations are systematized into a common document. He was called the Chart of Accounts. This is a kind of table in which all the necessary digital signs used in the wiring are collected. It is also worth remembering that the company can create its own working chart of accounts. However, the instructions for use of this document should be followed. It allows the accountant to find answers to many questions related to accounts.
What is a chart of accounts?
It is no secret that the accounting of any organization uses the so-called postings. They help to reflect both the arrival and the decline of various elements. Accounts are actively involved in posting. In fact, it is they who form the basis of operations.
In fact, the Chart of Accounts is a table that contains a list of all accounts used by accounting. This is a scheme that helps to correctly record the conduct of business and financial transactions of any organization. It is worth noting that any company keeps this kind of accounting. Even "Accounting for Dummies" offers first of all to get acquainted with the Chart of Accounts, as well as its sections.
Legislative regulation
A chart of accounts is not just paper used by individual accountants. It is not changed for all kinds of organizations. So, the issuance of the current chart of accounts was enshrined in the Federal Law in 2000, and later there was a new edition from 2010, that is, ten years later. That is, these regulatory documents stipulate which accounts and for what are used by the enterprise.
If the organization needs to use additional accounts, then the "Instructions for the use of the chart of accounts of accounting" can help here. In it you can find the structure of a specific account. Probably, one or another action can be displayed on it. If this option was not found, then it is allowed to use accounts that were not affected in the main chart of accounts. However, these innovations should be enshrined in the accounting policies of the organization.
Organization Chart of Accounts
As mentioned above, an enterprise can structure its own chart of accounts. In this case, you must adhere to a number of rules. So, based on the Instructions to the Chart of Accounts, the company can select those accounts that are necessary for working with specific operations.
By the way, in agreement with the Ministry of Finance, the organization can use additional accounting systems. This is possible in cases where the specificity of the organization requires it. The finished chart of accounts of a particular organization is fixed in the accounting policy. This becomes a tool for conducting quality activities by the organization, and also simplifies business activities.
Scheme of the working chart of accounts
Existing manuals, such as “Accounting for Dummies,” provide not only an approximate content of the work plan for a company of various profiles, but also a theoretical basis.
For example, a work plan is a branched structure. In the first place are synthetic accounts. They take into account capital, its movement, other liabilities and property, as well as business processes.
Analytical accounts can reflect more specific actions. The presence of these types of accounts allows you to verify transactions. However, this type of account is optional.
There are also subaccounts that help detail operations. So, in enterprises associated with production, it is possible to distinguish separate subaccounts by type of product or product. The chart of accounts with explanations helps the accountant draw up a work plan "for themselves."
Composition of the Chart of Accounts
Currently, the chart of accounts consists of eight sections. In total, they described sixty accounts. An interesting fact is that in the plan there are numbers from one to ninety-nine. This means that a series of numbers remains free from a particular account. This is just in case the specifics of the organization allows the use of additional synthetic accounts, that is, the company can use the free numbers. The accounting chart of accounts with sub-accounts also has off-balance accounts, which reflect, for example, leased property or material assets that were accepted by the organization for storage.
In total, the Chart of Accounts has eight large sections, in which all accounts are distributed, except for off-balance ones. There are also instructions regarding which sub-accounts for each of the synthetic accounts can be opened and under which number.
Off-balance accounts briefly
Off-balance accounts are those accounts that do not belong to any of the sections of the Chart of Accounts. They indicate operations related to funds that do not belong to the organization, but, for example, are in its temporary storage.
Off-balance accounts are also called auxiliary accounts. It is noteworthy that operations on them as a result are not reflected in the balance sheet, they also in no way affect the financial result of the organization. In the chart of accounts, they are presented in the form of three-digit numbers, starting from zero. That is, the first account of such a plan is number 001, and so on. The account with number 007 completes this kind of section.
What sections are included in the chart of accounts?
As already mentioned, the Chart of Accounts consists of eight sections with its own accounts. They are structured, which allows you to quickly find the necessary information.
- Non-current assets of the enterprise. This includes fixed assets on the balance sheet of the organization, their depreciation, as well as intangible assets;
- Productive reserves. In this section you can find accounting synthetic and analytical accounts for accounting the movement of materials, reserves of the company, or, for example, the acquisition of any material values;
- Production costs. As the name implies, this includes accounts directly related to all kinds of industries.
- Finished products. Accordingly, on the accounts located in this section, you can take into account finished products, calculate its value.
- Cash. This includes such accounts as “cash desk”, “settlement account”, “money transfers”.
- The calculations. This vast group includes many payment options, ranging from paying off debts to creditors and ending with the payment or payroll of employees of the organization.
- Capital. This section helps to structure the accounts associated with the authorized, reserve or additional capital of the organization.
- Financial accounts. This final section includes accounts that help to identify the result of the sale, as well as the final financial result for the company at the end of the year.
Synthetic and analytical accounts: what is the difference?
As you know, we can distinguish three groups of accounts of accounting, namely, synthetic, sub-accounts and analytical. All three groups are interrelated, but it is likely that they may be misunderstood, especially by novice accountants.
So, synthetic accounts are just located in the chart of accounts. That is, account 10 with the name “materials” is located in the section “production costs”. This includes all funds that are present in production activities, with the exception of fixed assets.
In turn, this account has sub-accounts. This is a more specific option. That is, to the synthetic account “materials”, you can open a sub-account with number one and the name “raw materials”. That is, neither animals nor spare parts are included here, only what is described in the name of a specific subaccount.
The analytical account allows you to further specify accounting. That is, oil, for example, will be a separate analytical account, which opens to the subaccount. Thus, the analytical account helps to structure the accounting of economic activity, and also allows you to check on which cost items you can save.
Instructions for using the finished chart of accounts
Instructions are called a document that helps the accountant to correctly use the existing chart of accounts. It contains the following information:
- Account number.
- Full name.
- The purpose of the account, namely, its contents and general structure.
- Ways of application, that is, the procedure for filling it.
That is, the instruction helps accounting to correctly use each of the accounts. After reviewing this document, the organization can begin to draw up a work plan for a particular company.
Practical tips for drawing up a working chart of accounts of the enterprise
After familiarizing yourself with the instructions for using this document, you can proceed with the specific preparation of the Chart of Accounts of the enterprise.
It must be borne in mind that in the future there may be changes involving the introduction of new, additional accounts in the structure of the enterprise. Therefore, you need to make sure that there are reserve sub-accounts.
It is also better to minimize the number of accounts used for accounting. This helps facilitate ways to reflect business activities. That is, if it is possible to refuse to use any account, it is better to do so.
It is also worth remembering that it is not so easy to make global changes to the organization’s existing chart of accounts. Therefore, it is better to think about how the future of the enterprise is seen in a couple of years. There is probably the prospect of a new type of product.
Do not forget that the accounting is now automated, but this does not prevent many specialists from carrying out checks manually. So, a popular negotiable statement of accounts, which allows you to identify errors on a specific account, is also perfectly created using the 1C program.