Chart of Accounts



What is a Chart of Accounts? 


The Chart of Accounts is used to organize the finances of a company and to separate expenditures, revenue, assets, and liabilities in order to provide the best possible information about the financial status of the enterprise. Chart of Accounts (COA) is a created list of the accounts used by an organization to define each class of items for which money or the equivalent is spent or received. It is used to organize the finances of the entity and to segregate expenditures, revenue, assets, and liabilities in order to give interested parties a better understanding of the financial health of the entity. The overall structure of COA is based on a system of double entry accounting that has become a standard all over the world to quantify how a company is doing financially. A chart of accounts is a list of accounts used to categorize the financial transactions of a business.

A chart of accounts usually consists of - Assets, Liabilities, Equity, Income, and ExpensesSome companies segregate their transactions into the additional segments of Cost of Goods Sold, Advertising Costs, General and Administrative Expenses, Other Expenses, Other Income, and Taxes. But by designing your chart of accounts with the financial analysis of your company in mind, you will be able to see just where your profits are coming from and where your expenses need to be examined





Understanding how ERP2ALL’s Chart of Accounts works

 

ERP2ALL acts as the main financial backbone for all areas and has the ability to make the most of the efficiency and update the flow of information across an organisation which can help an organization to combine all of the information and processes into a single integrated system and to arrange all important management functions such as customer relations, human resources, purchases, production, accounting, and finance. All Accounts will be listed in a tree view with 4 individual Parent folders:

 

  1. Asset accounts (Application of Funds): the different types of economic resources owned or controlled by an entity. Common examples of asset accounts are cash on hand, cash in the bank, real estate, inventory, prepaid expenses, goodwill, and accounts receivable.
  2. Liability accounts (Sources of Funds): represent the different types of economic obligations of an entity, such as accounts payable, bank loans, bonds payable, and accrued expenses
  3. Equity accounts (Sources of Funds): represent the residual equity of an entity (the value of assets after deducting the value of all liabilities). Equity accounts include common stock, paid-in capital, and retained earnings. The type and captions used for equity accounts are dependent on the type of entity.
  4. Revenue or income accounts: represent the company's earnings and common examples include sales, service revenue, and interest income.
  5. Expense accounts: represent the company's expenditures. Common examples are utilities, rents, depreciation, interest, and insurance.

 


ERP2ALL’s Accounting & Finance module's COA is designed considering simplicity, flexibility, usefulness in a tree structure having a parent-child relationship for better classification and grouping.

Users can define COA as per their choice down to as many as level seems appropriate to them. The COA can be picked from a standard COA inbuilt in ERP2ALL or may be defined by the user like you.


                                                                                             

                                                                                         Important

 

Please set up your chart of accounts before you start Accounting Entries

 

  • Accounting Entries can only be made against the general ledger. Entries against Groups are not allowed. 
  • Please DO NOT create any Accounts for Customers and Suppliers in the COA. They are created directly from the Customer / Supplier master data.
  • To create a Bank Account: Go to the appropriate group (usually Application of Funds > Current Assets > Bank Accounts and create a new Account (by clicking on Add Child) of type "Bank".
  • To create a Tax Account: Go to the appropriate group (usually Source of Funds > Current Liabilities > Taxes and Duties and create a new Account (by clicking on Add Child) of type "Tax" and do mention the Tax rate.

 

 

The COA is displayed in a Tree view (outline view) which is a graphical control element that presents a hierarchical view of information in the COA.  Each item (often called a branch or a node) can have a number of sub-items. This is often visualized by an indentation in a list which is used to present hierarchical data (groups & Ledger) in the Chart of Accounts. 



Tree View Parent and Child Items

 

  1. Any item in a tree-view can have a list of sub-items called child items associated with it.
  1. An item that has one or more child items is called a parent item.
  2. A child item is displayed below its parent item and is indented to indicate that it is subordinate to the parent.
  3. An item that has no parent appears at the top of the hierarchy and is called a root item.


To Access the Chart of Accounts:

Go to AF (Accounting & Finance), Then click on Chart of Accounts.



The landing page will be displayed as shown below:



To view the details: 

Click on the "Expand ALL" buttons to display the details in the General ledger.


For a Brief overview:

Click on the "Collapse ALL" button to revert to an initial brief overview.



To Search for a nominal:

To Search for a Nominal in the chart of accounts, 

Type the name of the Nominal in the search box option (right of the screen)

The search results will be highlighted and displayed.



To Create a Child: 

Note: A child cannot be added if it's declared & posted to the ledger.

Click on the Add Child button.



The new Child details screen will be displayed. 



Child details:

Enter the Name/title

Click on Save to insert & update the new child details.


To Rename: 

Select a Child item from the COA list & Click on the Rename button. 



The Rename details will be displayed 



Rename details:


Enter the new Name.

Click on Save to update the modified name/title change.



Deletion: 

Select a Child item from the list & Click on the Delete button. 




 

To View: 

Select a Child item (folder /group) & Click on the View Ledger button.



Users can customize Search preferences individually (Options: by From & TO date, months, years, days & present date)  & then click on the Search button to execute.




The Child item ledger details will be displayed as shown below:


Click on Document/Voucher number (Doc/Voucher No.) to view as shown below:



The payment voucher will be displayed after clicking on /Voucher number (Doc/Voucher No.):