July 31, 2019

Top 3 Reasons for creating Chart of Accounts for your Business

Naveen Shayan

LedgerMax specialist

Commonly known as COA, the chart of accounts is a tool that lists each and every account used in the general ledger of a business. An accounting software basically uses this chart to gather information into the financial statement of an entity. In general, the COA is arranged with respect to the account number, so as to make the process of locating particular accounts easily. Thus, the chart of accounts contains the name of accounts, ID codes and their brief descriptions.In actual fact, the COA works as the basis for the financial listing and records system of an organization. It delivers a sound structure that simplifies the inclusion of new accounts and removal of old ones. The accounts are usually recorded in the COA as per their presence in the financial statements of the company; where first comes the accounts for balance sheets and then the accounts for income statements.

Top 3 Reasons to create COA
  1. The most important reason of creating COA is to separate out expenses, liabilities, assets and revenues in order to allow viewers to summarily get the true impression of the financial health of the business.
  2. A well-made chart of accounts not just completely caters to the information requirements of the organization, but also aids a business to abide by the standards of financial reporting.
  3. The COA can be customized as per the company requirements. It gives organizations the flexibility within operating expenditures and operating revenues categories.

The chart of accounts can possibly be as complex and huge as the organization itself. This totally depends on the size of the organization; for instance, a multi-national company with more than a few divisions may require loads of accounts, while a small business owner like a local seller may want just few accounts. Thus, creating chart of accounts is the very first step you take while setting up your company's accounting system. This chart of accounts is a framework that works as an index for all the financial accounts of your business and LedgerMax makes it very easy for you to create it in seconds! This is how it works:


Our Featured Blog Posts

January 28, 2023
Like every other country in the world, small business owners in Pakistan also aim to increase their profit every year as compared to the profits earned in the preceding year. Fortunately, this is doable if they know the correct tactics and policies. So whether your small business in Pakistan had a strong 2022 or experienced some fluxes; let’s focus on what should be your strategies to make 2023 a thriving year for your small business.
Read more
December 9, 2022
Things are evolving and advancements in the field of business marketing are also replacing conventional methods rapidly. In Pakistan, small businesses are also remodeling their marketing strategies and opting for digital marketing to capture their target market in a more effective way. As a matter of fact, all small businesses in Pakistan aim to get their customers’ attention.
Read more
November 3, 2022
The significance of supply change management for a business is massive. It is a vastly comprehensive system that all organizations use in order to put up their products; starting from acquiring raw materials, processing them and finally delivering the end product to the consumer. Thus, an efficient supply chain is all about improving the functionality of operations and making them more well-organized and swift.
Read more