To be successful in the services market and ensure a good position against the competition, it is essential that managers aim to improve their knowledge of management. In this regard, among the issues that should be worked on in the business, we can mention various aspects of the financial sector, such as the implementation of a good chart of accounts for the company.
Basically, this concept refers to a set of transactions that represent the economic and financial demand of the company. Thus, the main goal is to organize the accounting work related to the records of operations. This plan also guides the preparation of the financial statements, as well as the business’s financial information, such as the Balance Sheet and Cash Flow.
Due to its importance, it is essential to know how to develop this strategy in your institution. To help with this topic, we’ve listed some tips in this article. Check it out!
Describe the account groups
First of all, we must emphasize that a company’s accounts will always have characteristics that are specific to your business. Therefore, to have an efficient chart of accounts, you need to create something personalized in order to meet the enterprise’s registration requirements.
The first step in setting up this strategy is to describe the groups in the chart of accounts. In this case, it is divided into four groups. The first group is “assets”. It can be divided into current, non-current, long-term, fixed and intangible assets, and investments. There is also the group of “liabilities”, which includes current and non-current liabilities and equity. In addition to these, we have two other groups: revenues and expenses.
Structure the information into levels
Another important point is that this accounting strategy should be set up in a visual structure in the form of a “tree”, so that there are levels that branch into sub-levels and so on. Furthermore, it is interesting to start organizing the processes by revenues, then by expenses, until finally arriving at the final result.
Carry out the breakdown of revenues and expenses
In the case of revenues, the type of product or service that justifies the inflow of funds in the institution should be established, as well as the nature of the transaction and the categories to which it belongs. It may also be useful to separate into subgroups, as is the case of “Revenue resulting from product sales” and “Revenue obtained from services”.
Another tip is to detail the direct expenses that are related to the revenues achieved, such as raw materials, sales commissions, logistic transportation, cost of goods sold, etc.
Well, these were the main information about how to prepare a chart of accounts for your company. It is worth noting that this strategy has the advantage of allowing for a better view of the company’s assets, liabilities, revenues and expenses, making processes more organized and effective.
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