Chart of Account and Numbering

Some options

1.  Small Business Proper Account Numbering

    1000 Asset Accounts   

     2000 liability accounts

     4000 sales accounts

Department Categories

Each department contained within the transaction category is assigned a number. For example, each asset starts with number one. The petty cash account could be numbered 1000, the checking account numbered 1020 and the savings account numbered 1030. Under liabilities, the accounts payable could be numbered 2000, accrued expenses 2100, and wages payable 2200. Make your general ledger numbering system large enough that you can add new accounts as you need them.

Individual Accounts

Every individual account within each department category is assigned a number. For example, your accounts payable general ledger account number is 2050. You can assign creditor ABC Corporation number 2051, creditor DEF Corporation number 2052 and creditor XYZ Corporation number 2053. When you pay creditor ABC Corporation's invoice, you credit account number 2051 with the payment.

Sales Accounts

Your general ledger numbering system can keep track of your business income. Each source of income can be assigned a number to help with this. For example, your sales transaction category number is 4000. By assigning account number 4100 to product one, account number 4200 to product two and account number 4300 to product three, you can see how much income each product generates.

2.    The 3 digit code:   From Accounting Tools

Assets - Account codes 100-199

Liabilities - 200-299

Equity accounts - 300-399

Revenues - 400-499

Expenses - 500-599 

We can have 3 sets of number account numbering (the 7 numbers account

numbering

 SBUcode    +   Department  Code   +   Account Number

     xx                         xx                            xxx

1.  We can set up SBU account:

  01     La Union

  02    Pangasinan

 03   Calamba

 04    Calapan

05    Oton

06    BPI

07   Majorem Lending

08   Destiny

09  CMCS

10  Cremation 

     b. Department code:

      01.  Accounting

     02.  Operations

      03.  Marketing

Example:   01  03  500

So this is La Union expense account

3.  The quickbooks account numbering system:

  From Informit; Quickbooks Account Numbering System

QuickBooks assigns numbers to each existing account, based on a standard system of numbering as follows:

1000s: Numbers in the 1000s are assets

2000s: Liabilities

3000s: Equity

4000s: Income

5000s: Cost of Sales

6000s, 7000s: Other operating expenses

8000s: Other income

9000s: Other expenses

4. Chart of Accounts Best Practices:

From Accounting Tools

Chart of Accounts Best Practices

The following points can improve the chart of accounts concept for a company:

• Consistency. It is of some importance to initially create a chart of accounts that is unlikely to change for several years, so that you can compare the results in the same account over a multi-year period. If you start with a small number of accounts and then gradually expand the number of accounts over time, it becomes increasingly difficult to obtain comparable financial information for more than the past year.
• Lock down. Do not allow subsidiaries to change the standard chart of accounts without a very good reason, since having many versions in use makes it more difficult to consolidate the results of the business.
• Size reduction. Periodically review the account list to see if any accounts contain relatively immaterial amounts. If so, and if this information is not needed for special reports, shut down these accounts and roll the stored information into a larger account. Doing this periodically keeps the number of accounts down to a manageable level.

If you acquire another company, a key task is shifting the acquiree's chart of accounts into the parent company's chart of accounts, so that you can present consolidated financial results. This process is known as mapping the acquiree's information into the parent's chart of accounts.

Accounts:

Assets:

• Cash (main checking account)
• Cash (payroll account)
• Petty Cash
• Marketable Securities
• Accounts Receivable
• Allowance for Doubtful Accounts (contra account)
• Prepaid Expenses
• Inventory
• Fixed Assets
• Accumulated Depreciation (contra account)
• Other Assets

Liabilities:

• Accounts Payable
• Accrued Liabilities
• Taxes Payable
• Wages Payable
• Notes Payable

Stockholders' Equity:

• Common Stock
• Preferred Stock
• Retained Earnings

Revenue:

• Revenue
• Sales returns and allowances (contra account)

Expenses:

• Cost of Goods Sold
• Advertising Expense
• Bank Fees
• Depreciation Expense
• Payroll Tax Expense
• Rent Expense
• Supplies Expense
• Utilities Expense
• Wages Expense
• Other Expenses

5. The Chart of Accounts with the number:

   From the Accounting tools 3 digit account numbering

Account Number	Description
010	Cash
020	Petty cash
030	Accounts receivable
040	Reserve for bad debts
050	Marketable securities
060	Raw materials inventory
070	Work-in-process inventory
080	Finished goods inventory
090	Reserve for obsolete inventory
100	Fixed assets – Computer equipment
110	Fixed assets – Computer software
120	Fixed assets – Furniture and fixtures
130	Fixed assets – Leasehold improvements
140	Fixed assets – Machinery
150	Accumulated depreciation – computer equipment
160	Accumulated depreciation – Computer software
170	Accumulated depreciation – Furniture and fixtures
180	Accumulated depreciation – Leasehold improvements
190	Accumulated depreciation – Machinery
200	Other assets
300	Accounts payable
310	Accrued payroll liability
320	Accrued vacation liability
330	Accrued expenses liability – other
340	Unremitted sales taxes
350	Unremitted pension payments
360	Short-term notes payable
370	Other short-term liabilities
400	Long-term notes payable
500	Capital stock
510	Retained earnings
600	Revenue
700	Cost of goods sold – materials
710	Cost of goods sold – direct labor
720	Cost of goods sold – manufacturing supplies
730	Cost of goods sold – applied overhead
800	Bank charges
805	Benefits
810	Depreciation
815	Insurance
825	Office supplies
830	Salaries and wages
835	Telephones
840	Training
845	Travel and entertainment
850	Utilities
855	Other expenses
860	Interest expense
900	Extraordinary items

            

From Marty Zigman setting up Chart of Accounts and Number

Other Samples  (using 4 digits)

3 digit account numbering

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