“Removing Roadblocks on Your Path to Success”
This month: Understanding the Backbone of Your Accounting Systems
Perhaps one of the most intimidating facets of accounting is the Chart of Accounts, which serves as the foundation for how your company’s finances are organized. The Chart of Accounts frequently intimidates business owners without deep accounting expertise, and can often lead to spirited debate amongst accounting professionals. This can lead many to take a ‘set it and forget it’ strategy that can create more complexity and less accuracy than you would like to have in your business’s books.
A well-constructed Chart of Accounts can make your entire business run more smoothly, so we’d like to take the opportunity to better understand this key accounting concept.
In short, the Chart of Accounts is a created list of all accounts used by a business to define each class of items for which money is spent or received. Its purpose is 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.
If you structure your Chart of Accounts correctly from the onset, you will have access to valuable reports to track your business performance. To help you learn more, we’ve put together two easy-to-understand walk-throughs of the Chart of Accounts:
Mastering the Chart of Accounts – Part 1: Income and Expense.
Mastering the Chart of Accounts – Part 2: Balance Sheet Accounts: Assets, Liabilities, and Equity.
We think these two posts will help debunk some common misunderstandings about your accounting system and enable you to make even better decisions to run your business! We’d love to hear your feedback.
March 2011 Newsletter
This newsletter is intended to provide generalized information that is appropriate in certain situations. It is not intended or written to be used, and it cannot be used by the recipient, for the purpose of avoiding federal tax penalties that may be imposed on any taxpayer. The contents of this newsletter should not be acted upon without specific professional guidance. Please call us if you have questions.
Copyright 2011, Pacific Crest Group, All rights reserved.