Chart of accounts – a preliminary look

Proper accounting requires the recording of commercial transactions in an understandable way. Regardless of whether the cash values ​​are incoming or outgoing, each transaction must be accounted for correctly from one account to another according to the double entry principles .

In order to allow the necessary clarity, an understandable accounting structure is indispensable, and even if there are no specific accounting regulations in Italy, it can be organized in such a way as to guarantee that the balance sheet and the income statement follow the envisaged scheme.

The chart of accounts must provide a series of information also for external subjects , both analytical information, with the sub-accounts, and summary, with the ledger accounts, used to determine the balance of the accounts used in the double entry in the journal). But now let’s try to clarify what a chart of accounts is.


  1. What is a chart of accounts?

What is a chart of accounts?

The chart of accounts consists of a document containing the e l encounters of all the accounts used by a company (or even by a private individual who is obliged to use the journal) for double-entry surveys. The accounts are of an economic, patrimonial and order nature.


Chart of accounts: the chart of accounts is essentially a list of items (accounts) in which all the accounting data, necessary for a company, for the double entry are recorded. It is not standardized by law and can therefore be customized by each company according to its needs.

They are usually preceded by a code ( account code ), so that you can recall a specific account uniquely in the accounting software. Usually this code is divided into two parts by a point: the grouping is indicated before the point, while the account concerned is specified after the point.

The chart of accounts must consist of the framework of accounts and the explanatory notes . While the chart of accounts is divided into the primary account, sub-accounts and balance sheet item in which it is to be inserted, the explanatory notes serve more, as the word itself says, to explain the functioning of the sub-accounts as well as the meaning of the values ​​included therein. In addition to the code, the name of the sub-account and the indication of the grouping to which it belongs, the explanatory note should contain the content of the sub-account, its operation and any related notes.

The chart of accounts must comply with current legislation, making the compilation of the financial statements and income tax returns as simple as possible. As already mentioned, the chart of accounts is divided into groups (or masters), accounts and sub-accounts and must comply with current legislation: even if theoretically it can be set freely , usually a predefined scheme is followed, in order precisely to make it easier the preparation of the financial statements and to simplify the transfer of values.


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