The chart of accounts is one of the main tools of economic and financial control of an organization. It is a set of accounts that represents transactions (income and expenses) in a strategic way and facilitates the financial management of your business.
It is a fundamental instrument for the administration of the company and also in the preparation of the financial statements. Continue reading to better understand what chart of accounts is, its importance and how to organize it.
What is a chart of accounts?
Chart of accounts is a document that categorizes the organization’s accounts. The set of entries and exits are classified and organized to represent the financial, patrimonial and economic movements of the company.
Here are the two types of chart of accounts most used:
Accounting chart of accounts
The accounting chart of accounts needs to be developed in accordance with the rules of Law No. 6,404 / 76 and the Brazilian Accounting Standards. Therefore, the instrument’s structure must follow a basic pattern and consequently it is similar to the document of other companies.
The information obtained in the accounting chart of accounts will be used as a basis for the preparation of financial statements, such as the Balance Sheet and the Cash Flow Statement.
Management Chart of Accounts
Unlike accounting, the managerial chart of accounts does not need to follow a standard. It is carried out in a more simplified way, to be used in business administration.
This type of chart of accounts assists in the organization’s decision making and facilitates the preparation of financial reports.
The document can take advantage of the information in the accounting chart of accounts, and organize the data strategically, based on the company’s management priorities and needs.
Integration of plans
As already mentioned, the accounting chart of accounts is used to produce the management chart of accounts. To facilitate the process, it is interesting to automate it using specialized software.
What is the chart of accounts for?
The accounting of a company is responsible for developing several financial statements, reports, documents and controls . For this, he must organize the entrances and exits according to the needs of the company and the legal requirements.
For the work to be efficient, all professionals and sectors involved need to follow the same model, that is, follow a standard to ensure optimized communication.
In other words, with the chart of accounts each transaction is treated in the same way in statements, reports and other documentation. Check out what the tool is for:
- development of financial statements;
- analysis of the financial, economic and patrimonial situation;
- standardization of accounting records;
- preparation of the corporate budget;
- optimization of accounting and financial sector work;
- providing useful data for business administration.
Ideal chart of accounts structure
The structure of the document is different according to the type of chart of accounts being made. The chart of accounts must be divided into:
- Assets: current, non-current, long-term assets, investments, fixed assets, intangible assets;
- Liabilities: current, non-current, shareholders’ equity.
- Result for the year: income and expenses.
The management can be organized according to the specific segment and needs of the company, always aiming to classify the cash flow inflows and outflows .
See 4 tips on making a chart of accounts
Now understand the fundamental steps for your development.
- List the information that will be used
It is very important to organize the data present in the chart of accounts to ensure its effectiveness. Therefore, list all the accounts that will enter the document and define the groups in which each one is part.
It is always interesting that the data is organized into levels and sub-levels to facilitate visualization and, consequently, understanding. If necessary, comments and indications of use can be implemented to ensure that the tool is used correctly.
- Understand the differences between the concepts
Those who work with accounting must always study to ensure the quality of their work. This is important to keep up-to-date on updates in the area, new laws and regulations, as well as to ensure that the knowledge acquired does not fall by the wayside.
A common mistake that compromises the quality of any chart of accounts is confusion between the concepts. To avoid problems, it is essential to ensure that all professionals involved know what expenses, costs, expenses are , among other terms that will be present in the tool.
- Take advantage of technology
In the past, the chart of accounts needed to be done with paper and pen – which made the process much longer, more complicated and prone to errors. Fortunately, nowadays there are management software and spreadsheets that make this task much simpler.
Technological tools are useful to develop, feed and visualize the chart of accounts information in the best possible way. It is worth researching to find the alternative that best meets the needs of the business, considering the budget, size and segment of the company.
- Reflect on the structure of the chart of accounts
To understand what data, groups and classifications the chart of accounts will have, it is important to know which reports will be generated. As we have already said, one of the main purposes of this tool is to support the production of financial statements and other financial documents.
Therefore, the necessary information for the elaboration of these documentation must be included in the chart of accounts from the beginning to avoid rework or errors in the interpretation of the data.
As we have seen, the chart of accounts has several benefits for organizations. The instrument standardizes financial transactions, ensures that information will be interpreted properly and contributes to improving decision making. In addition, it is necessary for the fulfillment of tax obligations.
