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A chart of accounts is a listing of the name of the accounts that a company has identified for recording transactions into general ledger. the company can tailor its chart of accounts to best suit its needs. Every business is different and needs the chart of accounts to be unique to its own industry.
The chart of accounts are listed as:
Balance Sheet = assets, liabilities and owners equity
Income statement = revenue, cost of goods sold, wage and administrative expenses.
In this tutorial we are going to use Simply Accounting software program version 2009, and will learn how to create a chart of accounts from scratch. Open your Simply Accounting software to home screen. Home screen is shown below.
Next, click on Chart of Accounts. Your screen should look like this:
You should see a yellow screen with heading. This screen will fill up as you creat accounts in different categories.
So, lets begin. click on file – create. your screen should look like this:
The chart of account represents the following categories.
1000 to 1999 is set for current and long term assets
2000 to 2999 is set for current and long term liabilities
3000 to 3999 is set for owners contribution, current and retained earnings
4000 to 4999 is set for Revenue
5000 to 5999is set for cost of goods sold, wages, and administrative expenses.
lets creat a few accounts. From the top choose the account number, I have 1055 and my description for that account is Savings Bank Account.
The type is a subgroup account and on the chart of account report it is represented with a letter “G”
Under information GIFI stands for General Index Of Financial Information created by the Canada Revenue Agency in 1999, the GIFI is a system which assigns a unique code to a list of items commonly found on income statements, balance sheets, and statements of retained earnings.
The purpose of the GIFI is to allow the CRA to collect and process financial information more efficiently; for instance, the GIFI lets the CRA validate tax information electronically rather than manually.
For the purpose of setting up the chart of account I will allow Simply Accounting to designate the GIFI Codes.
Click in the box and you can choose to omit this account from financial statements if the balance is zero.
Click in the box if you are using project allocation.
Click on the next tab “Class Options“, your screen should look like this:
It is important to give your accounts a Class Option. The class option for this account is Bank. If you drop down the menu you will see a list to choose from.
Now that you know how to create your chart of accounts, I have a sample one for you to look at and you can adopt the accounts for your business and add more if needed.
Here is a sample of a chart of accounts. Click on the image for a full view.
I hope this tutorial has helped. Drop me a note at http://www.accompservices.ca/blog for any questions.