Managing Chart of Accounts through Deskera ERP

A chart of accounts (COA) is a created list of the accounts used by an organization to define each class of items for which money or the equivalent is spent or received. It is used 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. Before calculators/computers came into existence, accounting was performed by hand in a ledger. A separate ledger was maintained for similar or related entries and this was called an Account. For a small business, the group of ledgers was often kept in one or more books. A Chart of Accounts (COA) literally means a list of ledger accounts that are to be maintained in the Client’s accounting system. A COA is required before a Client can be created in the system, making the COA one of the first elements that must be completed during the implementation of the software.

Nomenclature, Classification and Codification

Each account in the chart of accounts is typically assigned a name and a unique number by which it can be identified. Account numbers are often five or more digits in length with each digit representing a division of the company, the department, the type of account, etc. The first digit might signify if the account is an asset, liability, etc. For example, if the first digit is a “1” it is an asset. If the first digit is a “6” it is an operating expense. A gap between account numbers allows for adding accounts in the future. The following is a partial listing of a sample chart of accounts.

Types of Accounts

Within the chart of accounts, the accounts are typically listed in the following order Asset accounts: represent the different types of economic resources owned or controlled by business, common examples of Asset accounts are cash, cash in bank, building, inventory, prepaid rent, goodwill, accounts receivable[1] Liability accounts: represent the different types of economic obligations by a business, such as accounts payable, bank loan, bonds payable, accrued interest.[citation needed] Equity accounts: represent the residual equity of a business (after deducting from Assets all the liabilities) including Retained Earnings and Appropriations.[citation needed] Revenue accounts or income: represent the company’s gross earnings and common examples include Sales, Service revenue and Interest Income.[citation needed] Expense accounts: represent the company’s expenditures to enable itself to operate. Common examples are electricity and water, rentals, depreciation, doubtful accounts, interest, insurance.[citation needed] Contra-accounts: Some balance sheet items have corresponding contra accounts, with negative balances, that offset them. Examples are accumulated depreciation against equipment, and allowance for bad debts against long-term notes receivable. Within the categories of operating revenues and operating expenses, accounts might be further organized by business function (such as producing, selling, administrative, financing) and/or by company divisions, product lines, etc. Managing Chart of Accounts through Deskera ERP Deskera ERP provides single integrated view of all enterprise accounts which can be viewed through an interactive ‘Chart of Accounts (COA)’ under Account Management. COA is further divided into two main heads:

COA Reports
Account Types

COA Reports in Deskera ERP

COA Report is a comprehensive report listing all the details of accounts like accounts name, account type, opening balance and opening balance type. You can also add new account to the existing list of accounts, edit or delete the existing accounts. You can also export the COA report to an external location in convenient formats like PDF and CSV.

COA Reports in Deskera ERP

Some of the features of Deskera COA Reports are:

Add New Account: You can add new account to the existing list of accounts. A pop-up window will appear where in you can enter all the details related to account. And then you can save the information to add a new account to the list of accounts.

Edit the Report: If you want to carry out changes in any of the fields of a particular account, you can do this by editing the report in Deskera ERP. You can edit account for carrying out changes in the accounts you want to. And finally you can save the details to edit the account and update it in the list of accounts.

Export the Report: The COA report can be exported to an external location in convenient formats like PDF and CSV for using them at a future point of time.

All the account types in the system are listed with their names, nature and their effect on gross profit. You can also add new account types and also modify or delete the existing ones.

GST Accounts

All GST Accounts are pre-configured and can be viewed under the Chart of Accounts. You can view the GST accounts, by opening Chart of Accounts and searching under it.

Forex Gain/Loss Account

Forex Gain/Loss account is setup in Master Configuration. Once it is mapped, you may view it under Chart of Accounts by typing the name of account mapped to bring its details up.

Features of Account Type in Deskera ERP

Add New Account type: You can add new account type. A pop-up window will appear where in you can enter all the details related to account. And then you can save the information to add a new account to the list of accounts.

Edit Account type: You can carry out changes in the account types.

Drawbacks of Managing Chart of Accounts using traditional methods

No standardization.
Manual management of accounts.
Reports are difficult to understand.
No monitoring and tracking of accounts.

Benefits of Managing Chart of Accounts using Deskera ERP

It provides ‘One View’ of the organization.
Easy MIS reporting: Quick and easily understandable reporting.
Quick consolidation: No fancy account mapping rules required.
Better management control throughout the life cycle of the chart of accounts.
Standardized process.
Close monitoring and tracking of accounts.

Hence, Deskera ERP provides a very innovative and useful feature for managing the Chart of Accounts in a hassle free manner. It is a beneficial tool to conduct a detailed view of the Chart of Accounts. If properly done, it can give a clear understanding of the future road map of the organization, thorough knowledge of the current accounting principles, processes, policies and standards. The end result is a tightly knit organization flexible enough to handle local accounting exceptions.

All the account types in the system are listed with their names, nature and their effect on gross profit. You can also add new account types and also modify or delete the existing ones.

GST Accounts

All GST Accounts are pre-configured and can be viewed under the Chart of Accounts. You can view the GST accounts, by opening Chart of Accounts and searching under it.

Forex Gain/Loss Account

Forex Gain/Loss account is setup in Master Configuration. Once it is mapped, you may view it under Chart of Accounts by typing the name of account mapped to bring its details up.

Features of Account Type in Deskera ERP

Add New Account type: You can add new account type. A pop-up window will appear where in you can enter all the details related to account. And then you can save the information to add a new account to the list of accounts.

Edit Account type: You can carry out changes in the account types.

Drawbacks of Managing Chart of Accounts using traditional methods

No standardization.
Manual management of accounts.
Reports are difficult to understand.
No monitoring and tracking of accounts.

Benefits of Managing Chart of Accounts using Deskera ERP

It provides ‘One View’ of the organization.
Easy MIS reporting: Quick and easily understandable reporting.
Quick consolidation: No fancy account mapping rules required.
Better management control throughout the life cycle of the chart of accounts.
Standardized process.
Close monitoring and tracking of accounts.