Introduction:
Why is the structure of a chart of accounts important? The chart of accounts NetSuite tool determines the level of detail available for financial reporting. Although a chart of accounts will vary by a business entity in NetSuite, items drive postings first to the account structure making this the foundation of the financial reporting.
To use warehouse analogy accounts are the like “bins” that hold accounting transactions. The chart of accounts is simply the organized list of all the bins and shelves. To illustrate, when a computer company records the sale of a laptop, the account will post to the revenue section in the NetSuite chart of accounts and put the sale amount in the account sales laptops, if the company posts to detailed revenue accounts.
Period-end financial statements summarize and group the balances that are in the individual accounts at using a predefined accounting period. Accordingly, financial statements can be no more detailed or informative than the underlying chart of accounts structure.
Process Overview:
How to Create an Account: Financial > Lists > Accounts > New.
Enter the required information. Select Bank as the account type.
Restrict the account.
Conclusion:
In summary, a chart of accounts is a NetSuite tool that provides a business with a complete and accurate listing of each account in their general ledger. Each account will have account names, a brief description of the account, along with an identification code. A chart of accounts can be customized to fit the company’s specific operations. These accounts can also be classified using different classifications (departments, classes, locations). Creating the correct chart of accounts for your business can help you plan for growth and deliver reporting that meets the organizational needs.
In our next Financial Tips & Tricks blog, we will outline how to make the most of organizing classifications and even creating a custom financial segment when required.
Audience:
Administrator, Chief Financial Officer (CFO), Finance Team, Accounts Payable
Keywords:
Elimination Subsidiary, Financials, Finance Fundamentals, Financial Management
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