21st Century Accounting Tutorials - General Ledger

Designing Your Chart of Accounts

At the heart of your accounting system, your chart of accounts allows you to record and track your business transactions by type of transaction. The 21st Century Accounting flexible account structure gives you the ability to post by department, by division, by cost center, by revenue center, or by any other accounting subdivisions your company requires.

If you choose, when you create a company, to enter your Chart of Accounts from scratch, you enter the accounts in the General Ledger/Configure/Chart of Accounts window.

If you decide to use one of the model companies, use the Chart of Accounts window to customize the chart according to your company's needs (adding and deleting accounts and changing account names and numbers as necessary).

You cannot move accounts from one category to another in the Chart of Accounts. For unusual reporting requirements, you can change account categories in a Financial Report Template that includes GL accounts "explicitly."

Account segments

21st Century Accounting general ledger account numbers can consist to up to 5 segments, for a total of 20 alphanumeric characters (including separators).

Traditionally, the primary or account segment represents the type of transaction (sales, cost of goods, revenues, various expenses, and so forth). Additional segments can represent departments, divisions, regions, stores, right down to departments within stores or individuals in, for example, a law firm.

A well thought-out chart of accounts also provides the basis for detailed analysis—through financial reports—of your business performance from day-to-day and over time.

Think about your company's current and future accounting needs before you set up your account structure. Make a list of the accounts you use now and consider your company's potential for growth.

But remember that you can increase the length of segments or add new segments (up to the 5-segment, 20-character limit) at any time as your needs change.