Sydney Accountants – Things to know

While downloading your new accounting software, you were most likely asked to use one of the default account charts included with the program, or create your own. Unless you are well acquainted with setting up a set of financial books, you’ll want to choose from one of the selections available. So even though you have the experience of choosing one of the defaults you’ll save a lot of time. But if I don’t need all these accounts and how do I know which accounts I should hold, you might ask what. And should I or should not be using a numbering system? Let me support you by describing what a map of accounts is and how the default list can be tailored to your needs. Checkout Accountant Penrith Near Me.

First of all, in its simplest definition a Chart of Accounts is a list of accounts used to track all financial transactions that flow through a company. Usually, this list is divided into eight segments: Assets, Liabilities , Equity , Income, Products Sold, General and Administrative Expenses, Other Revenue and Other Expenses. You may see Equity known as Investment, Cost of Goods Sold known as Direct Costs, and General and Administrative Expenses known as Expenses. Companies wishing to report Sales Expenditures such as fees, salaries and related sales personnel expenses and other costs directly related to sales operation could also incorporate a Sales Expense section.

The first three segments reflect the accounts you would find on a balance sheet and split them into sub-sections. Sub-segments for Current Assets, Fixed Assets and often Other Assets may be found under Assets. Current assets accounts are used for assets that can quickly be liquidated into cash, such as securities, stocks, receivables accounts and notes, and deposits. You may choose to create a further section when setting up more than one cash or receivable account. This will allow you, for example, to list all of your cash accounts on your balance sheet while keeping a separate reporting account for each bank account. Fixed Asset accounts are used to record the expense of purchased items with a useful life lasting beyond one year. The Segment of Fixed Assets also involves counteraccounts (reduction of the value of an asset) used to monitor the depreciation of the fixed assets. Usually such counter-accounts are called “Depreciation Allowance-( name of type of fixed asset).” You should have a fixed asset account for each form of fixed asset you buy, and a corresponding depreciation account. Several examples are upgrades to the cars, office equipment and furniture, renovation or leasehold. The category Other Assets is used on all other asset types.