Better reports with Better chart of Accounts.
We can get better reports with better Chart of Accounts.
Once it is decided what is reporting needs, we need to frame up what chart of accounts would be used at data entry level which can help to ensure that we get required reports which can help in decision making.
Importance of Framing better Charts of Accounts
Charts of accounts are one listing of all the accounts in such an order that it helps in making financial reports efficiently and easily. Accounts are allocated with a specific code so that the tracing can be done hinder free. We can choose the format and other information for the Charts of Accounts after deciding the priority of the report needed to be made using that content.
We get better reports if the Charts of Accounts are made properly. Generally, COA (Charts of Accounts) contains account name, account code, and a brief description. COA serves as a base for a business’s record keeping. It creates a logical flow which helps to see and analyze the information filled in COA. A carefully built Charts of Accounts provides not only the information but also helps a company to manage with financial reporting standards.
But before all this, setting up the priority is needed. So, if you want to make a report regarding Payroll then create your COA according to that. Make separate accounts for different subcategory like wages, bonus, repairing, health insurance etc. give each account a proper code and select a category for them, in this case of Payroll, it is the expensive one.
Like Payroll, there can be different scopes of business like Cash account, Purchase or Sale accounts and much more. So, firstly select one core account and according to that scrutinize what other sub-accounts would be for preparing the report. It will also help in knowing what is the basic information needed at the time of data entry. The more precise the Charts of Accounts, the more suffice and accurate information it will deliver. It will eventually result in the easiness of getting better reports on your hand at the end.