Answer to Question #316065 in Management for angel

Question

in your own opinion, why do companies need to create their personalized chart of accounts

Answer 1

A chart of accounts is a list of financial accounts set up, usually by an accountant, for an organization, and available for use by the bookkeeper for recording transactions in the organization's general ledger. A Chart of Accounts is important because it is designed as a way to separate expenditures, revenue, assets, and liabilities, so a business can have a clear understanding and view of their overall financial health. It allows the business to break down all the transactions that the business made during a specific period into different subcategories. By separating out revenue, liabilities, assets, and business expenditures, a chart of accounts enables the business to gain insight into the effectiveness of different areas of the business. One can see exactly where the business is making and spending money. This can be everything from a new bank loan, an invoice from a client, or a receipt for a new office computer.