Keep that Chart of Accounts from Exploding
Resist the urge to add yet another account segment or code, and instead consider the following:
- Lifespan
- Budgeting
- Equity Retention
- Transaction Balancing
The above points will help you decide which of the following transactional characteristics is appropriate:
- Projects
- Transaction Codes
- Account Attributes
- Transaction Attributes
- Project Attributes
While the above have different abilities, each can at least be reported on. For example, I can use a Transaction Attribute to report activity group by Location without creating additional Accounts.
Also, I'm always impressed by individuals who can tell me exactly what account '01-4512-22-3-84' is without reference. Instead of referencing numerical code tables, or worse sticky notes, you can book transactions using plain English.
The table below outlines the basics of each characteristic.
|
Characteristic |
Retain Equity? |
Budget? |
Require to Balance? |
How many can you define? |
|
Project |
Yes |
Yes |
Yes |
Unlimited |
|
Transaction Code |
Yes |
Yes* |
Yes |
Five |
|
Transaction Attributes |
No |
No |
No |
Unlimited |
|
Account Attributes |
No |
No |
No |
Unlimited |
|
Project Attributes |
No |
No |
No |
Unlimited |
Now that you know account segments aren't the only show in town ... be kind to your Chart of Accounts and keep it from exploding.