# Accounting Codes & Chart of Accounts

IFRS-Compliant Double-Entry Accounting System

## Overview

The Chart of Accounts (COA) is the backbone of your accounting system. It provides a structured framework for recording all financial transactions and generating financial statements that comply with International Financial Reporting Standards (IFRS).

## Account Types

Assets

Normal Balance: Debit

Examples:

- Cash
- Accounts Receivable
- Inventory
- Equipment
- Buildings

Liabilities

Normal Balance: Credit

Examples:

- Accounts Payable
- Loans Payable
- Accrued Expenses
- VAT Payable
- Deferred Revenue

Equity

Normal Balance: Credit

Examples:

- Owner's Capital
- Retained Earnings
- Common Stock
- Dividends
- Treasury Stock

Revenue

Normal Balance: Credit

Examples:

- Sales Revenue
- Service Revenue
- Interest Income
- Rental Income
- Commission Income

Expenses

Normal Balance: Debit

Examples:

- Cost of Goods Sold
- Salaries Expense
- Rent Expense
- Utilities
- Depreciation

## Chart of Accounts Structure

#### Hierarchical Organization

Accounts are organized in a tree structure with parent-child relationships:

###### Example Structure:

- 1000 - Assets (Parent)
  - 1100 - Current Assets (Parent)
    - 1110 - Cash on Hand
    - 1120 - Bank Accounts
    - 1130 - Accounts Receivable
    - 1140 - Inventory
  - 1200 - Fixed Assets (Parent)
    - 1210 - Land
    - 1220 - Buildings
    - 1230 - Equipment
    - 1240 - Accumulated Depreciation

Best Practice: Use a consistent numbering system. For example:

- 1000-1999: Assets
- 2000-2999: Liabilities
- 3000-3999: Equity
- 4000-4999: Revenue
- 5000-5999: Expenses

## Key Features

#### Sub-Accounts

- Create unlimited sub-account levels
- Organize accounts hierarchically
- Roll up balances to parent accounts
- Flexible reporting at any level

#### VAT Integration

- Link VAT rates to accounts
- Automatic VAT calculations
- Separate VAT tracking accounts
- VAT reports and returns

#### IFRS Compliance

- Standard account classifications
- Proper balance sheet ordering
- Income statement categorization
- Audit-ready reports

#### Account Controls

- Active/Inactive status
- Prevent deletion if used
- Parent/sub-account validation
- Balance type enforcement

## Default System Accounts

Code | Account Name | Type | Purpose
--- | --- | --- | ---
`1000` | Assets | Asset | Parent account for all assets
`1100` | Cash & Bank | Asset | Current liquid assets
`1130` | Accounts Receivable | Asset | Money owed by customers
`1140` | Inventory | Asset | Products for sale
`2000` | Liabilities | Liability | Parent account for all liabilities
`2100` | Accounts Payable | Liability | Money owed to suppliers
`2110` | VAT Payable | Liability | Output VAT collected
`3000` | Equity | Equity | Owner's equity and capital
`4000` | Sales Revenue | Revenue | Revenue from sales
`5000` | Cost of Goods Sold | Expense | Direct costs of sold items
`5100` | Operating Expenses | Expense | Business operating costs

## Creating New Accounts

##### Step-by-Step Guide

1. Navigate to Chart of Accounts

   Go to Accounting ? Chart of Accounts

2. Click "New Account" Button

   Opens the account creation form

3. Enter Account Details:
   - Account Code: Unique numeric code (e.g., 1150)
   - Account Name: Descriptive name (e.g., "Prepaid Expenses")
   - Account Type: Select from Asset, Liability, Equity, Revenue, Expense
   - Parent Account: Optional - select if this is a sub-account
   - VAT Code: Optional - link VAT rate if applicable
   - Description: Optional notes about the account
4. Save the Account

   Account becomes immediately available for transactions

Important:

- Account codes must be unique
- Choose appropriate account types for correct financial statements
- Parent accounts should not have direct transactions
- Cannot delete accounts with transaction history

## Financial Reports

##### Balance Sheet

Assets = Liabilities + Equity

Shows financial position at a specific date

##### Income Statement

Revenue - Expenses = Net Income

Shows profitability over a period

##### Trial Balance

Debits = Credits

Verifies accounting equation balance

## Best Practices

- Use Consistent Numbering: Maintain a logical numbering system across all account types
- Create Sub-Accounts: Break down major categories for detailed tracking
- Document Purpose: Add descriptions to clarify account usage
- Review Regularly: Periodically audit your chart of accounts
- Avoid Duplication: Ensure each account has a unique purpose
- Plan for Growth: Leave number gaps for future account additions
- Follow Standards: Align with IFRS and local accounting regulations
- Inactive vs Delete: Mark unused accounts as inactive rather than deleting