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 Parent account for all assets
1100 Cash & Bank Current liquid assets
1130 Accounts Receivable Money owed by customers
1140 Inventory Products for sale
2000 Liabilities Parent account for all liabilities
2100 Accounts Payable Money owed to suppliers
2110 VAT Payable Output VAT collected
3000 Equity Owner's equity and capital
4000 Sales Revenue Revenue from sales
5000 Cost of Goods Sold Direct costs of sold items
5100 Operating Expenses 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
Back to Help Center Open Chart of Accounts