A template Chart of Accounts is a standard set of master GL accounts. As each department is created within MGL, these master GL accounts can be copied to each department to ensure consistency within the actual Chart of Accounts. A prefix to a GL account is used to distinguish each GL account within a department. For example:
The Chart of Accounts for a small organisation can be extended for a multi-department organisation.
Sales and Cost of Sales can be dissected in any number of ways, such as by product categories, sales territories, warehouses, etc. The calculation of various margins may also be a consideration, where Sales versus Cost of Sales reveals Gross Margin, and Gross Margin versus Direct Expenses, Factory Costs or Manufacturing Costs reveals Gross Profit. The calculation and compilation of these margins provides management with a very comprehensive and detailed analysis of the organisation's main source of income, the costs associated with earning that income and the resulting profits made before operating expenses.
Operating expenses may be another area where major dissections occur. Motor vehicles may need to be reported by vehicle and cost. Telephone costs may need to be split between various salespeople for analysis. Wages may need to be reported in various categories, such as by factory, sales or administration. All these considerations need to be made when implementing your Chart of Accounts.
However, the Balance Sheet section of the Chart of Accounts can be formulated in the same way as a simple Chart of Accounts. The Balance Sheet is a statutory requirement and the format used for smaller organisations will satisfy any private business.
For information about setting up your template Chart of Accounts, refer to "File - Template".