An account is a financial record of any expense , susceptibility, asset, tax revenue and equity. The chart of accounts is a record of all financial statements used in the general ledger of a professional organization (Sumariwalla & Levis, 2000). An accounting software aggregates data into an entity’s account.
In a customer interview process, it is important to find out how customers manage their accounting documents, file them and how they can quickly retrieve them, how they can recover all of their paid invoices at the end of a specified financial period and how they can pile all of their assets into different types of expenses and income. A well-kept chart of accounts can be assistive in keeping the financial condition of the customer’s company in a good position.
A chart of accounts in organized into assets, financial gain (income), liabilities and expenses. The asset section will include everything you manage that has value. Liabilities will contain things like loans, mortgages, payroll and income taxes, personal bills and promissory notes (Arndt, 1990). Income is the money received while expenses are money spent on doing something. It is important to customize your chart of accounts to adapt it more precisely to your business so as to address the special needs according to your preferences. In a service business, an owner equity account should be included in the chart of accounts for each member of the business firm.
The primary distinction between a retail business and a service business is that the retail business has to stock inventory. The inventory is part of the expense (the price of goods cleared). Others may see it as asset inventory. In a retail business, different accounts in the chart of accounts should be carried out for direct pricing expenses referred to as overhead tracking.