Hello, I'm not an accountant but a small business owner. I'm in the process of designing my COA and I'd like to get some professional opinions. Since I will be using a rather high end accounting system that uses a SQL backend and since I'm well versed in SQL I'd like to setup my COA so as to track as much info as possible. It's a retail business selling inventory.
So rather then have all my items post to a single inventory account I'd like to have a separate inventory, COGS, Sales accounts for each item.
For example here is an inventory item account: 1300-01-0001 Where the first segment 1300 is the main Inventory account The second segment 01 is the item category The last segment 0001 is the item itself.
To get the total value of inventory in my GL to compare to my subledger I just sum all 1300 accounts. If I need to break it down further I sum by 1st and 2nd segment. To get the total in inventory for an item, I just lookup by the last segment.
COGS and Sales will behave the same way. Opinions?
Thanks! G