They're not completely arbitrary, but there isn't anything that requires
them to be used.
Older software required them to assign accounts to the report writer
software. Quickbooks doesn't need account numbers, but then would sort
accounts by type and then by alpha. So if you wanted to sort your liquid
assets by what is most liquid, in an account number system account 100 would
be Cash on Hand, 110 would be Bank of America......
Under the Alpha sort, Bank of America would be listed first, followed by
Cash on Hand.
In a numeric account system, accounts are generally sorted as follows:
100 = Cash and other liquid assets, accounts receivable, fixed assets, long
term assets, etc.
200 = accounts payable, current notes and loans payable, long term notes and
loans payable, etc
300 = equity type accounts, stock, retained earnings, etc.
400 = sales and operating revenues, etc
500 = cost of goods.
600, 700, 800 = operating costs.
900 = other revenues and expenses
Most decent chart of accounts can be held together by as little as three
numbers, you might want four or more if you want more detail:
710 = Telephone
711 = Local Service
712 = Long Distance
713 = 800 Service
714 = Cell phones
715 = ..............
And you can see how messy it can get if you want to, or need to, get too
Some accounting systems also allow for sub-numbers for projects, cost
centers, jobs, locations, departments, etc.
710.1 is the main office
710.3 is the lake office
710.5 is the mountain job
710.7 is the shipping department.
What ever you decide to use, be sure you plan in advance how far you will
need to carry out the numbers, if you'll be adding accounts in the future,
Thanks Paul for the info. So it sounds like it's arbitrary, but
generally good to be familiar for the CPA. I'm into whatever is going to
save our guy time. If most people are following this type of numbering
scheme, I'll not deviate. :)
Paul Thomas, CPA wrote:
BeanSmart.com is a site by and for consumers of financial services and advice. We are not affiliated with any of the banks, financial services or software manufacturers discussed here.
All logos and trade names are the property of their respective owners.
Tax and financial advice you come across on this site is freely given by your peers and professionals on their own time and out of the kindness of their hearts. We can guarantee
neither accuracy of such advice nor its applicability for your situation. Simply put, you are fully responsible for the results of using information from this site in real life situations.