Chart Of Accounts: Difference between revisions

Latest revision as of 08:16, 9 October 2024

This section of ContactsLaw provides an overview of the chart of accounts. In ContactsLaw, the hierarchy begins with a subscription that encompasses the management of your business. Within each subscription, you can create and manage one or more businesses, and all accounting activities are handled at the business level.

Each business may have one or two charts of accounts, depending on whether a trust account is in use. A standard setup typically includes a general chart of accounts, and if applicable, an additional trust chart of accounts to manage trust-related transactions separately. This structure ensures that financial records and transactions are organised clearly and efficiently for each business you operate.

General Chart of Accounts:

ContactsLaw comes pre-equipped with a series of accounts that are automatically created when a new subscription is provisioned. These accounts are designed for users to efficiently post transactions, encompassing various functions such as support billing, receiving payments, and managing debtors. This built-in structure streamlines financial management and ensures that users can quickly and effectively handle their accounting needs.

Purpose:

Cash: Under in this category are Bank account, Credit card, Escrow account, Loan, Credit card merchant, and Petty cash.
Sales & Purchases: This includes the Accounts receivable and Accounts payable.
Billing: This category has Disbursements, Professional services, Other invoice items, Discounts, Interest, Debt written off, and Disbursements written off.
Tax: Under in this category are Provisions for sales tax, Sales tax, and Tax running balance account

Type:

In this category, you have five fundamental accounting account types: Asset, Liability, Income, Expense, and Owner’s Equity. Each of these account types plays a crucial role in organising financial information and helps in understanding the overall financial health of a business.

Aged Creditors:

Aged Creditors is one of the built-in reports in ContactsLaw. It provides an overview of all contacts identified as creditors, displaying the outstanding amounts owed to them and how long these amounts have been outstanding. The report helps track overdue invoices and manage payment timelines effectively.

Balance Sheet

This section displays the asset, liability, and equity accounts, along with a summary of any losses and an indication of profit. It provides an overview of total liabilities and equity, giving you a clear understanding of the financial position of the business.

Bank

This section functions similarly to the previous pop-up screen but is specifically limited to bank accounts or any accounts designated with the purpose "bank." It allows you to view transactions posted to that account over a specified period. If filters are cleared, you can access a paginated report, provided there are enough transactions recorded in the account.

GST

This section provides a set of Australia-specific metrics and items used for preparing tax records for businesses. For GST reports, you can choose to report on either a cash or accrual basis.

While most businesses typically operate on a cash basis, ContactsLaw offers the option for accrual reporting, as this is the method used internally within the software to manage accounting processes.

Profit & Loss:

This section provides a standard financial report that summarises your income and expense accounts, typically for a specific financial year. However, you can customise the report to display data for shorter periods, such as a month, a quarter, or any other time frame you prefer.

Reconciliations

Reconciliations are a process used to verify that the transactions recorded in ContactsLaw match the actual transactions shown on your bank statement. This ensures that the recorded financial activity in your system is accurate and consistent with the bank's records, helping maintain the integrity of your financial data.

Trial Balance

This section displays all accounts as of a specific date, showing both debit and credit activities, along with their balances. In double-entry accounting, some accounts will have debit balances while others will have credit balances, but they will never show both. This serves as a verification step, ensuring that total debits always match total credits, maintaining the fundamental principle of accounting. It's a standard practice used to confirm the accuracy and consistency of financial records.

@@ Line 1: / Line 1: @@
-This section of ContactsLaw you will be seeing the chart of accounts. Since we have mentioned that the sort of hierarchy for a subscription in contactslaw is that we have a section that tackles about subscription and my business..
+This section of ContactsLaw provides an overview of the chart of accounts. In ContactsLaw, the hierarchy begins with a subscription that encompasses the management of your business. Within each subscription, you can create and manage one or more businesses, and all accounting activities are handled at the business level.
-Then you can create one or more businesses within that subscription. As far as accounting is concerned, everything happens at the business level. So within a particular business, you will have one or two charts of accounts depending on whether you operate a trust account or not. You might have a general chart of accounts and a trust chart of accounts.
+Each business may have one or two charts of accounts, depending on whether a trust account is in use. A standard setup typically includes a general chart of accounts, and if applicable, an additional trust chart of accounts to manage trust-related transactions separately. This structure ensures that financial records and transactions are organised clearly and efficiently for each business you operate.
-'''Sections under General Accounting:'''
 == General Chart of Accounts: ==
-ContactsLaw ships with a series of accounts which get created automatically when a provision of a new subscription, and those are basically just the accounts that contacts law users to post transactions to automatically which includes support billing, receiving, payments, and debtors.
+ContactsLaw comes pre-equipped with a series of accounts that are automatically created when a new subscription is provisioned. These accounts are designed for users to efficiently post transactions, encompassing various functions such as support billing, receiving payments, and managing debtors. This built-in structure streamlines financial management and ensures that users can quickly and effectively handle their accounting needs.
 === Purpose: ===
@@ Line 17: / Line 14: @@
 === Type: ===
-In this category you’ve got five basic accounting account types namely Asset, Liability, Income, Expense, and Owner’s Equity.
+In this category, you have five fundamental accounting account types: '''Asset''', '''Liability''', '''Income''', '''Expense''', and '''Owner’s Equity'''. Each of these account types plays a crucial role in organising financial information and helps in understanding the overall financial health of a business.
 [[File:(1) Accounts.png|none|thumb|500x500px]]
 == Aged Creditors: ==
-Aged creditors is one of the built-in reports of contactslaw. For any contacts that you've identified as creditors where you have recorded invoices and payments to those creditors, this just shows you how much is outstanding and for how long and how it's been outstanding for.
+Aged Creditors is one of the built-in reports in ContactsLaw. It provides an overview of all contacts identified as creditors, displaying the outstanding amounts owed to them and how long these amounts have been outstanding. The report helps track overdue invoices and manage payment timelines effectively.
 [[File:(2) Aged Creditors.png|none|thumb|500x500px]]
 == Balance Sheet ==
-This section shows the asset liability and equity accounts along with a summary of  those loss with an indication of the profit which allows you to get an idea of the total liabilities and equity.
+This section displays the asset, liability, and equity accounts, along with a summary of any losses and an indication of profit. It provides an overview of total liabilities and equity, giving you a clear understanding of the financial position of the business.
 [[File:(3) Balance Sheet.png|none|thumb|500x500px]]
 == Bank ==
-This section is like the pop up screen that we saw before. This is limited specifically to the bank account or any accounts that have the purpose bank and this just allows us to see the transactions that have been posted to that account over a certain period or if we clear the philtres, we get a paginated report at least we would if there are enough transactions posted here.
+This section functions similarly to the previous pop-up screen but is specifically limited to bank accounts or any accounts designated with the purpose "bank." It allows you to view transactions posted to that account over a specified period. If filters are cleared, you can access a paginated report, provided there are enough transactions recorded in the account.
 [[File:(4) Bank.png|none|thumb|500x500px]]
 == GST ==
-This is a set of metrics or base items specific to Australia in the preparation of tax records for businesses. For all of these GST reports, you can report on either a cash or accruals basis.
+This section provides a set of Australia-specific metrics and items used for preparing tax records for businesses. For GST reports, you can choose to report on either a cash or accrual basis.
-Most businesses operate on a cash basis, but we have the option for accruals because we that's the method of accounting that we use internally within the software.
+While most businesses typically operate on a cash basis, ContactsLaw offers the option for accrual reporting, as this is the method used internally within the software to manage accounting processes.[[File:(5) GST.png|none|thumb|500x500px]]
-[[File:(5) GST.png|none|thumb|500x500px]]
 == Profit & Loss: ==
-This section is another standard of financial report. It basically just summarizes your income and expense accounts for usually for a particular financial year, but you can limit it to a month or quarter or arbitrary period if you like.
+This section provides a standard financial report that summarises your income and expense accounts, typically for a specific financial year. However, you can customise the report to display data for shorter periods, such as a month, a quarter, or any other time frame you prefer.
 [[File:(6) Profit and Loss.png|none|thumb|500x500px]]
 == Reconciliations ==
-Reconciliations are basically a way of verifying the transactions that you've recorded to the bank account in contacts, law match the bank account, bank transactions that appear on your bank statement.
+Reconciliations are a process used to verify that the transactions recorded in ContactsLaw match the actual transactions shown on your bank statement. This ensures that the recorded financial activity in your system is accurate and consistent with the bank's records, helping maintain the integrity of your financial data.
 [[File:(7) Reconcilliations.png|none|thumb|500x500px]]
 == Trial Balance ==
-This just shows all of the accounts as at a particular date, so these are the debit and credit activity, even debit and credit balances. If some accounts can be in debit and some accounts can be in credit, they'll never be in both and this is just kind of a sanity check that people use in double entry accounting to ensure that the total debits always match the total credits. It's not possible for those figures to ever be different, but this is just something that is standard in accounting.
+This section displays all accounts as of a specific date, showing both debit and credit activities, along with their balances. In double-entry accounting, some accounts will have debit balances while others will have credit balances, but they will never show both. This serves as a verification step, ensuring that total debits always match total credits, maintaining the fundamental principle of accounting. It's a standard practice used to confirm the accuracy and consistency of financial records.
 [[File:(8) Trial Balance.png|none|thumb|500x500px]]