Simple Chart of Accounts

As an example of a chart of accounts, consider the following:

40Accounts Receivable* (Not Cashbook)
50Accounts Payable* (Not Cashbook)
60GST Collected*
70GST Paid*
80Fixed Assets
90Profit & Loss*

This is about as simple as you can get — MoneyWorks requires the presence of accounts marked with *. If you use this you will be able to determine your profitability, do your GST, and (if you are using MoneyWorks Express of Gold) know how much you are owed and how much you owe.

However for most businesses it would be inadequate because all the income and expenses are lumped together, so you can’t see how it was derived. It would be more sensible to look at the type of income and expenses that is important to the business and have codes for these. Thus instead of a single expense code we might have:

20Salaries & Wages
21Office Expenses
22Vehicle Expenses
23Other Expenses

We can then see at a glance how much was paid out in wages, or how much it cost to run the office. But again there is not much level of detail — for example, we can’t determine how much the telephones cost to run, or how much was spent on stationery. This may not be a problem, as we may never be interested in this information. However if we were, we would need to go to a finer level of detail.

It is possible of course to go too far and make things too complicated. If you find that you are agonising over whether an expense should be put under the “Pencils Expenses” code or the “Pens Expenses” code, then you probably have too many codes.