Chart of Accounts β a list of all accounts used to record financial transactions in the organizationβs general ledger.
Financial reports in the system are based on double-entry bookkeeping transactions.
Double-entry bookkeeping is used to ensure the accuracy and balance of financial transactions. This means that each financial transaction is recorded with two entries: one in the debit and the other in the credit. The goal is to maintain a balance between assets, liabilities, and equity.
An accounting entry is a record in accounting that reflects a financial transaction. It consists of two parts: debit and credit, according to the double-entry principle. Each entry affects at least two accounts: one is debited, and the other is credited.
Key Elements of an Accounting Entry:
Transaction Date β the date when the transaction occurred.
Debit Account β where the resource is received, or the liability is increased.
Credit Account β where the resource is coming from, or the liability is decreased.
Amount β the transaction amount.
Transaction Description β an explanation or reason for the entry.
We offer a standard chart of accounts based on IFRS, and if necessary, you can make the adjustments you need.
The account code structure is as follows: XX.YYY.ZZZ, where:
β’ XX β account category;
β’ YYY β group;
β’ ZZZ β position.
The accounts are grouped by categories as follows:
Generation of automatic entries
Some entries are created by the system based on invoices and accrued salaries. The account settings used for these can be configured through Company > Settings > P&L Policy.
Example settings
For standard invoices (Invoice lines), an entry will be generated based on the Income date:
β’ Debit: 20.036.002 β Future trade accounts receivable
β’ Credit: 70.001.001 β Revenue from software development services
On the Issue date of the invoice, an entry will be generated:
β’ Debit: 20.036.001 β Current trade accounts receivable
β’ Credit: 20.036.002 β Future trade accounts receivable
A liability is created, and the entry will be attributed to the Revenue - T&M line in the P&L report. Thus, the revenue is recorded with the invoice and reflected in the P&L report.
Examples of manual entries
For bank transactions, you must manually detail the entries to classify incoming or outgoing funds.
For example, if an invoice for $1,200 was issued to a client, but they paid $1,175, with $25 deducted as a bank fee:
The payment results in the following entries:
β’ Debit: 20.031.001 β Bank
β’ Credit: 20.036.001 β Current trade accounts receivable
These entries do not appear in the P&L report but are shown in the balance sheet.
If the company covers the bank fee, the following entry is made:
β’ Debit: 85.001.001 β Bank fees
β’ Credit: 20.036.001 β Current trade accounts receivable
In the case of an expense transaction, such as purchasing office equipment, the expenses have the following accounts:
β’ Debit: 80.017.*** β Office equipment / Office supplies / Food supplies / β¦
β’ Credit: 20.031.*** β Bank / Corporate card holders / β¦
The appropriate debit account is selected to classify the expense, and the relevant credit account is chosen for the type of payment source.