How are account codes usually grouped?
Many charts of accounts group codes by type. A common pattern:
Codes | Type |
1000 to 1999 | Assets |
2000 to 2999 | Liabilities |
3000 to 3999 | Equity |
4000 to 4999 | Revenue |
5000 to 5999 | Cost of sales |
6000 to 9999 | Expenses |
Your business may use a different pattern. Use the Account Type column, not the code, to decide the type.
A business with several entities may give each entity its own codes, or share one chart of accounts across all of them.
What do the abbreviations mean?
Abbreviation | Meaning | Usual treatment |
Accum dep, A/D | Accumulated depreciation | Exclude |
Accr, Accrued | Accrual | Exclude, unless supplier invoices post there first |
Prov | Provision: an estimate of a future cost | Exclude |
I/C, Interco | Intercompany | Exclude |
COGS, COS | Cost of goods sold, cost of sales | |
WIP | Work in progress | Exclude |
GRNI | Goods received not invoiced | Exclude |
P&E, PP&E | Plant and equipment | Include as Capital goods |
R&M | Repairs and maintenance | Include |
ROU | Right-of-use asset (a lease) | |
Opex, Capex | Operating spend, capital spend |
What do I do with catch-all accounts?
Accounts such as Sundry expenses, Other operating costs or General expenses can hold anything. Include them, and flag them for your finance team.
If a catch-all account holds a large share of your spend, one category will not describe it. Use classification rules on the supplier and description to split it.
A suspense account holds amounts finance has not yet allocated. Ask what is in it before you decide.
Why does my chart of accounts have duplicates?
There are two kinds:
The same code appears twice. Each account code must be unique. Ask your finance team which row is correct, and remove the other before you upload.
The same name appears under two codes. These are two different accounts. They often come from a move to a new finance system, or from old accounts kept for history. Ask your finance team which one holds transactions in your reporting period.
An old account marked "do not use" can stay in the chart of accounts. If its transactions net to nil within that account, exclude it.
What do I ask my finance team?
Take these questions to your first meeting with finance:
Where do supplier invoices first post for stock, for prepaid items such as insurance, and for freight and utilities?
Do any supplier invoices post to an accrual or clearing account first?
Which accounts hold month-end accruals, reversals or allocation journals?
Which accounts are intercompany?
Is depreciation posted to the same accounts as asset purchases?
Is stock recorded as an asset, or as an expense with a year-end adjustment?
Can the ledger extract include a column for the transaction type, such as Supplier invoice or Journal?
Which accounts are catch-alls, and what goes into them?
Does the export show one signed amount, or separate debit and credit columns?
Did the chart of accounts change during the year, for example after a move to a new finance system?
What this means in Avarni
Record what finance tells you in the Justification column for each account. Your auditor reads it.
Set accounts that are waiting on finance to Flagged, and filter on Flagged to see what is still open.
See Chart of accounts: what to include and what to leave out for the review itself.
Avarni rejects a duplicate account code. Remove duplicates before you upload.
For a summary of the files and rules, see What does Avarni need from your finance system?