Find environmental programs and resources that could help improve your business. E-business strategy Effectively using information technology is an important part of managing a business. In this section, you should outline how you plan to use internet technologies to reach customers, manage your business, and reduce costs.
Defining Accounts Different types of businesses will have different accounts. For example, to report the cost of goods sold a manufacturing business will have accounts for its various manufacturing costs whereas a retailer will have accounts for the purchase of its stock merchandise.
Many industry associations publish recommended charts of accounts for their respective industries in order to establish a consistent standard of comparison among firms in their industry. Accounting software packages often come with a selection of predefined account charts for various types of businesses.
There is a trade-off between simplicity and the ability to make historical comparisons. Initially keeping the number of accounts to a minimum has the advantage of making the accounting system simple.
Starting with a small number of accounts, as certain accounts acquired significant balances they would be split into smaller, more specific accounts. However, following this strategy makes it more difficult to generate consistent historical comparisons.
For example, if the accounting system is set up with a miscellaneous expense account that later is broken into more detailed accounts, it then would be difficult to compare those detailed expenses with past expenses of the same type.
In this respect, there is an advantage in organizing the chart of accounts with a higher initial level of detail.
Some accounts must be included due to tax reporting requirements. For example, in the U. One should check the appropriate tax regulations and generate a complete list of such required accounts.
Other accounts should be set up according to vendor.
If the business has more than one checking account, for example, the chart of accounts might include an account for each of them. Account Order Balance sheet accounts tend to follow a standard that lists the most liquid assets first.
Revenue and expense accounts tend to follow the standard of first listing the items most closely related to the operations of the business.
For example, sales would be listed before non-operating income. In some cases, part or all of the expense accounts simply are listed in alphabetical order. Sample Chart of Accounts The following is an example of some of the accounts that might be included in a chart of accounts.
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