Distinctive sorts of organizations use diverse sorts of accounts. For instance, a manufacturing business will require different records for reporting manufacturing costs. A retail business, notwithstanding, will have accounts for the purchases of finished goods. Numerous industrial associations distribute prescribed charts of accounts for their individual commercial enterprises, keeping in mind the end goal, to set up a predictable standard of comparison among companies. Accounting software packages regularly give a choice of predefined charts of accounts for different sorts of organizations.

Requirements of tax authorities must also be considered when defining accounts different types of accounts ( for example some tax authorities requires that separate accounts should be used for travel, entertainment and advertising expenses.

Following image shows how other accounts can be set up as needed.

defining accounts


Additional Information

Debits and Credits

Chart of Accounts

Defining Accounts