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Design of a numbering system for accounting codes

Describe some considerations useful in the design of accounting codes. For each consideration you name, provide an example to illustrate your point.

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Accounting codes are normally designed to follow the basic formula for double entry bookkeeping: assets = liabilities + equity. For a regular business or corporation, the standard is:

100 for Assets
200 for Liabilities
300 for Capital
400 for Revenues
500 to 900 for expenses

Then within the asset category, current assets (following a balance sheet format) would have the lower numbers and non-current assets the higher number. For liabilities, current assets would be first. The numbering of expenses would follow the nature of a business. For example, if a business sells a product, the 500 might be all the cost of goods sold section accounts.

A larger company might make their categories four digit: 1000s for assets, 2000s for liabilities, etc to give the company a wider range of numbers for account assignment. Even more elaborate ...

Solution Summary

The 550 word solution presents samples of common accounting code layouts with explanations and variations. A discussion about Quickbooks is included, as well it should be.