By choosing the right chart of accounts format, businesses can ensure that their financial information is organized, accessible, and tailored to their reporting needs. Assigning unique series of numbers for each account type creates a flexible numbering system where newly-added accounts will not affect other account numbers. When a new account is added, it will be assigned an account number that is not yet used by other accounts of the same type. That’s why it is important to leave a lot of room between account numbers to accommodate new accounts.

Chart of Accounts Best Practices

The amount in this entry may be a percentage of sales or it might be based on an aging analysis of the accounts receivables (also referred to as a percentage of receivables).