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Maintain General Ledger Easier by Reducing Chart Of Accounts



Many of us fall into the trap of a lengthy chart of accounts with one assumption that the more specific an account the easier to analyze it—the more accurate the analyzes we can get. The truth it is a trade-off: the longer the list of chart account the more inconsistency of transaction classification can be found in the ledger and will result in difficulties when trying to compare it time by time.

Maintain General Ledger by Reducing Chart of Accounts


So to avoid such inconsistency, merge some similar small accounts into one account only. Do it at just after end year closing. If you do it in the middle of period, you will get confuse when trying to compare the number in the chart of account you just merged to some different account before they are merged. Do it gradually year by year until you get the most effective chart account [not too lengthy].

Also you need to make sure you won’t loss the historical data, so don’t do it by deletion, inactive it instead.

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