Describe How Chart of Accounts Are Used During the General

Question

Examlex · Accepted Answer

The Answer is The chart of accounts establishes the basis upon which reports can be generated;a fully flexible chart of accounts would include an indicator for every possible dimension that the transaction may conceivably need to be reported on.In practice,however,there is a trade off - the more digits a general ledger account number contains,the more likely data processing errors become.General ledger account codes are added to every transaction prior to it being processed into the subsidiary ledger during the operational cycles.The purpose of the general ledger is to extract these transactions and their associated account numbers,then summarise and transfer the data into the general ledger.A well-designed chart of accounts will support diverse reporting requirements while maintaining an acceptably low data entry error rate.Adoption of any alternative costing or reporting requirements,such as activity based costing,will increase the number of tags,or indicators,needed to code transactions accurately into the general ledger accounts.

Describe How Chart of Accounts Are Used During the General

Definitions: