GL Account is an abbreviated term that stands for General Ledger Account. GL Accounts are the key data tag used in aggregating financial transactions and turning the aggregated data into financial statements.
The video below discusses some important consideration in designing your chart of accounts.
Important things to consider when designing your chart of accounts:
- Accounting Seed uses a natural account plus a subaccount structure (General Ledger Accounting Variables aka GLAVs) to create robust and dynamic financial reporting.
- The natural account provides top level financial reporting and consistency in reporting long term results for taxes, auditors and investors.
- The underlying subaccount structure is used primarily for more detailed management reporting of business units and is designed to be changed frequently if need be.
- It is best practices to have each general ledger account start with a number. The recommended naming convention for GL Accounts is a four-character number followed by a dash and then the account description.
- Example: 1000-Cash, 2000-Accounts Payable, 4000-Revenue, 5000-Expenses
- GL Account ranges for similar functioning accounts will make identifying accounts easier throughout the application. Below is an example of GL Accounts grouped into number ranges. Skipping numbers in a range is a good idea as this will allow for new accounts to be added while maintaining a logical order. See GL Accounts for more information.