Basically there are two approaches to prepare the chart of account of a company.
1) In the first approach, cost heads are separately opened for the cost of goods, administrative expenses,
.marketing and business promotion expenses. In this case grouping of chart of account is kept in mind at the time of data entry and the list of chart of account also becomes lenghty.
2) In the second approach, cost heads are not repeated. A generic list of cost heads are prepared and these are linked with the departments and products / projects. Software itself pick the relevant department and product / projects to prepare the desired grouping. In this approach data entry operator is not required to look at the groupoing because it is processed by system itself.
Kindly provide your comments that which one of the approach is the best one with its justification.
And which one approach is being used in the current scenartios by large organizations.
VIvienna
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