What is the account tree and how to prepare it
The account tree is simply an exploration or statement in which all accounts of the company are recorded. It is called the account tree as it is branched in the form of a tree shape into several sections, including the main accounts and sub -calculations. The calculation tree is the primary strength of the accounting system.
The accounts branching from the account tree are divided into a financial center and includes assets and obligations, and toIncome menu accountsThe various sources of revenues include, in addition to the elements of expenses, and under this section are included in all kinds of expenses.
What is the benefit of the account tree ?
The use of the account tree is the best way to ensure the regulation of accounting data procedures, both using Accounting programs Or by registering manually. With the process of designing the account tree, it needs a great effort from the financial team in the beginning, but it later facilitates all procedures and maintains the time taken in registration operations and adding new accounts or deleting old accounts.
The account tree facilitates access to all the details of a specific part of the accounts. For example, you can access employee wages or a specific management staff wages within a few seconds.
The importance of the account tree can be summarized in the following points:
Why use the account tree?
The calculation tree or account guide is used to achieve success in the first step of the accounting system, and to properly assist the decision -making in all the measures we follow in the advanced stages. The account tree is considered a necessity for all types of companies and institutions, as it helps to register and save all items and inputs and follow them automatically or manually. It is also characterized by the possibility of modifying and controlling them according to the company's account plan.
How to make a complete account tree
The account tree is created in two phases, the first: determining the terms of the institution's accounting guide levels. The second: codify these items.
The first stage: Defining the terms of the level of accounting guide
Any accounting guide is based on five main accounts that are branched from items, and all these items are classified on levels that are determined according to the nature of the institution.
level one : It includes the main calculations of the accounting guide: assets, obligations, property rights, revenues, and expenses, which are the basis that the rest of the items are branched into several levels.
Second Level : It is the level that includes the sub -items of the first -level items. The assets are divided intoCurrent assetsAnd uninterrupted assets. Obligations are divided into circulating obligations and non -circulating obligations. And property rights are divided intocapital And theReserves and detained profits. The expenses are divided into administrative expenses of sale and operational expenses. Revenue is divided into various sales and revenues.
The third level : It is the level that includes the sub -items of the second -level items, in the circulating assets divided into cash of all kinds, customers and stocks andDebits Other and credits. Unseen assets are divided intoLong -term assets (fixed)And incalculator assets and investments. The circulating obligations are divided into suppliers, short -term loans, allocations and other creditor assets. The non -circulating obligations are divided into long -term loans, long -term allocations and deferred tax obligations.
fourth level : It is the level that includes the sub -items of the third level items. Long -term (fixed) assets are divided into buildings, machines and cars. Unassuma is divided into patent and fame. Investments are divided into investments in sister companies, investments in subsidized companies and investments available for sale. Customers are divided into divisional agents, wholesalers, local agents, and international clients
level five : It is the level that includes the sub -items of the fourth level items, and this level is an analytical level of some of the levels of the level, and the more analyzing the levels, this indicates the accuracy and concentration of the account tree.
In this way, we can add an endless number of assets, branches, branches of branches ... etc.
The second stage: the items of the items
The coding of items simply means giving each main and sub -item its own number but in an organized way, how is that?
We will depend on the method of coding in the arrangement, so we start first with the items of the first level, which is five, so each item gets a number starting from (1) to (5), as follows: the item of the assets carries the code (1),Clause of opponentsCode (2), the property rights item carries the code (3), the revenue item carries the code (4), the item of expenses carrying the code (5).
After that, we move to the terms of the second level, so we start first with the items branching from the item of the assets, which are a vehicle, so the first gets (1) and the second (2) with the addition of the main item code for them (the assets), as follows: the item of the assets circulating, the code (11) , Item of non -circulating assets carries the code (12).
How is the codes prepared in the account tree?
For example, the article becomes clear. When using (Code 1) at the beginning of the accounting tree to express the assets, the method of forming the tree will be as follows:
Asset element (code number 1) In case Insert fixed assets (code No. 11) in this example it is clear to us to use (code No. 11) in order to connect it to fixed assets, where it falls under (code No. 1), which is the first item. In case Insert a computer under the branch of the fixed assets that fall under the asset item, it will be used (code number 111). In case Adding a special item for technical devices such as photography and printing becomes (code number 112) because the computer is the first item The item of the devices falls from fixed assets as the fixed assets of the assets fall.
The numbering process should be done accurately, and in most companies the numbering is done as follows: Assets No. 1, litigants 2, expenses No. 3, revenues No. 4. This method helps to enable the accounting official to add accounts correctly, as well as conducting the classification process according to The type if it follows the assets, discount, expense, or revenues.
An illustration model for coding the account tree
1 assets
111 cash
112 clients
113 stocks
121 long -term (fixed)
1211 buildings
1212 machines
1213 cars
122 inconsistent
1221 patents
1222 fame
123 investments
1231 in sister companies
1232 in subsidiary companies
1233 is available for sale
2 obligations
211 suppliers
212 short -term loans
221 long -term loans
222 long -term allocations
223 deferred tax obligations
3 property rights
4 revenues
5 expenses
Assets in the calculation tree
The definitions of financial assets were numerous, but one of the most clear and simplicity is the definition that it is All economic resources owned by the institution that can use and measure them according to accounting principles. Assets can be classified into: fixed assets, circulating assets, inappropriate assets.
Types of assets in the account tree
Fixed assets:
They are the long -term resources and property to facilitate production and completion of tasks, not for reselling, such as facilities, furniture, cars, equipment, etc.
Current assets:
It is also called liquid assets, which are cash resources and property that are used by selling or converting them into cash within a specific period often one year, such as short -term, critical investments, stocks ... etc.
Informed origins:
It is the in -kind property (unfinished), but it directly contributes to preserving the institution and its success, such as reputation and spread, publishing and property rights ... etc.
In the calculation tree, the assets item often takes the code (1), and it falls under the origins:
Conditions must be met in assets
In order for the property to be considered at the origin of the institution, it must have several conditions, which are:
Property:
The first conditions for the assets are that the original is owned by the institution as a ownership that qualifies it to benefit from this original. Otherwise, it is not considered one of the origins of the institution.
Productive ability:
It means the possibility of the institution to benefit from this original, if there is no desired benefit from behind it, then it is not considered one of the assets of the institution.
Long -term benefit:
This condition is also called future services, and it is specifically concerned with the benefit of the institution from the original in the long run that can continue for more than one financial period.
Measurement:
In order for the supplier to be considered one of the institution’s assets to be measurable through accounting principles, in order to determine its productive ability and benefit that it brings to the institution separately.
