Income and Expense First in the Chart of Accounts

This is how unique we are:

So far we have gotten two inquiries about the makeup of our Chart of Accounts: one request was from Nigeria and the other from Brazil.

The questions were the same: “Can Plus & Minus have a Chart of Accounts where the Revenue and Expense Accounts are first and then the Assets, Liabilities, and Equity?”

This translates into the Revenues starting off with the Chart of Account number 1 and the Expenses starting off with the Chart of Account number 2, or whatever numbers the user needs to get the Revenues listed first and the Expenses listed as the second set of accounts.

This means that at the very minimum, the Assets would have the first digit of the account number start off with the first number of a 3.

So, what’s going on here? You could say it’s cultural and you would be correct. That’s how the process is done in some countries. And actually, it’s how we do accounting in the US if you think closely about our process. The first financial statement we produce is the Income Statement and then we feed the Net Income or Loss into the Equity section of the Balance Sheet. Voila! We have the basics.

But wait a minute. Didn’t we produce the Income Statement first? Yes. Well, then why don’t we have the Revenues and Expenses listed first in the Chart of Accounts?  It’s only logical. Do the Income Statement first and the Balance Sheet second.

Now here comes the real beauty! Plus & Minus can do all accounting in one’s local currency anywhere in the world. And the results of whatever currency you record the original entries in can all be translated into another currency.

And that’s the beauty of powerful accounting software.