When setting up new GL accounts, it’s important to define your account numbers correctly, especially for reporting purposes. Account numbers must be a minimum of four and a maximum of ten numbers.
An important part of defining an account number is selecting the appropriate account type. The first digit of the account number defines the account type. For example, an account number of 2340 would designate the account type as a liabilities account because it starts with a 2. Table 5.1: GL Account Types and Prefixes shows existing agrē account types and their prefixes.
Table 5.1: GL Account Types and Prefixes
Account Type |
Prefix |
Asset |
1 |
Liability |
2 |
Equity |
3 |
Revenue |
4 |
Cost of Goods Sold (COGS) |
5 |
Expense |
6, 7, 8, 9 |
Note
It is recommended that all account numbers have the same number of digits (e.g., five digits) to ensure that your financial statements are sorted and displayed consistently.
Ensure that your account numbers are sequentially ordered so that your postings are correctly added and displayed, especially for non-posting accounts. It is recommended that you leave a gap between account numbers for layout purposes so that you have room to add new accounts later. For example, if you create account number 2500, make your next account number 2600.
Account numbers are used to determine in what order the accounts are listed on the Balance Sheet and the Income Statement. If an account is not appearing where you want it, just change the account number.