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Community Contributor **

Nested Charts Of Accounts - Is It Bad Practice?

Hello All,

 

I've been planning to ask this for a very long time but never found the time. Nevertheless I am curious to hear your opinion.

 

In our business we configured the charts of accounts as nested tree.

 

Top-level 1

  • Sub-Account1
  • Sub-Account2

                    Sub-Sub-Account1

  • Sub-Account3

Top-level 2

      etc etc etc.....

 

The idea behind this is to track Expenses, COGS, Income and other financial transactions on different levels. For example we have an expense tree as follows:

 

Office Expenses

  • Computers

                    Software Purchases

                    Software Subscriptions

                    Hardware Purchases

                    Repair

  • Office Supplies

                    Printing Paper

                    Ink

                    Water

 

etc...etc....

 

When running reports, we can compare the expense of water for example to Office Supplies and  Office Expenses totals which is very useful.

 

I am curious to know if this is completely wrong and are we causing QB to miscalculate the sums or is this actually just another, more granular, way of tracking transactions in QB?

 

Thanks much for your help and input.

2 Comments
Senior Contributor *

Re: Nested Charts Of Accounts - Is It Bad Practice?

This is absolutely correct to do. The main benefit of structuring the Chart of Accounts as you describe, is that *you* get to decide how information is grouped and subtotaled on reports, to make the information most useful to you.

Community Contributor **

Re: Nested Charts Of Accounts - Is It Bad Practice?

@FTechThank you so much for the quick reply.

Yeah, I think the nested chart of accounts can be pretty powerful in reports. I wonder why this methodology is not being promoted as a recommendation or best practice (i guess in the name if keeping things simple)

 

The only problem I saw over the years is that our accountant was complaining that our P&L reports are too detailed. I wish there was a way to select how many nesting levels to include on the report rather than just Detail or Summary (all or nothing)