Page 51 - Budgeting for Managers

A Really Complicated Account Code
Account codes can get very complicated. One of my clients
tracked all costs in the IT department by project, phase, and
type of work. Each project had a code, from 20001 on up. For each
34 Budgeting for Managers
project, phases were designated 01 through 05.There were also codes
for type of work: 01 for an internal expense, 02 for contractor servic-
es, and 03 for equipment. So, if I wanted to get paid as a contractor
TEAMFLY
for phase two of project 20015, then I needed to put a note on my
invoice that the account code was IT-20015-02-02.

for trade shows: they use 01 for mailings, 02 for trade shows,
and 03 for miscellaneous. In manufacturing they don’t care
what the copies are for, but want to know who requested the
copies: they use 01 for the administrative assistant, 02 for the
director’s secretary, and 03 for the director herself.

Key Accounting Concepts
You don’t need to know about accounting to make a good
departmental budget, but it helps. If you know a bit about
accounting, then it’s easier to request information from the
accounting department and to give them information and
records that they need in the way they need to see them.
Accounting systems have been around since about the year
800, when the court of Emperor Charlemagne of France invent-
ed double-entry bookkeeping. So that’s where we’ll start.
Transactions, Double-Entry Bookkeeping,
and the General Ledger
The basic unit of accounting is not money, it is the transaction.
Accounting tries to record the movement of money from one
place to another. The bean counters in Charlemagne’s court
realized that if every number was recorded twice, then it was
possible to make sure that there were no errors. Every time
money came from one place and went to another place, the
transaction was recorded in both places. Then it became possi-
ble to balance accounts and make sure that there were no
errors. This was called double-entry bookkeeping

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