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Master Data 53

CHART OF ACCOUNTS
A chart of accounts (COA) is an ordered listing of accounts that comprise a
company’s general ledger. There are three types of charts of accounts: opera-
tive COA, country-specifi c COA, and group COA. The operative or opera-
tional COA contains the operational accounts that are used to record the
fi nancial impact of an organization’s day-to-day transactions. It is the primary
COA maintained by an organization.
The accounts in the operative COA are mapped to alternative accounts
in country-specifi c charts of account. Companies create these alternative
accounts to meet special country-specifi c reporting requirements. Figure 3-3
illustrates a scenario in which both GBI US and GBI Germany use the INT
COA, while each company also maintains its country-specifi c COA—CANA
(North America COA) and GKR (German COA).

Figure 3-3: Charts of accounts and company codes

Finally, a group chart of accounts contains group accounts that multiple
companies within an enterprise use to consolidate their fi nancial reporting.
When an enterprise includes several companies, then, in addition to creat-
ing fi nancial statements for each company (company code), it must also cre-
ate fi nancial statements for the enterprise as a whole. This consolidation is
necessary because the enterprise, which is itself a separate legal entity (e.g.,
parent or holding company), has reporting requirements. Using a group
chart of accounts makes it easy to generate consolidated fi nancial statements.
Otherwise the enterprise must rely on more complex methods of consolida-
tion. All enterprises must maintain an operative COA in order to record fi nan-
cial data. In contrast, group and country-specifi c COAs are optional.

GENERAL LEDGER ACCOUNTS
The accounts in the general ledger are defi ned based on the selected COA. The
general ledger is an instantiation of the COA for a particular company and
can include some or all of the accounts in the COA. Like most master data,
the data in general ledger accounts are segmented by organizational level
(Figure 3-4). COA account data include a COA or client segment and a
company code segment.
The COA segment typically includes an account number, short and long
text, an account group, and an indication as to whether the account is a balance
sheet or a profi t and loss account. Each account is assigned a unique account

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