Re: Chart of Account Query

On Thu, Oct 2, 2014 at 5:20 AM, R. Ransbottom <..hidden..> wrote:

Hello,

Regarding CoA implementation:

Can a account_heading be referenced by discontiguous accounts.
My experience indicates that discontiguous records are
GAAP-improper.

For reasons below, we can't enforce a contiguousness rule very well. However, as you point out breaking that rule on a logical level is dangerous.

By discontiguous I mean, given (100 Cash), (110 Petty Cash),
(130 A/R), that (100) and (130) have one account_heading parent
while (110) has a different one.

I can't imagine a case where you'd want to do that, unless you wanted to be able to aggregate a bunch of petty cash drawers together, and have that header have its parent be the same as for 100 and 130.

Let's look at a more likely example:

heading 13000 Accounts Payab,e

- 13000-00-00 Accounts Payable Corporate

- 13001 -- Heading: Clients Payable

-- 13001-00-01 - Clients Payable US

-- 13001-00-02 - Clients Payable MX

-- 13001-00-03 - Clients Payable CA

- 13002 -- Reserves Payable

-- 13002-00-01 - Reserves Payable US

-- 13002-00-02 - Reserves Payable MX

-- 13002-00-04 - Reserves Payable CA

- 13999-00-00 Accounts Payable Misc

I can think of cases where people have books which are logically like this, where everything contiguously is descended from the same header, but may not be directly so. Consequently, the subtotal of the 13000 heading will be the exact same whether or not the 13001 and 13002 headings are in place, but these provide some intermediate points of aggregation which may or may not be helpful.

I am not aware of any GAAP issues with the above setup, because 13000 aggregates represents a contiguous block of accounts. supporting this use case, however, does mean we can't enforce things remarkably strictly so people can mess up their books.

It is further worth noting that generally there are plenty of places where we assume that these blocks are contiguous. We certainly do not consider it good practice to break that rule.

Thanks,
Rob

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Best Wishes,

Chris Travers

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