Question

Can someone answer this question for me. Please

Why would you customize a COA to a specific business?

Answer 1

COA are chart of accounts. It means that it is a list of the accounts that are to be used by a business for classifying it's assets, liabilities, revenues and expenditures.

These accounts are to varied or customized due to the following

* Nature of business - For two entities doing different nature of business shall require different accounts for complete and appropriate disclosures of it's financial status. For eg a company selling food item and a real estate company will have different accounts in their books of accounts.

* Size of business - The classification required may differ due to size variations of business. As in large business the transactions will be complex and large in number as compared to small business. Thus, the Chart of account will vary thus requires customization.