Understanding aACE Chart of Accounts

This guide explains best practices for organizing a chart of accounts in aACE. It is intended for system administrators.

There are three kinds of general ledger account records in aACE:

  • Root Header Account (e.g. Total Assets) — Occupies the root level of the chart of accounts.
  • Header Account (e.g. Total Cash) — Contains and summarizes other accounts, such as Checking Account 4563, Undeposited Funds, and others; is always assigned to another header account or else to a root header account.
  • Detail Account (e.g. Checking Account 4563) — Accepts transactions and is always assigned to a header account.

Header accounts can contain both other header accounts and detail accounts. This allows you to build a chart of accounts with as many levels as you need, as demonstrated with this example structure:

  • Total Assets (Root Header)
    • Current Assets (Header)
      • Total Cash (Header)
        • Checking Account 4563 (Detail)
        • Undeposited Funds (Header)
          • Undeposited Funds - Cash/Checks (Detail)
          • Undeposited Funds - Visa/MC (Detail)        

Root Header Account Setup

aACE is designed to work with the standard nine root header accounts:


Account #
1000
2000
3000
4000
5000
6000
7000
8000
9000
Account Name
Total Assets
Total Liabilities
Equity
Sales
Cost of Sales (Cost of Goods Sold)
Expenses
Overhead Expenses
Other Income
Other Expenses

The first digit in an account number determines the natural balance of the account and its placement on various reports. 

For example, accounts beginning with 1 have a debit natural balance, whereas accounts beginning with 2 have a credit natural balance. The natural balance determines whether a credit appears as a positive value or a negative value on reports such as the income statement. Similarly, accounts beginning with 1—3 appear on the balance sheet, while accounts beginning with 4—9 appear on the income statement.

We recommend using account numbers with 4—5 digits. You may choose number ranges and account names that works for you as long as the first number for the account fits with the logical equivalent. For example, your account number for sales and revenue should begin with a 4; however, the account number could be 40, 400, or 44100, while the account name could be either Sales, Revenue, or a similar term. 

Segmenting your account numbers is not required nor supported by aACE. 

Header and Detail Account Setup

Header and detail accounts follow the same rules as root header accounts with regards to numbering (described above). The numbering should be logically coherent for various reasons:

  • You would not want to assign a 2000-series detail account to a 1000-series header account. 
  • Grouping similar accounts into sequential ranges makes it easier to search, report, and audit. 

Accounts can be renumbered at any time in aACE, so it is not critical that you perfectly number every account the first time.

Account Types

The Account Type field adds summaries to your income statement. For example, account records with an Account Type of "Revenue" or "Cost of Sales" will be grouped together by default as "Gross Profit (Loss)" accounts. 

To customize your income statement using the Account Type field, speak with your aACE partner.