Budget Chart of Accounts format

The accounts are displayed in tree format consisting of folders and sub-folders. Your chart of accounts can have multiple levels i.e. you can have sub-accounts of sub-accounts of sub-accounts etc in a budget model. This is very handy for totaling and sub-totaling accounts in the budget. It is recommended that the accounts used here for budgeting, forecasting and management reporting should mirror that used with your ledger system for best results. This will facilitate line by line account data transfers and the comparison of actual data with that of the budget or forecast.

Generally you add 3 extra periods beyond the required budget periods. So a twelve month forecast should have 15 periods. A 36 month forecast should have 39 periods. This is to take into account any “End effects”. Example: Sales in month 13 may require the purchase of inventory in month 12 or 11 and this will affect the inventory levels, creditors and bank on the balance sheet for this year. Three months is sufficient to cater for most organization’s “end effects”, but if you have long Lead times (e.g. farmer producing wine) you can increase the number of periods to forecast.