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Best practice in defining COA and accounting string

What is the best practice to be followed while designing the COA and Accounting string / combination. Are there any standards to be followed.

A new incorporation suggesting to use Alpha Numeric Values for COA and other Accounting String values, Any thoughts will be much appreciated.


Based on my research, most COAs are numbered numerically. The main reason is that it makes sorting easy. Sorting alphanumeric or alphabetical is either impossible or the account numbering is cryptic.

In practice, I have found that a delimited numeric numbering scheme works best.  It is easy to understand, simple to sort and, most importantly, infinitely expandable as any number of sub-accounts can be added without disturbing the overall structure.

On a side note, while current/non-current numbering is often used, in my opinion it adds unnecessary clutter and duplicity. For example, restricted cash, investments, receivables, inventory, pre-paids could all be current and/or non-current.  Why have separate accounts when this is not a recognition issue (after all, restricted cash is restricted cash regardless of how long restriction is) but a disclosure issue? As a result, I prefer to deal with this at the sub-account level.

BTW, a COA can incorporate XBRL. But, as XBRL is designed to facilitate reporting and disclosure not recognition, it is not particularly easy and usually leads to a messy structure.  The better approach is to map to XBRL at the statement not COA level, especially if the entity needs to map to various XBRLs.

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