Account assignment denotes the accounting allocation of a business transaction to the accounts provided for this purpose. It determines on which accounts a transaction is recorded, thereby forming a basis for its subsequent posting.
What does Account coding mean?
Business transactions are allocated to specific accounts in Bookkeeping. In Account coding, it is determined which accounts are used to record a specific transaction.
The classification depends in particular on the nature and economic substance of the transaction and the account system used in the company.
Account coding in the double Bookkeeping
In the double-entry bookkeeping at least two accounts are involved in a business transaction. The Account coding determines to which accounts the transaction is to be objectively allocated.
The resulting entries are posted to the corresponding accounts of the General ledger or recorded in the corresponding Buchführung sectors.
Account coding and booking entry – what is the difference?
Account coding and Booking entry are closely related, but do not mean the same thing.
The Account coding determines the accounting classification of the transaction to the designated accounts. The booking entry shows which accounts are debited and which are credited.
In short: The Account coding determines the account assignment – the booking entry reflects the debit and credit entry.
What role does the Chart of accounts play?
The Account coding aligns with the accounts used in the company. These are typically derived from a Chart of accounts or chart of accounts.
This allows comparable business transactions to be allocated to the designated accounts according to a uniform system.
Depending on the Buchführung system, additional features such as cost centres, Cost object or tax classifications can also be recorded.
