If you want to be precise in your accounting, you will likely have a large number of accounts to describe each type of income, expense, asset or liabilities that you wish to follow. This can make any analysis tricky, unless we organize the accounts in a way to consolidate those of the same type into a nice summary line. For instance, you may want to track your gas, electricity, water and telephone bills. At the same time, it can cloud the larger picture. What if we could put all those expenses in a bigger folder, named 'Utilities'?.
BudgetInMind uses 5 hierarchical levels:
- The Account is the primary envelope carrying a given type of expenses, such as Cell Phone, Electricity, ...
- A Subclass holds a set of Accounts, such as Utilities, Food & Home, ...
- A Cluster holds a set of Subclasses, such as Recurring Expenses, Food & Home, ...
- A Class holds a set of Clusters. There are 5 Classes: Income, Expenses, Assets, Liabilities, and Special.
- A Type holds a set of Classes. There are 3 Types: Income Statement, Balance Sheet, and Special.
We recommend that you use the hierarchy to organize your accounts.
Tip: Use the new file wizard to create an overall structure. This will give you a very good organization to start from.
Since there are five levels of hierarchy, an account is uniquely identified with its full path Type:Classe:Cluster:SubClass:Account. However, it would be very tedious to enter this full chain everytime you want to enter a transaction.
BudgetInMind simplifies the transaction entry by requiring that unicity is made on SubClass:Account. For instance, BudgetInMind uniquely identifies the Gas account by selecting Utilities:Gas in the example above.
This requires that Types, Classes, Clusters, and SubClasses to be unique. Said differently, if you name a subclass Utilities, you cannot name any other subclass in the hierarchy Utilities, same for Clusters, Classes and Types. In practice, it is not an issue, since the only places where you want to have several times the same name is on Accounts as shown below.
