A picture is worth a thousand journal entries: accounting graph topology for auditing and fraud detection Monash University

Owner’s equity measures how valuable the company is to the shareholders of the company. The financial health, flow, and fluidity of your business will ultimately dictate its long-term success, which is why monitoring your money matters carefully, comprehensively, and accurately is absolutely essential. A spider or radar graph is a very useful type of graph for showing qualitative data or the overall “score” or comparison of multiple series. We follow strict ethical journalism practices, which includes presenting unbiased information and citing reliable, attributed resources. The articles and research support materials available on this site are educational and are not intended to be investment or tax advice. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

This is a straightforward graph that gives you a glance overview of the financial health of your company. It doesn’t include any ratios or proportions but solely numbers that represent the state of your current liabilities, current assets, and total working capital. If the working capital is high, you might want to consider investing the excess cash, as higher values don’t necessarily mean your company is performing well. Our list of financial data visualization examples wouldn’t be complete without cost avoidance. This is one of the graphs that are important to take care of since it tracks how much costs, in this case, of a procurement department, have been saved in a specific time frame.

International aspects and accounting information interchange – Charts of accounts and tax harmonisation issues

If you want to know more about this topic, check out our guide on the top 14 interactive dashboard features. CFI is the global institution behind the financial modeling and valuation analyst FMVA® Designation. CFI is on a mission to enable anyone to be a great financial analyst and have a great career path. In order to help you advance your career, CFI has compiled many resources to assist you along the path. An area chart is a solid area and can be effective when showing stacked, cumulative data series. A pie graph is effective for illustrating the percentage breakdown of a small number of data points.

• The information in the chart of accounts is the
  foundation of a well-organized accounting system.
• The COA is a listing of all existing accounts
  including a description of the specific use of
  the account.
• On the contrary, a poor color palette can make the visualization process less effective and harder to understand.
• If used by a consolidated or combined entity, it also includes separate classifications for intercompany transactions and balances.
• There are many more financial metrics and KPIs that are industry-specific.

Also, the numbering should be consistent to make it easier for management to roll up information of the company from one period to the next. But experience has shown that the most common format organizes information by individual account and assigns each account a code and description. What’s important is to use the same format over time for the consistency of period-to-period and year-to-year comparisons.

Example Chart of Accounts

An advantage of the P/V graph is that profit and losses at any point can be read directly from the vertical axis. The units sold are plotted on the horizontal axis, while total revenue is shown on the vertical axis. Multiview Financials ERP provides our clients with a comprehensive software suite that empowers their finance teams to advance their organizations.

The graphs most widely used by accountants are bar graphs, column
graphs, pie graphs and line graphs; however, other effective forms are
also available. Some of the sub-categories that may be included under the revenue account include sales discounts account, sales returns account, interest income account, etc. However, they also must respect the guidelines set out by the Financial Accounting Standards Board (FASB) and generally accepted accounting principles (GAAP).

Radar chart

Here Cost of goods sold means all the costs that are directly related to your product/service. Though most accounting software products set you up with a standard COA or let you import your own, it’s a good idea to have an accountant scan it and add any other accounts that are specific to your business. Unearned revenue represents a customer’s
advanced payment for a product or service that has yet to be
provided by the company. Since the company has not yet provided the
product or service, it cannot recognize the customer’s payment as
revenue, according to the revenue recognition principle. The company owing the product
or service creates the liability to the customer. Accounts payable recognizes that the company owes money and has
not paid.

#5 Waterfall Chart

If your company is interested in an ERP system that can assist with your accounting data visualization efforts, Multiview has a solution for you. These visual representations present significant benefits over raw data, including improved viewer comprehension. They can also express large quantities of data in easily digestible formats, and even create narratives using data. These representations can be used in all aspects of a business, from daily operations to major presentations.

Remember, when a customer purchases something “on
account” it means the customer has asked to be billed and will pay
at a later date. Machinery is usually specific to a manufacturing company
that has a factory producing goods. Unlike other long-term assets such as machinery,
buildings, and equipment, land is not depreciated. The process to
calculate the loss on land value could be very cumbersome,
speculative, and unreliable; therefore, the treatment in accounting
is for land to not be depreciated
over time. Cash includes paper currency as well as coins, checks, bank
accounts, and money orders. Cash activities are a large part of
any business, and the flow of cash in and out of the company is
reported on the statement of cash flows.

A savvy investor knows how to use accounting ratios to determine whether a stock presents a lucrative opportunity or perhaps a liability that other investors have yet to realize. For example, if unit selling prices, unit variable costs, and total fixed costs remain constant, the P/V graph can show how many units must be sold to achieve a target profit. The Multiview ERP platform is a comprehensive software suite that leverages factor definition technology for your finance teams. Trusted by hundreds of organizations, our platform offers core accounting tools, business insight tools, automation and inventory management capabilities to help your business at all levels. Done poorly, data visualization can cause confusion and even misrepresent your data. When looking into data visualization, accounting departments should keep some essential do’s and don’ts in mind.

If you have a special request for something you don’t see here – email me, and I’ll try to add it. Break-even charts and P/V graphs are often used together to benefit from the advantages of both visualizations. Below and to the left of the break-even point, the difference between the total cost line and the total revenue line reflects the net loss for the period.