Synthetic account

What it means

A synthetic account is a three-digit account from the chart of accounts carrying the aggregate balance and movement. Its number is set by ministerial decree and cannot be changed at will.

Detail sits in the analytical records beneath it: by partner, cost centre, job, currency or tax treatment. The analytical total must equal the synthetic balance to the cent.

Above the synthetic account sit the account group, with a two-digit number, and the account class, with a single digit. The synthetic account is thus the lowest level the state prescribes, and also the level at which the general ledger is kept. Everything below it the entity decides for itself according to its needs.

How it works in practice

Statements are built from synthetic accounts, but management needs the analytics. So the analytical structure is designed around the questions management asks, not around what the software offers.

The trial balance is the control: it compares opening balances, movements and closing balances. A mismatch between synthetic and analytical records shows up there.

When moving to new accounting software or taking over the books from another firm, synthetic accounts carry over easily because they are the same everywhere. The work is in the analytical accounts: we map the old ones to the new so that opening balances and the comparison with last year agree, and have the client sign off the mapping.

What to watch out for

Too many analytical accounts is as much of a problem as too few. Hundreds that nobody uses for decisions only raise posting errors and lengthen the close.

A wrongly chosen synthetic account lands on the wrong line of the balance sheet, even if the analytical account is named correctly. A long-term loan booked among short-term liabilities worsens the liquidity ratios, and a bank that watches them may ask why the company suddenly looks weaker when nothing has changed.