Account class

What it means

An account class is the highest level of the chart of accounts in double-entry bookkeeping. The Slovak chart for businesses has ten classes numbered 0 to 9, each grouping accounts of the same kind. The first digit of an account number always shows which class it belongs to.

Class 0 covers fixed assets, class 1 inventory, class 2 cash and bank, class 3 receivables and payables, and class 4 equity and long-term liabilities. Class 5 is expenses, class 6 income and class 7 closing and off-balance-sheet accounts. Classes 8 and 9 are reserved for internal accounts.

Classes are divided into account groups with two-digit numbers, and those into general ledger accounts with three digits. The company then creates analytical accounts as it needs, and together they form its company chart of accounts.

How it works in practice

When setting up a new client’s books we start from the classes of the chart and create analytical accounts where the client needs detail, for example separate bank accounts, revenue by line of business or costs by centre. The class structure is the same for every company.

Classes help with orientation. Checking that the balances of classes 5 and 6 agree with the profit, or that the balances in class 3 match the subledger, is one of the basic steps before closing.

For larger clients who need internal management accounts, we suggest using classes 8 and 9 or separate dimensions in the software. The choice depends on how closely the company wants to track costs and output by department.

What to watch out for

Posting to the wrong class, such as small items to fixed assets or an advance to expenses, distorts both the balance sheet and the income statement. In audits such errors are easy to find by comparing what accounts contain with what they are for.

Companies that also report under foreign rules, for example for a parent company, often have a different chart of accounts. The mapping between Slovak classes and the foreign structure must be set up once and applied consistently, or the reports will not agree.