Brewery Business Financial Management: COA Template & Account Hierarchy

Posted In | Finance | Accounting Software | Chart of Accounts

The brewery business has experienced significant growth in recent years, with craft breweries and microbreweries gaining popularity worldwide. Effective financial management is essential for the success of any brewery, and a crucial component of this process is the Chart of Accounts (COA). In this article, we will discuss the importance of a COA for breweries, provide an example template, and outline the account hierarchy.
 

 

What is a Chart of Accounts (COA)?

A Chart of Accounts (COA) is an organized list of all financial accounts used by a business to record and report its financial transactions. The COA serves as the foundation for the company's accounting system, enabling accurate tracking and reporting of financial activities. For breweries, a well-structured COA can provide insights into profitability, cost management, and areas for improvement.

 

Example COA Template for Brewery Businesses

The following is an example COA template designed specifically for brewery businesses. Keep in mind that every business is unique, and your COA should be tailored to your specific needs and requirements

 

1. Assets
 

1.1. Current Assets

1.1.1. Cash

1.1.2. Accounts Receivable

1.1.3. Inventory

1.1.4. Prepaid Expenses
 

1.2. Non-Current Assets

1.2.1. Property, Plant, and Equipment

1.2.2. Intangible Assets

 

2. Liabilities
 

2.1. Current Liabilities

2.1.1. Accounts Payable

2.1.2. Accrued Expenses

2.1.3. Current Portion of Long-term Debt
 

2.2. Non-Current Liabilities

2.2.1. Long-term Debt

2.2.2. Deferred Tax Liabilities

 

3. Equity

3.1. Owner's Capital

3.2. Retained Earnings

 

4. Revenue

4.1. Beer Sales

4.2. Merchandise Sales

4.3. Other Income

 

5. Expenses
 

5.1. Cost of Goods Sold

5.1.1. Raw Material Costs

5.1.2. Packaging Costs

5.1.3. Production Labor Costs
 

5.2. Operating Expenses

5.2.1. Salaries and Wages

5.2.2. Rent and Utilities

5.2.3. Marketing and Advertising

5.2.4. Equipment Maintenance and Repairs

5.2.5. Insurance

5.2.6. Depreciation and Amortization
 

5.3. Interest Expense
 

5.4. Income Tax Expense

 

Account Hierarchy in Brewery Business Financial Management

Account hierarchy is essential for maintaining consistency and accuracy in financial reporting. A typical account hierarchy for brewery businesses consists of the following levels:
 

1. Category: The highest level in the hierarchy, representing the main divisions of the financial statement (assets, liabilities, equity, revenue, and expenses).
    

2. Subcategory: A more detailed level within the main categories, further segregating accounts based on their nature or function (e.g., current assets, non-current assets, operating expenses).
    

3. Account: The most detailed level, representing individual financial accounts used to record specific transactions (e.g., cash, inventory, raw material costs).

 

A well-organized Chart of Accounts is crucial for effective financial management in brewery businesses. By creating a customized COA tailored to the specific needs of your brewery and establishing a clear account hierarchy, you will ensure accurate financial record-keeping, facilitate reporting, and provide valuable insights for decision-making. Brewery businesses have unique accounting needs, such as tracking raw material costs, managing inventory, and handling production labor expenses. It is essential to consider these specific requirements when developing your COA. You may also want to include accounts for distribution and transportation costs, excise taxes, and licensing fees, as these are common financial events in the brewery industry.