> For the complete documentation index, see [llms.txt](https://smartbooks.gitbook.io/smartbooks-docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://smartbooks.gitbook.io/smartbooks-docs/consolidation/create-a-consolidated-company/consolidated-financial-accounts.md).

# Consolidated Financial Accounts

Once you have created the company and adjusted the subsidiaries’ financial account structure, you can begin modifying the consolidated financial accounts structure.

#### How Consolidation Works

* **Initial Aggregation:**\
  In consolidation, the general ledger accounts are initially aggregated under the subfolder to which they were assigned.
* **Sorting by Code:**\
  After grouping by subfolder, the accounts are further aggregated by their account codes. For example:
  * If three subsidiaries have account 8000 under subfolder code 40, all these accounts will be aggregated under account 8000 in subfolder 40.
  * If two subsidiaries have account 8000 under subfolder 40 and one subsidiary has account 8000 under subfolder 60, then one set of account 8000 will be allocated to subfolder 60 and the other two to subfolder 40.

In other words, consolidation first sorts accounts based on the subfolder, then by the account code.

#### Customizing the Consolidated Structure

* **Drag and Drop:**\
  You can reposition subfolders and general ledger accounts in the consolidated structure just as you do in the normal financial accounts.
* **New Subfolders:**\
  You also have the option to create new subfolders that do not exist in the subsidiaries’ structure if needed.
* **Important Hierarchy Rule:**\
  When adjusting the hierarchy, ensure that each subfolder contains either subfolders or GL accounts, not both on the same level. Mixing them will result in GL accounts becoming unmapped in the consolidation.

#### Note on Changes

Any changes made in the consolidated financial accounts structure do not affect the underlying entities. This process is similar to adjusting the subsidiary structure, offering you the flexibility to tailor your consolidated reporting to your specific needs.