> 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/data-models/financial-accounts/role-of-financial-accounts.md).

# Role of Financial Accounts

The Financial Accounts Structure is your organized view of all Profit and Loss, Balance Sheet, and Cash Flow accounts. It’s designed to help you see how each account fits into your overall financial picture, making reporting and analysis more straightforward.

## **Key Concepts**

* **Subtotals and Groupings:**\
  By placing accounts under folders such as “Personnel Related Costs” or “Marketing & Sales,” you create subtotals that roll up into larger totals. This grouping makes it easier to see aggregated figures for key areas of your business.
* **Hierarchical Organization:**\
  In the initial setup, a basic financial reporting template is applied. Your general ledger accounts and predefined classifications are grouped into sections like Gross Margin, Operating Costs, and Net Result. Each section contains relevant subfolders, which serve as the building blocks of your financial reports.
* **Types of General Ledger Accounts:** \
  General ledger accounts are assigned types based on the data retrieved from your financial source system. These types ensure that each account is displayed with the correct sign and behaves appropriately in reports.

## **Recommended steps**

1. **Review the Current Setup:**
   * **Expand/Collapse Folders:** Explore the current hierarchy by expanding or collapsing folders to see which accounts are included in each subtotal.
   * **Assess Structure:** Check if the existing structure reflects your reporting needs and provides the necessary insights.
2. **Make Adjustments:**
   * **Add a Subfolder:**\
     If you need a new subtotal or grouping, create a subfolder (for example, “Marketing & Sales”) and drag the relevant accounts under it.
   * **Rename or Move Accounts:**\
     Adjust the names or reposition accounts to align with your internal terminology, ensuring clarity for all team members.
   * **Check Account Types:**\
     Verify that the account types are correctly classified so that they display the proper sign (positive or negative) in your reports.

This flexible structure is designed to adapt to your unique financial reporting requirements, helping you create clear and actionable insights into your business's performance.