S5: ICT in accounting

Key Unit competence: Create charts of accounts and S/P charts with the code 

in SAGE 100

Introductory activity

STRONG FAMILY is a small sole trade business of purchasing and selling 
of Electronic devices. It is located in KINYINYA Sector, Gasabo District in 
Kigali city (Tel +250788594143; P.O Box 2023Kigali). STRONG FAMILY 
Shop is well known for its excellent services performed in society and this 
attracts many customers. Actually it is facing serious problems related to 
the use of manual accounting. The decision is taken to hire you knowing 
that you are skilled in computerized accounting and expecting that you 
will help the Shop in the process of recording financial transaction using 
Sage line 100.
1. What do you understand by chart of account? What is meant by 
SP Chart?
2. Identify the types of accounts affected by the transactions below
3. Basing on the transactions below extracted from STRONG FAMILY 
in January, 2020, create chart of Account and SP chart.
On 1st January, 2020 Starting business with RWF 20,000,000(from the 
business owner)
2ndJanuary, 2020 Receiving a loan from bank of RWF 20,000,000
8thJanuary,2020Bought land for RWF 3,500,000 and paying rent for RWF 
400,000 (both by cheque) 
10thJanuary,2020Bought goods on credit from Emma for RWF 2,600,000 
11thJanuary,2020 Selling goods on credit to Minani for RWF 1,500,000 (cost 
of goods sold RWF 900,000)

12thJanuary,2020 Receiving cash from Minani (paying a half of his debt) 

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4.1. Description of chart of account in sage line 100

Learning Activity 4.1 

The following are transactions extracted from INYABUTATU Ltd Company 
in 2021
1st January started a business with 9,000,000 Frw at bank
2nd January withdrew 3000,000 Frw from bank account
3rd January Bought goods of 700,000 Frw by cash
10th January sold goods worth 350,000 to BERWA for cash
17th January received commission of 130, 000 Frw and was deposited at 
bank
21st January bought goods for 400,000 Frw, receiving 5% discounts. 
1. What is meant by chart of account
2. Identify the accounts affected by the above transactions and their 
types
 Learning Activity 4.1 
4.1.1 Meaning of chart of account
A Chart of Accounts (COA) is a financial, organizational tool that provides an 
index of every account in an accounting system. This provides an insight into all 
the financial transactions of the company. Here, an account is a unique record 
for each type of asset, liability, equity, revenue and expense. A COA includes 
many subcategories for each account.
In practice, the Chart of Account serves as the foundation for a company’s 
financial record-keeping system. It provides a logical structure that facilitates 
the addition of new accounts and the deletion of old accounts in computerized 
accounting system. Similarly, an important purpose of a chart of account is to 
segregate expenditures, revenue, assets and liabilities so viewers can quickly 
get a sense of a company’s financial health. A well-designed chart of account 
not only meets the information needs of management; it also helps a business 
to comply with financial reporting standards.
A company has flexibility in creating a chart of account that suits its needs. Within 
the categories of operating revenues and operating expenses, for instance, 
accounts might be further organized by business function or by company 

divisions. They need to be mindful of the Generally Accepted Accounting 

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Principles (GAAP) and the Financial Accounting Standards Board, however 
companies should also ensure that the chart of account format remains the 
same over a period of time. Changes to a chart of account in the short term can 
make it challenging to analyze the difference in a company’s financial health 

over the long term.

4.1.2. Grouping of account categories and their account 
numbers (codes)
While traditional rules revolved around three accounts namely real, personal, 
and nominal, the modern version classifies the accounts into six types, making 
the transactions split into these categories, affecting the debit and credit sides. 
These accounts include asset, liability, revenue, expense, capital, and drawings 

account.

In SAGE line 100, the groups of accounts and their codes are as follow:

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Note: Some users of SAGE LINE 100 use 56-56999…for bank and 57-57999 for 
cash referring chart of account adapted from French ‘’plan comptable’’ used in 
Rwanda. It is possible to modify the account numbers range depending on the 
user’s preference by following these steps:
• Click on File then on concerning your company-and click on Options

• In Options tab, click on Account type

Figure 4. 1: List of account types 

• After double clicking each of the account available and changing the range 

of account numbers.

For example, for customers you will get the following:

Figure 4. 2:Customer account number range

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Figure 4. 3: Back to Account Type
Find the list of other accounts then you select the type of account to be modified.
4.1.3. Steps to create chart of account in Sage line 100
In Sage line 100, the following are the steps to create Chart of Account:
• Click on Structure menu
• Click on Chart of Account 

• Do a right click and click on Add New Element. You get the window below: 

Figure 4.4.a: Chart of account window using a vertical bar

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Figure 4.4.b: Chart of account window using a Wizzard bar

Application activity 4.1

1. Explain the meaning of chart of account
2. State the grouping categories of accounts when creating chart of 
account in Sage line 100
3. Write down the steps followed in creating chart of account in SAGE 

line 100 software

4.2 The capital, income accounts and their codes

Learning Activity 4.2

The following are transactions extracted from TUZAMURANE Ltd Company 
in 2022.
1st January started a business with 15,000,000FRW at Bank and 3000,000 
FRW cash in hand
2nd January, withdrew 5000,000 FRW and bought land valued at 4000,000 
FRW by cash
3rd January Bought goods worth 300,000FRW on credit

5th January received rent for 200,000 FRW by cash

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7th January Interest worth 25,000 FRW received and deposited on saving 
account.
10th Jan withdrew 100,000 FRW for personal car maintenance.
15th January sold goods of 600,000 FRW by cash. Cost of sales 450,000 
FRW
1. Identify the capital and income accounts affected by the above 
transactions
2. Create chart of account for the identified incomes and capital 
accounts.
As mentioned earlier, the capital account number ranges from 10 to 
1099999999999 depending on the number of digits used for account numbers, 
while incomes account number ranges from 7 to 7999999999999 depending 
on the number of digits set in the creation of accounting file. 
For example, if we use 4 digits’ account number, our sample chart of account for 

capital and incomes will look like this:

For example, if we have the transactions such as:
Started a business with 4000,000 Frw at bank
Sold goods worth 600, 000 for cash
Received commission of 50,000 Frw and was deposited on bank account
Received a discount of 25, 000 Frw
Rent received for 100,000 Frw
The chart of account will be made of the following accounts and account 

numbers

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ICT in Accounting | Student Book | Senior Five

Figure 4. 7: Sample chart of capital and income accounts

You continue in the same process to create other accounts in chart of account

Application activity 4.2

In January, 2019, Jane commenced a hardware store business in Rwamagana 
town with 4000,000 Frw at bank and 2,500,000 Frw cash in hand. 
On 2nd January, bought 100 sacks of cement for 10,500 Frw each.
On 10th January, sold 40 sacks of cement for 12,000 Frw each.
On 15th January received interest for 50,000Frw and interest was 
deposited on bank account.
20th January, received a discount of 28,000 Frw
1. Identify the types of accounts affected by the above transactions
2. Create chart of account for capital and income account identified in 

the above transactions

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4.3 Creation of assets account and their codes in chart of 

account

Learning Activity 4.3 

The following are transactions extracted from URUMURI Ltd Company in 
2019
1st January started a business with 15,000,000 Frw at bank and 3000,000 
Frw cash in hand
2nd January, withdrew 7000,000 Frw from bank account
5th January, bought land worth 2,500,000 Frw by cash
7th January, bought building valued at 4000,000 Frw by cash
11th January Bought goods of 700,000 Frw by cash
15th January sold goods worth 350,000 Frw to NKINGI on credit
20th January, bought goods valued at 1,200,000 Frw from JIMMY by cheque. 
Cost of goods sold 850,000 Frw.
2nd February, Purchased office equipment for 650,000 Frw by cheque
5th February, paid rent with 400,000 Frw by cash
10th February, NKINGI settled his full debt by cash
1. Identify the assets accounts found in the above transactions and 
allocate the account numbers (codes) corresponding to each account
2. Create chart of assets account identified from the above transactions
4.3.1Creating fixed assets in chart of account
Fixed assets are company-owned, long-term tangible assets, such as forms 
of property or equipment. These assets make up its day-to-day operations to 
generate income. Being fixed means they can’t be consumed or converted into 
cash within a year. As such, they are subject to depreciation and are considered 
illiquid.
Fixed assets can include buildings, computer equipment, software, furniture, 
land, machinery, and vehicles. Other fixed assets (or non-current assets) include 
long-term investments and intangibles. Intangible assets are those that can lack 
physical existence but can still be used over the long term. These types of assets 
include goodwill, copyrights, trademarks, and intellectual property. Long-term 

investments can include bonds that won’t be sold or mature within a year.

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The creation of chart of account for fixed assets in SAGE line 100 follows the 
same process as capital and incomes, the only difference lies on the account 
numbers, where fixed assets accounts range from 20 to 2799999999999.When 
it goes to 28, it becomes the code of depreciation of fixed assets.
Using four (4) digits for account numbers, the chart of account will look like 

this:

To create the fixed assets in chart of accounts,
• Click on structure menu
• Click on chart of account 

• Right click then add new element

The following window appears:

Figure 4. 8: Chart of account window

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In the Ac no field, enter account number (eg 2001 for land account), in the name 
field, type account name and put your cursor in classif field to get the name of 
account repeated.Normally on the account type, the software itself will recognize 
that account number used is of fixed assets type. Using our sample assets chart of 

account, the chart of account in Sage line 100 will look like this:

Figure 4. 9: Sample chart of account for fixed assets

For deleting already created fixed asset, right click on that particular asset, then 

click on “delete selected element”

You can also delete the selected fixed asset or any other created element of chart 

of account by selecting it and clicking on delete icon on navigation toolbar

Figure 4. 10: Location of delete icon on navigation toolbar

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4.3.2 Creating current assets in chart of account

Current assets are either: (a) items owned by the business with the intention of 
turning them into cash within one year; or (b) cash, including money in the bank, 
owned by the business. These assets are ‘current’ because they are continually 
flowing through the business. For example, a trader, Kamegeri, runs a business 
selling motor cars and purchases a showroom, which he stocks with cars for 
sale. (a) If he sells a car in a cash sale, the goods are immediately converted into 
cash. (b) If he sells a car in a credit sale, the car will be given to the customer 
who becomes a receivable of the business. Eventually, the receivable will pay 
what he owes in cash. The transactions described above could be shown as a 

cash cycle. 

Figure 4. 11: Cash cycle

Current assets are listed in descending order of the length of time it might be 
before the asset will be converted into cash. Broadly speaking, inventory will 
convert into receivables, and receivables will convert into cash. So inventory, 
receivables and cash will be listed in that order. Prepayments, because they are 
similar to receivables, should be listed after receivables and before cash.
In SAGE line 100, if we use four(digits)current assets would have the following 

account numbers in chart of account:

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For example, if we have the following current assets in our business, 
– Stock of raw materials
– Stock of furniture
– Stock of office supply
– Customers (account receivables)
– Sundry debtors
– Cash
– Bank 
The chart of account for the above current assets is:

Figure 4. 12: Chart of account window

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To enter the account number and account names of the aforementioned current 
assets, you type the account number in Ac no. field, the account name in name
field, the account type is displayed itself since the software recognizes the 
account number used for the particular account type. After creating the chart 

of account for current assets you will have the following results:

Figure 4. 13: Creation of cash account 

Application activity 4.3

The following is the list of the assets owned by UBUMWE agro processing 

industry ltd in 2021.

Required: Create chart of account for the above assets owned by UBUMWE agro-processing industry Ltd.

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4.4 Creation of third party accounts in SAGE line 100
Learning Activity 4.4
Corin KARURANGA owns and runs the Aerobic Health Foods Shop in 
Muhanga town. He commenced trading on 1 January 202.
Customers are allowed to purchase up to 200,000 Frw of goods on credit 
but must repay a certain proportion of their outstanding debt every month. 
These customers include Eden Restaurant, Fast food Restaurant and 
INEZA Motel. Again, the business has contract with different suppliers like 
Modern farms cooperative, Turwanyinzara cooperative, and IGIRE Muhinzi 
cooperative.
More importantly, the business is employing workers including 2 watchmen, 
cashier, accountant, customer care officer, service providers and sales men.
1. Why is it unavoidable for business to keep customers, suppliers and 
employees’ records in books of accounts?
2. Identify the customers (debtors), suppliers (creditors) and 
employees of Corin KARURANGA and create S/P chart for them.
 Learning Activity 4.4 
4.4.1 Creation of S/P chart for debtors
Debtors represent the amount of money owed to the business and can be subdivided into trade debtors and others. The former category relates to customers 
who have bought goods on credit terms and represents the amount of money 
still outstanding from them at the year end. Other debtors could include 
dividends receivable from investments in the shares of other companies.
Before creating individual debtors accounts in S/P chart, you need first to create 
their general account in chart of account as debtors(customers)as follow:

Click on structure-chart of Account-Right Click-Add new element.

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The following steps will be followed:
Click on structure
• S/P chart
• Right click
• Add new element

Then the following window will be displayed:

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Figure 4. 15: SP chart window
1. Write the account number of the debtor
2. Type the name of the debtor
3. Select the type of account (In customer, supplier, employee, and other), 
select cust(customer)
4. Click in classif field for the debtor name to be reproduced
5. Click on controlling account, the chart of account already created appear 
and you select debtor(customers)
Additionally, you can fill the full address of the debtor as mentioned in the table.
For example if you have the four debtors in your company, Kalisa, Mukamana, 

Kanyana, and Uwizeye. 

Figure 4. 16: Creation of individual accounts of customers (debtors)in SP chart

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4.4.2 Creation of SP chart for the creditors (Suppliers)
A creditor is an individual or entity that is owed money. Typically, the creditors 
of a business are its suppliers, which have provided it with goods and services, 
and in exchange expect to be paid by an agreed-upon date. Or, the business 
owes money to a lender, which also expects to be repaid at a later date. The 
amounts owed should be reported on the firm’s balance sheet as either 
accounts payable or loans payable. Accounts payable are usually classified as 
current liabilities, while loans may be classified as either current or long-term 
liabilities, depending on their scheduled repayment dates.
Examples of creditors are suppliers and lenders. There are several varieties of 
creditor, which include the following:
• Secured creditor. This creditor is legally entitled to take certain borrower 
property and sell it in the event of a payment default.
• Unsecured creditor. This creditor is not legally entitled to take any 
borrower property in the event of a default.
• Senior creditor. This creditor will be paid before junior creditors in the 
event of a borrower’s bankruptcy.
• Junior creditor. This creditor will only be paid after senior creditors have 
been paid in full, if there is a borrower bankruptcy
Before creating individual creditors accounts in S/P chart, you need first to 
create their general account in chart of account as creditors (customers) as 
follow:
Click on structure-chart of account-Right click-Add new element.

The following window appears:

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Figure 4. 17. Chart of account window

In the account number field, fill 4010(If four digits were used to set account 
length). In the name field, fill Creditors or suppliers. Then click on classif to 
make the account name be reproduced. Account type will automatically show 
as supplier since the software itself recognizes the type of account when the 
account number is written in its field. After, the following window will be 

displayed:

Figure 4. 18: Creation of general account for suppliers (creditors)

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Once the general account of creditors has been created, the next step is to create 
individual account of creditors in S/P chart. 
The sample S/P chart for individual suppliers’ accounts is structured as 

summarized in the following table:

To find S/P chart, 
• Click on structure
• Click on S/P chart
• Right click

• Click on Add new element

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The following window is shown:

Figure 4. 19: Display of SP chart account types
• In Ac No field, fill the account number of the creditor
• In the name field, fill the name of creditor
• Click on Cust tab and select supplier
• Click on controlling account, then the chart of account appear and select 
suppliers or creditors (depending on the name you have attributed to 
creditors in chart of account)
• Lastly, fill full address of the customer, including postal code (PC), town, 

Region /Ctry and telecom.

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Figure 4. 20: Creation of individual supplier(creditor)’ account
After filling the information above for one creditor, do the same for all creditors 
of the company. Considering the sample creditors stated above, S/P chart will 

be like this:

Figure 4. 21: Sample SP chart for suppliers(Creditors)

4.4.3 Creation of SP chart for employees
An employee is a person who works for another in return for financial or other 
compensation. Under that definition, independent contractors would appear 
to be employees. Black’s Law Dictionary defines employee as a person in the 
service of another under any contract of hire, express or implied, oral or written, 
where the employer has the power or right to control and direct the employee 

in the material details of how the work is to be performed.

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A payroll journal entry is a record of how much you pay your employees and 
your overall payroll expenses. That way, you can look back and see details about 
employee compensation, such as when you paid it, how much it was, and where 
the money went. Compensation describes the cash rewards paid to employees 
in exchange for the services they provide. It may include base salary, wages, 
incentives and/or commission. Total compensation includes cash rewards as 
well as any other company benefits.
The employees account length ranges from 421 to 42199999999 in the chart 
of account. 
In Sage line 100, employees are created in the same way as debtors and 
suppliers. You just click on Structure-SP chart-Right click-Add New Element. 
After getting to S/P chart, the next step is the creation of all employees working 
in the business.
If for example a business is employing five employees, let’s say Mukamana, 
Kamari, Rwabugiri, Bagabo, Nkurikiyinka, the table summarizing SP chart 
for the employees names account numbers and types using four (4) digits for 

account length are as follow:

To create the above employees in the S/P chart, click on structure-SP-chart-Right 
click-add new element, then you record the required information concerning 
employees. 
• In the Ac no field, fill the account number of employee
• In the name field, fill the name of employee
• Click in classif field to get the name of employee reproduced
• Click on controlling account tab to get the previously created chart of 
account, then click on employees to connect each employee individual 
account to their general account as collected in chart of account.
• Fill other information regarding address and personal information of 
employee

Below is the filled S/P chart for the above employees.

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Figure 4. 22: Sample SP chart for employees

Application activity 4.4

The company MM has the following suppliers and customers; prepare 

their chart of account.

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End unit assessment

THOUSAND HILLS Ltd company is a manufacturing company that process 
sugar cane into finished sugar. The following are transactions extracted 
from THOUSAND HILLS Ltd company in 2020.
1st January, Started a business with 10,000,000 FRW at bank and 4000,000 
FRW cash in hand,
3rd January, withdrew 5000,000 FRW and bought building for 7000,000 
FRW by cash
5th January, Credit purchases from JUMA for 6000,000 FRW. 
10th January, Bought office stationeries for 1,500,000 FRW by cheque
20thJanuary, Credit sales to NDANGA for 7,000,000 FRW. Cost of goods 
sold 4,800,000 FRW
31st January, Paid rent on office building for 150,000 FRW by cash
5th February, withdrew 800,000 FRW for buying personal computer.
11th Feb, Paid insurance valued at 300,000 FRW and Fuel for 50,000 FRW 
by cheque
25th Feb, Rent received for 100,000 FRW by cash
27th Feb, Earned sales commissions for 35,000 FRW 
1. Identify the accounts affected by the above transactions

2. Create chart of account and S/P chart for the identified accounts

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