Sometimes you may decide you want to split one account into multiple accounts to more closely track certain kinds of information. Suppose that the owner of Lisa’s Candle Shop decides that she needs to track her candle inventory a little differently to more quickly see what types of inventory are selling well. The increased detail would also help her more easily see what she has left in inventory. To meet these needs, she decides to add three new inventory accounts:
1201 Inventory—Candlesticks 1202 Inventory—Scented Candles 1203 Inventory—Unscented Candles
She adds these accounts to the chart of accounts and the general ledger using numbers immediately following the inventory account so that these accounts stay together on the ...