How is a bank account managed in the books?
Published
In the books, a bank account is an asset account within cash and equivalents, with exactly one real-world counterpart: a specific bank account. Rule one: one ledger account per bank account - merging two into one kills the ability to reconcile.
Two non-negotiable rules
1. Separation from personal. Mixing the owner's account with the business's means: statements unusable before a bank or investor, a chaotic owner's current account, and personal costs leaking into the books - see the balance sheet page for the numbers.
2. One account per balance. In Al-Waha's chart: 1121 operating, 1122 savings - and a third bank would be a new line, never a merge.
An idea worth adopting: the tax account
As on the output VAT page: open an account (or savings pot) receiving the tax portion of every collection. At filing time the amount is ready - and the difference between a business that does this and one that "finds the money" in filing week is the difference between cash management and firefighting.
Frequently asked questions
Do I need more than one operating account?
Operating + a tax/obligations pot covers most small businesses. Beyond that, each extra account needs a clear purpose (payroll, a project), not a hobby - every account is one more monthly reconciliation.
A foreign-currency account?
Its own ledger account in its own currency, with exchange differences arising on revaluation and transfers - never merged with the riyal account.