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Accountancy Chart of Accounts, Balance Sheet Accounts, Chart of Accounts Ideas

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Chart of Accounts (COA)
A Chart of Accounts is a list of all accounts tracked by a single accounting system, and should be designed to capture financial information to make good financial decisions.

Each account in the chart is assigned a unique identifier, typically an account number. Each account in the Anglo-Saxon chart is classified into one of the five categories:

Assets, Liabilities, Equity, Income and Expenses.
A chart of accounts is a listing of the names of the accounts that a company has identified and made available for recording transactions in its general ledger.

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A company has the flexibility to tailor its own chart of accounts to best suit its needs, including adding accounts as needed in their business.

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Important Note
Because the material covered here is considered an introduction to the topic of Accountancy and Accounting, there are many complexities that may not be presented. You should always consult with a business accounting professional for assistance with your own specific circumstances.

The chart of accounts is a listing of all the accounts in the general ledger, each account accompanied by a reference number. To set up a chart of accounts, one first needs to define the various accounts to be used by the business.

Practitioners of accountancy are known as accountants. There are many professional bodies for accountants throughout the world. Many allow their members to use titles indicating their membership or qualification level. Examples are Chartered Certified Accountant (ACCA or FCCA), Chartered Accountant (FCA, CA or ACA), Management Accountant (ACMA, FCMA or AICWA), Certified Public Accountant (CPA) and Certified General Accountant (CGA or FCGA).

Accounting - accountancy attempts to create accurate financial reports that are useful to managers, regulators, and other stakeholders such as shareholders, creditors, or owners. The day-to-day record-keeping involved in this process is known as bookkeeping. Accounting scholarship is the academic discipline which studies accounting/accountancy.

Introduction to Chart of Accounts

Each account that a business is going to use should have a number to identify it. For very small businesses, three digits may suffice for the account number, though more digits are highly desirable in order to allow for new accounts to be added as the business grows.

With more digits, new accounts can be added while maintaining the logical order. Complex businesses may have thousands of accounts and require longer account reference numbers.

It is worthwhile to put thought into assigning the account numbers in a logical way, and to follow any specific industry standards.

Within the chart of accounts you will find that the accounts are typically listed in the following order:

Balance Sheet Accounts

Balance Sheet Accounts
- Assets
- Liabilities
- Owner's (Stockholders') Equity

Income Statement Accounts

Income Statement Accounts
- Operating Revenues
- Operating Expenses
- Non-operating Revenues and Gains
- Non-operating Expenses and Losses

Within the categories of operating revenues and operating expenses, accounts might be further organized by business function (such as producing, selling, administrative, financing) and/or by company divisions, product lines, etc.

A company's organization chart can serve as the outline for its accounting chart of accounts . For example, if a company divides its business into ten departments (production, marketing, human resources, etc.). Each department will likely be accountable for its own expenses (salaries, supplies, phone, etc.). Each department will have its own phone expense account, its own salaries expense, etc.

A chart of accounts will likely be as large and as complex as the company itself. An international corporation with several multi-national divisions may need thousands of accounts, whereas a small local retailer may need as few as one hundred accounts or less.

Types of Accounts

Asset Accounts

Asset Accounts represent the different types of economic resources owned by a business. Common examples of Asset Accounts are cash, cash in bank, building, inventory, prepaid rent, goodwill, accounts receivable.
Read more on Asset Accounts...

Liability Accounts

Liability Accounts represent the different types of economic obligations by a business, such as accounts payable, bank loan, bonds payable, accrued interest.
Read more on Liability Accounts...

Equity Accounts

Equity Accounts represent the residual equity of a business (after deducting from Assets all the liabilities) including Retained Earnings and Appropriations.
Read more on Equity Accounts...

Revenue or Income Accounts

Income or Revenue Accounts represent the company's gross earnings and common examples include Sales, Service revenue and Interest Income.
Read more on Revenue or Income Accounts...

Expense Accounts

Expense Accounts represent the company's expenditures to enable itself to operate. Common examples are electricity and water, rentals, depreciation, doubtful accounts, interest, insurance.
Read more on Expense Accounts...

Contra Accounts

Contra Accounts, from the term contra, meaning to deduct, the value of which are opposite the 5 above mentioned types of accounts. For instance, a contra-asset account is Accumulated depreciation. This label represent deductions to a relatively permanent asset like Building.

Sample Chart of Accounts

Balance sheet accounts tend to follow a standard that lists the most liquid assets first. Revenue and expense accounts tend to follow the standard of first listing the items most closely related to the operations of the business. For example, sales would be listed before non-operating income. In some cases, part or all of the expense accounts simply are listed in alphabetical order.

The following is an example of some of the accounts that might be included in a chart of accounts.

Asset Accounts

Current Assets

Account No.	Description
1000	Petty Cash
1010	Cash on Hand (e.g. in cash registers)
1020	Regular Checking Account
1030	Payroll Checking Account
1040	Savings Account
1050	Special Account
1060	Investments - Money Market
1070	Investments - Certificates of Deposit
1100	Accounts Receivable
1140	Other Receivables
1150	Allowance for Doubtful Accounts
1200	Raw Materials Inventory
1205	Supplies Inventory
1210	Work in Progress Inventory
1215	Finished Goods Inventory - Product #1
1220	Finished Goods Inventory - Product #2
1230	Finished Goods Inventory - Product #3
1400	Prepaid Expenses
1410	Employee Advances
1420	Notes Receivable - Current
1430	Prepaid Interest
1470	Other Current Assets

Fixed Assets

Account No.	Description
1500	Furniture and Fixtures
1510	Equipment
1520	Vehicles
1530	Other Depreciable Property
1540	Leasehold Improvements
1550	Buildings
1560	Building Improvements
1690	Land
1700	Accumulated Depreciation, Furniture and Fixtures
1710	Accumulated Depreciation, Equipment
1720	Accumulated Depreciation, Vehicles
1730	Accumulated Depreciation, Other
1740	Accumulated Depreciation, Leasehold
1750	Accumulated Depreciation, Buildings
1760	Accumulated Depreciation, Building Improvements

Other Assets

Account No.	Description
1900	Deposits
1910	Organization Costs
1915	Accumulated Amortization, Organization Costs
1920	Notes Receivable, Non-current
1990	Other Non-current Assets

Liability Accounts

Current Liabilities

Account No.	Description
2000	Accounts Payable
2300	Accrued Expenses
2310	Sales Tax Payable
2320	Wages Payable
2330	401-K Deductions Payable
2335	Health Insurance Payable
2340	Federal Payroll Taxes Payable
2350	FUTA Tax Payable
2360	State Payroll Taxes Payable
2370	SUTA Payable
2380	Local Payroll Taxes Payable
2390	Income Taxes Payable
2400	Other Taxes Payable
2410	Employee Benefits Payable
2420	Current Portion of Long-term Debt
2440	Deposits from Customers
2480	Other Current Liabilities

Long-term Liabilities

Account No.	Description
2700	Notes Payable
2702	Land Payable
2704	Equipment Payable
2706	Vehicles Payable
2708	Bank Loans Payable
2710	Deferred Revenue
2740	Other Long-term Liabilities

Equity Accounts

Account No.	Description
3010	Stated Capital
3020	Capital Surplus
3030	Retained Earnings

Revenue Accounts

Account No.	Description
4000	Product #1 Sales
4020	Product #2 Sales
4040	Product #3 Sales
4060	Interest Income
4080	Other Income
4540	Finance Charge Income
4550	Shipping Charges Reimbursed
4800	Sales Returns and Allowances
4900	Sales Discounts

Cost of Goods Sold

Account No.	Description
5000	Product #1 Cost
5010	Product #2 Cost
5020	Product #3 Cost
5050	Raw Material Purchases
5100	Direct Labor Costs
5150	Indirect Labor Costs
5200	Heat and Power
5250	Commissions
5300	Miscellaneous Factory Costs
5700	Cost of Goods Sold, Salaries and Wages
5730	Cost of Goods Sold, Contract Labor
5750	Cost of Goods Sold, Freight
5800	Cost of Goods Sold, Other
5850	Inventory Adjustments
5900	Purchase Returns and Allowances
5950	Purchase Discounts

Expenses

Account No.	Description
6000	Default Purchase Expense
6010	Advertising Expense
6050	Amortization Expense
6100	Auto Expenses
6150	Bad Debt Expense
6200	Bank Fees
6250	Cash Over and Short
6300	Charitable Contributions Expense
6350	Commissions and Fees Expense
6400	Depreciation Expense
6450	Dues and Subscriptions Expense
6500	Employee Benefit Expense, Health Insurance
6510	Employee Benefit Expense, Pension Plans
6520	Employee Benefit Expense, Profit Sharing Plan
6530	Employee Benefit Expense, Other
6550	Freight Expense
6600	Gifts Expense
6650	Income Tax Expense, Federal
6660	Income Tax Expense, State
6670	Income Tax Expense, Local
6700	Insurance Expense, Product Liability
6710	Insurance Expense, Vehicle
6750	Interest Expense
6800	Laundry and Dry Cleaning Expense
6850	Legal and Professional Expense
6900	Licenses Expense
6950	Loss on NSF Checks
7000	Maintenance Expense
7050	Meals and Entertainment Expense
7100	Office Expense
7200	Payroll Tax Expense
7250	Penalties and Fines Expense
7300	Other Taxes
7350	Postage Expense
7400	Rent or Lease Expense
7450	Repair and Maintenance Expense, Office
7460	Repair and Maintenance Expense, Vehicle
7550	Supplies Expense, Office
7600	Telephone Expense
7620	Training Expense
7650	Travel Expense
7700	Salaries Expense, Officers
7750	Wages Expense
7800	Utilities Expense
8900	Other Expense
9000	Gain/Loss on Sale of Assets

Business Tips

Some tips on how to avoid business failure:

Don't underestimate the capital you need to start up the business.
Understand and keep control of your finances - income earned is not the same as cash in hand.
More volume does not automatically mean more profit - you need to get your pricing right.
Make sure you have good software for your business, software that provides you with a good reporting picture of all aspects of your business operations.

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Important Note
Because the material covered here and other pages is considered an introduction to the topic of Accountancy and Accounting, there are many complexities not presented. You should always consult with a business accounting professional for assistance with your own specific circumstances.

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