What Is a Chart of Accounts?

A chart of accounts (COA) is an index of all of the financial accounts in a company's 澳洲幸运5官方开奖结果体彩网:general ledger. In short, it is an organizational tool that lists by category and line item all of the financial 澳洲幸运5官方开奖结果体彩网:transactions that a company conducted during a specific 澳洲幸运5官方开奖结果体彩网:accounting period.

How a Chart of Accounts Works

Large and small companies 澳洲幸运5官方开奖结果体彩网:use a COA toꦓ organize their fi𒁃nances and give interested parties, such as investors and shareholders, a clear view and understanding of their financial health. Separating expenditures, revenue, assets, and 澳洲幸运5官方开奖结果体彩网:liabilities helps to achieve this and ensures that 澳洲幸运5官方开奖结果体彩网:financial statements are in compliance with reporting standards.

Here is a way to think about a COA as it relates to your own finances. Say you have a checking account, a savings account, and a 澳洲幸运5官方开奖结果体彩网:certificate of deposit (CD) at the same bank. When you log in to your account online, you’ll typically go to an overview page that shows the balance in each account. Similarly, if you use an online program that helps you manage all your accounts in one place, like Mint or 澳洲幸运5官方开奖结果体彩网:Personal Capital, you’re looking at basically the same thing as a comp🎉any’s COA. You 🃏can see all your assets and liabilities on one page.

There is no single format for a chart of🍸 accounts. Typically, they all follow the essential structure described below. But the final structure and lဣook will depend on the type of business and its size.

COA Structure

The COA is typically set up to display information in the order that it appears in financial statements. That means that 澳洲幸运5官方开奖结果体彩网:balance sheet accounts are listed first and are followed by accounts in the 澳洲幸运5官方开奖结果体彩网:income statement.

These primary accounts of assets, liabilities, 澳洲幸运5官方开奖结果体彩网:shareholders' equity, revenue, and expenses can then be broken down into sub-accounts such as 澳洲幸运5官方开奖结果体彩网:operating revenues, 澳洲幸运5官方开奖结果体彩网:operating expenses, 澳洲幸运5官方开奖结果体彩网:non-operating revenues, and non-operating losses.

In addition, the operating revenues and operating expenses accounts might be further organized by business function and/or by company divisions.

As an example, a small company COA might include these sub-accounts under the primary assets, primary liabilities, and primary shareholders' equity accounts:

Assets

• Cash
• Savings account
• 澳洲幸运5官方开奖结果体彩网:Petty cash balance
• 澳洲幸运5官方开奖结果体彩网:Accounts receivable
• Undeposited funds
• Inventory assets
• 澳洲幸运5官方开奖结果体彩网:Prepaid insurance
• Vehicles
• Buildings

Liabilities

• Company credit card
• 澳洲幸运5官方开奖结果体彩网:Accrued liabilities
• 澳洲幸运5官方开奖结果体彩网:Accounts payable
• Payroll liabilities
• Notes payable

Shareholders' equity

• 澳洲幸运5官方开奖结果体彩网:Common stock
• 澳洲幸运5官方开奖结果体彩网:Preferred stock
• 澳洲幸运5官方开奖结果体彩网:Retained earnings

Account Identifiers

To make it easy for readers to locate specific accounts or to know what they're looking at instantly, each COA typically contains identification codes, names, and brief descriptions for accounts.

This coding system is important because the COA can display many line items for each tr🅷ansaction in eve𝐆ry primary account.

For example, a company may decide to code assets from 🦂100 to 199, liabilities from 200 to 299, equity from 300 to 399, and so forth. Those could then be broken down further into, e.g., current assets (110-119) and current liabilities (⛎210-219). The number of figures used depends on the size and complexity of a company and its transactions.

Many organizations structure their COAs so that expense information is separately compiled by department. Thus, the sales department, engineering department, and accounting department all have the same set of expense accounts. Examples of expense accounts include the 澳洲幸运5官方开奖结果体彩网:cost of goods sold (COGS), 澳洲幸运5官方开奖结果体彩网:depreciation expense, utility expense, and wages expense.

Special Considerations

COAs can differ and be tailored to reflect a company’s operations. However, they also must respect the guidelines set out by the 澳洲幸运5官方开奖结果体彩网:Financial ♔Accounting Standards B𒊎oard (FASB) and 澳洲幸运5官方开𓂃奖结果体彩网:generally accepted accounting principles (GAAP).

Of crucial importance is that COAs are kept the same from year to year. Doing so ensures that accurate comparisons of the company’s finances can be made over time.

Example

Here's one example of a chart of accounts.

The Bottom Line

A chart of accounts is a document that numbers and lists all the financial transactions that a company conducts in an accounting period. The infor💜mation is usually arranged in categories that match those on the balance sheet and income statement.

Thꦬe chart of accounts is a very useful tool for the access it provides to detailed financial information for individuals within companies and others🎃, including investors and shareholders.