Chart of accounts
From Wikipedia, the free encyclopedia
Chart of accounts (COA) is a list of the accounts used by an organization. The list can be numerical, alphabetic, or alpha-numeric. Each nominal ledger account is unique to allow its ledger to be located. The list is typically arranged in the order of the customary appearance of accounts in the financial statements, profit and loss accounts followed by balance sheet accounts.
Contents |
[edit] Example
[edit] Simple Chart of Accounts
Group headings - Sales, Cost of Sales, Direct Expenses, Administration Expenses, Selling Expenses, Distribution Expenses, Establishment Expenses, Financial Expenses
Within each of these headings will be the individual nominal ledger accounts that make up the chart of accounts. Establishment expenses may consist of rent, rates, repairs
Balance Sheet Accounts
Asset Accounts ----
Cash, Accounts Receivable, Prepaid Expenses, Supplies, Inventory, Land, Buildings, Vehicles & Equipment, Accumulated Depreciation and Other Assets
Liability Accounts ----
Accounts Payable , Bank Loans, Taxes
Stockholders' Equity Accounts ----
Common Stock (Share Capital), Retained Earnings (Revenue Reserves)
Profit & Loss accounts
Revenue Accounts ----
Sales Revenue, Sales Returns & Allowances, Sales Discounts, Interest Income,
Expense Accounts ----
Advertising Expense, Bank Fees, Depreciation Expense, Payroll Expense, Payroll Tax Expense, Rent Expense, Income Tax Expense, Telephone Expense, Utilities Expense
[edit] Trial Balance
The trial balance is a list of the active general ledger accounts with debit and credit balances. A balanced trial balance does not guarantee that there are no errors in the nominal ledger.
[edit] Types of 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
- Liability accounts: represent the different types of economic obligations by a business, such as accounts payable, bank loan, bonds payable, accrued interest.
- Equity accounts: represent the residual equity of a business (after deducting from Assets all the liabilities) including Retained Earnings and Appropriations.
- Revenue accounts or income: represent the company's gross earnings and common examples include Sales, Service revenue and Interest Income.
- Expense accounts: represent the company's expenditures to enable itself to operate. Common examples are electricity and water, rentals, depreciation, doubtful accounts, interest, insurance.
- Contra-accounts: from the term ciccia, 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.
