Chart of accounts

Chart of accounts (COA) is a list of the accounts used by an organisation. 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.

Example

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

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Asset Accounts ----

Cash Accounts Receivable Prepaid Expenses Supplies Inventory Land Buildings Vehicles & Equipment Accumulated Depreciation Other Assets

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Liability Accounts ----

Accounts Payable Notes Payable - Current Notes Payable - Long Term

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Stockholders' Equity Accounts ----

Common Stock Retained Earnings Income Statement Accounts

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Revenue Accounts ----

Sales Revenue Sales Returns & Allowances Sales Discounts Interest Income

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Expense Accounts ----

Advertising Expense Bank Fees Depreciation Expense Payroll Expense Payroll Tax Expense Rent Expense Income Tax Expense Telephone Expense Utilities Expense

Trial Balance

The trial balance is a list of the active general ledger accounts.

Types of accounts

1. 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
2. Liability accounts: represent the different types of economic obligations by a business, such as accounts payable, bank loan, bonds payable, accrued interest.
3. Equity accounts: represent the residual equity of a business (after deducting from Assets all the liabilities) including Retained Earnings and Appropriations.
4. Revenue accounts or income: represent the company's gross earnings and common examples include Sales, Service revenue and Interest Income.
5. Expense accounts: represent the company's expenditures to enable itself to operate. Common examples are electricity and water, rentals, depreciation, doubtful accounts, interest, insurance.
6. 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.