What is a Chart of Accounts (COA)?

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The chart of accounts is a listing of all accounts used in the general ledger of a business. The chart is used by accounting software to collate information into an entity’s financial statements.Accounts are usually listed in order of their appearance in the financial statements, starting with the balance sheet and continuing with the income statement.

To be truly effective, Charts of Accounts are structured by departments or product/service offerings.

Typical accounts found in the chart of accounts are:

Assets:

  • Cash
  • Marketable Securities
  • Accounts Receivable
  • Prepaid Expenses
  • Inventory
  • Fixed Assets
  • Accumulated Depreciation (contra account)
  • Other Assets

Liabilities:

  • Accounts Payable
  • Accrued Liabilities
  • Taxes Payable
  • Wages Payable
  • Notes Payable

Stockholders’ Equity:

  • Common Stock
  • Retained Earnings

Revenue:

  • Revenue
  • Sales returns and allowances (contra account)

Expenses:

  • Cost of Goods Sold
  • Advertising Expense
  • Bank Fees
  • Depreciation Expense
  • Payroll Tax Expense
  • Rent Expense
  • Supplies Expense
  • Utilities Expense
  • Wages Expense
  • Other Expense

A well thought out Chart of Accounts can greatly improve your understanding of key financial aspects of your business. Without it, it’s impossible to be able to understand where revenue is being generated and what areas of the business are causing financial stress.

To find out how BYBB can help you understand the financial situation of your business, please contact us.

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