Sample Chart of Accounts for a Small Company

The chart of accounts helps break down all financial transactions into categories. The more organized the chart of accounts is, the more useful the information presented in it. As a result, it helps businesses determine the effectiveness of how different business layers perform.

It improves reporting standards by driving consistency across the entire company and different business units. This consistency then translates into comparability, which is essential when expanding with new product lines or growing into new verticals. Depending on the size of your company, the chart of accounts may have only a few account subcategories or hundreds. The trial balance is a list of the active general ledger accounts with their respective debit and credit balances. A balanced trial balance does not guarantee that there are no errors in the individual ledger entries. The foundation of any ERP implementation is developing a thoughtful CIM design, representing data definitions used across the enterprise.

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Groups of numbers are assigned to each of the five main categories, while blank numbers are left at the end to allow for additional accounts to be added in the future. Also, the numbering should be consistent to make it easier for management to roll up information of the company from one period to the next. Accounting systems, by definition, have a general ledger in which your asset accounts (what you own) match your liability accounts (what you owe). Each time you add or remove an account from your business, it’s important to record it in your books. This column is for information only to indicate whether the account is normally increased by a debit or a credit.

These are divided on a positive/negative
scale- assets include bank accounts, real
estate, prepaid expenses, and accounts
receivables. Liabilities include obligations
such as accounts payable, loans, credit card
debt, and other due outbound expenses. Liabilities may often have a “payable”
descriptor (i.e., AP) attached to them. Since different types of entities use different types of accounts, there is no one single chart of accounts template that would be applicable to all businesses. The accounting software then aggregates the information into an entity’s financial statements.

Template: Standard Chart of Accounts

To leverage an optimally designed CoA to the fullest extent, it needs to be supported by a strong governance structure. Governance enables the maintenance and creation of accounting segments, policies, and processes. The governance body should include key stakeholder groups, such as controllership, FP&A, tax, compliance, and business technology. If you don’t leave gaps in between each number, you won’t be able to add new accounts in the right order. For example, assume your cash account is and your accounts receivable account is 1-002, now you want to add a petty cash account.

A balance sheet is a financial statement that reports a company’s assets, liabilities, and shareholders’ equity at a specific point in time. A chart of accounts is a document that numbers and lists all the financial transactions that a company conducts in an accounting period. The information is usually arranged in categories that match those on the balance sheet and income statement. Think of your chart of accounts as a roadmap across your operations, indexing all of your different financial accounts in an organized, consumable way.

Organize the chart of accounts to support management decision-making

However, in most countries it is entirely up to each accountant to design the chart of accounts. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the “Deloitte” name in the United States and their respective affiliates.

It only includes revenues related to the core functions of the business and excludes revenues that are unrelated to the main activities of the business. Liability accounts provide a list of categories for all the debts that the business owes its creditors. Typically, liability accounts will include the word “payable” in their chart of accounts example name and may include accounts payable, invoices payable, salaries payable, interest payable, etc. Each asset account can be numbered in a sequence such as 1000, 1020, 1040, 1060, etc. The numbering follows the traditional format of the balance sheet by starting with the current assets, followed by the fixed assets.

He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University. The group refers to the categorization of the account into one of the headings shown below. It generally helps to keep the most used accounts towards the top of each group as this helps speed up locating the account and the posting of double entry transactions.

• At the end of the year, review all of your accounts and see if there’s an opportunity for consolidation.
• Even worse, if your competition has a highly efficient and streamlined COA, they will always have a competitive advantage over you.
• Every time you record a business transaction—a new bank loan, an invoice from one of your clients, a laptop for the office—you have to record it in the right account.
• For example, a taxi business will include certain accounts that are specific to the taxi business, in addition to the general accounts that are common to all businesses.
• That doesn’t mean recording every single detail about every single transaction.

For example, the Crumbs Bakery account number 2010 shows that we have accounts payable (a liability) for that particular listing, while bakery supplies (an expense) are account number 5000. In France Liabilities and Equity are seen as negative Assets and not account types of themselves, just balance accounts. At clients, we often see management and statutory reporting performed in silos, making combined financial and managerial reporting a challenge. Companies tend to expand their CoA over time by defining accounts that represent product, region, location, and other managerial dimensions, resulting in an unwieldy CoA structure.