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Chart of Accounts Guide

The Chart of Accounts (COA) is the foundation of your accounting system. It lists every account used to record transactions.

Account Structure

Each account has:

  • Code: Numeric identifier (e.g., 1000, 2000)
  • Name: Display name (e.g., "Cash", "Accounts Payable")
  • Type: ASSET, LIABILITY, EQUITY, REVENUE, EXPENSE
  • Normal Balance: DEBIT or CREDIT
  • Parent: Optional parent account for hierarchy

Standard Account Code Ranges

RangeTypeExamples
1000-1999AssetsCash, AR, Inventory, PPE
2000-2999LiabilitiesAP, Loans, Deferred Revenue
3000-3999EquityCommon Stock, Retained Earnings
4000-4999RevenueSales, Service Revenue
5000-5999COGSDirect Materials, Direct Labor
6000-6999ExpensesSalaries, Rent, Utilities
7000-7999OtherInterest Income/Expense, FX Gain/Loss
8000-8999TaxIncome Tax Expense
9000-9999StatisticalMemo accounts

Account Hierarchy

Accounts can have parent-child relationships:

1000 Assets
├── 1100 Current Assets
│ ├── 1110 Cash
│ ├── 1120 Bank Accounts
│ ├── 1130 Accounts Receivable
│ └── 1140 Inventory
└── 1200 Non-Current Assets
├── 1210 Property, Plant & Equipment
└── 1220 Accumulated Depreciation

Creating an Account

  1. Navigate to Chart of Accounts
  2. Click Add Account
  3. Fill in:
    • Account Code (numeric, unique)
    • Account Name
    • Account Type
    • Normal Balance
    • Parent Account (optional)
  4. Click Create

Account Types Explained

Assets (Debit balance)

What the company owns.

  • Current: Convert to cash within 1 year (cash, AR, inventory)
  • Non-current: Long-term (equipment, buildings, intangibles)

Liabilities (Credit balance)

What the company owes.

  • Current: Due within 1 year (AP, accrued expenses)
  • Non-current: Due after 1 year (long-term debt)

Equity (Credit balance)

Owners' stake in the company.

  • Common Stock
  • Retained Earnings
  • Additional Paid-in Capital

Revenue (Credit balance)

Income from business operations.

  • Sales Revenue
  • Service Revenue
  • Other Income

Expenses (Debit balance)

Costs of doing business.

  • Cost of Goods Sold
  • Operating Expenses
  • Other Expenses

Best Practices

  1. Use consistent numbering: Follow standard ranges
  2. Keep it simple: Don't create too many accounts
  3. Use hierarchy: Group related accounts
  4. Never delete accounts with transactions: Deactivate instead
  5. Review annually: Remove unused accounts