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
| Range | Type | Examples |
|---|---|---|
| 1000-1999 | Assets | Cash, AR, Inventory, PPE |
| 2000-2999 | Liabilities | AP, Loans, Deferred Revenue |
| 3000-3999 | Equity | Common Stock, Retained Earnings |
| 4000-4999 | Revenue | Sales, Service Revenue |
| 5000-5999 | COGS | Direct Materials, Direct Labor |
| 6000-6999 | Expenses | Salaries, Rent, Utilities |
| 7000-7999 | Other | Interest Income/Expense, FX Gain/Loss |
| 8000-8999 | Tax | Income Tax Expense |
| 9000-9999 | Statistical | Memo 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
- Navigate to Chart of Accounts
- Click Add Account
- Fill in:
- Account Code (numeric, unique)
- Account Name
- Account Type
- Normal Balance
- Parent Account (optional)
- 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
- Use consistent numbering: Follow standard ranges
- Keep it simple: Don't create too many accounts
- Use hierarchy: Group related accounts
- Never delete accounts with transactions: Deactivate instead
- Review annually: Remove unused accounts