A chart of accounts
A chart of accounts (COA) is a list of all the accounts used by an organization to record financial transactions. The chart of accounts is typically organized in a hierarchical structure, with different levels or categories for various types of accounts. The specific accounts included in a chart of accounts can vary depending on the nature of the organization and its industry. Below is a simplified example of a chart of accounts:
1. Assets
1.1 Current Assets:
1.1.1 Cash
1.1.2 Accounts Receivable
1.1.3 Inventory
1.2 Fixed Assets:
1.2.1 Property, Plant, and Equipment
1.2.2 Vehicles
2. Liabilities:
2.1 Current Liabilities:
2.1.1 Accounts Payable
2.1.2 Short-Term Loans
2.2 Long-Term Liabilities:
2.2.1 Long-Term Loans
2.2.2 Bonds Payable
3. Equity:
3.1 Common Stock
3.2 Retained Earnings
4. Revenue:
4.1 Sales
4.2 Service Revenue
5. Expenses:
5.1 Cost of Goods Sold
5.2 Operating Expenses
5.2.1 Salaries and Wages
5.2.2 Rent
5.2.3 Utilities
5.3 Depreciation Expense:
This is just a basic example, and the accounts and categories can be adapted to fit the specific needs of an organization. The numbering system helps to organize accounts hierarchically, with each digit representing a different level in the hierarchy. For example, "1.1.1" represents the most detailed level under "Current Assets" for the "Cash" account.
Keep in mind that the chart of accounts can be more detailed or simplified based on the complexity and reporting requirements of the organization. It is essential to tailor the chart of accounts to the specific needs and industry of the business.