Chart of Accounts Assignment Help

A Chart of Accounts is a listing of all the individual accounts in the general ledger that contains the account's name, a brief description of the account and optional other identifiers (codes) or a coded account number assigned to aid in recording, classifying, summarizing and reporting transactions. It is used to define each className of items for which money or the equivalent is spent or received by an organization. It is used to organize the finances of an organization and to segregate expenditures, revenue, assets and liabilities in order to give interested parties a better understanding of the financial position of the entity. A well-designed chart of accounts not only meets the information needs of management, it also helps a business to comply with financial reporting standards. A company has the flexibility to tailor its chart of accounts to best suit its needs. Within the categories of operating revenues and operating expenses, for instance, accounts might be further organized by business function and/or by company divisions. A chart of accounts will likely be as large and as complex as the company itself. An international corporation with several divisions may need thousands of accounts, whereas a small local retailer may need as few as one hundred accounts. The chart of accounts serves as the foundation for a company’s financial record keeping system. It provides a logical structure that facilitates the addition of new accounts and deletion of old accounts.

To set up a chart of accounts, one first needs to define the various accounts to be used by the business. Within the chart of accounts, the accounts are typically listed in the following order:-

Within the categories of revenues and expenses, accounts might be further organized by business function (such as producing, selling, administrative, financing) and/or by company divisions, product lines, etc.

Sample Chart of Accounts:-