Chart of Accounts

Keep business financial accounts in order by properly setting up a chart of accounts
By Sue-Lynn Carty A business chart of accounts is the same as an accounting chart of accounts, they are both an organized list of all the accounts in the general ledger. To allow for easy identification, most accountants assign specific first digits to help identify the type of account. This step isn't required, but doing so makes organizing, adding and tracking all the accounts in a standard chart of accounts more efficient because they are so easily identifiable. This level of detail becomes increasingly important as the number of accounts listed grows.
 

The number of accounts listed in a chart of accounts is dependent upon the size of the company and the industry in which the company does business. The following is a typical sample chart of accounts list.

1. Current Assets chart of accounting includes all assets such as, cash, accounts receivable, inventory and supplies.

2. Property, Plant and Equipment chart of accounts give title to all land, equipment, buildings and vehicles the company owns or leases. This chart of accounts listing must also include all respective accumulated depreciation.

3. Liabilities and Owner's Equity chart of accounts includes all payable accounts, long and short-term liabilities, common stock, retained earnings and stockholder's equity.

Begin building your business chart of accounts with a rough draft

Before making any permanent entries into the permanent chart of accounts, make a rough list of accounts and assign numbers to them.
Try: Look at a sample chart of account at Learning Link Finders, Inc. and The Entrepreneur Network to see what your business chart of account should look like.

Allow room to add new charts of accounts in the future

The chart of accounts list grows as your business grows. Leaving enough space between different accounts makes it easier to add the new accounts into your accounting software program.
Try: Use Peachtree Premium Accounting software from Sage Software and Quickbook financial software by Intuit Inc. makes organizing the chart of accounts for your business easy.

Make the chart of accounts list as detailed as possible

The more detail you have in your chart of accounts list, the easier and faster it is to track each account. Assign a specific first digit to all major accounts and then, break it down further by making charts of accounts for each individual department within the company.
Try: Buy industry specific chart of account software from Inphinet Interactions Communications, Inc. and Tech Target.

• Keep the financial accounts of your business up to date by regularly maintaining and updating the information in the chart of accounts. In order to ensure that bookkeeping chart of accounts is up to date, enter all financial transactions on a daily basis.