Chart of Accounts
An organized list of all accounts in a company's general ledger, categorized by type and assigned unique codes.
What is Chart of Accounts?
A chart of accounts (COA) is a structured listing of every financial account used in a company's general ledger, organized into categories — assets, liabilities, equity, revenue, and expenses — and typically assigned a unique numerical code to facilitate sorting and reporting. The COA serves as the backbone of a company's accounting system, determining how transactions are classified and reported in financial statements. Account codes usually follow a logical structure: 1000s for assets, 2000s for liabilities, 3000s for equity, 4000s for revenue, and 5000s or higher for expenses. Designing an appropriate COA is a foundational task in setting up an accounting system, and a well-structured COA makes financial analysis and auditing significantly easier.
Example
A manufacturing company might have account code 1010 for Cash, 1200 for Raw Material Inventory, 2010 for Accounts Payable, 3000 for Common Stock, 4000 for Product Revenue, and 5010 for Cost of Goods Sold — each code representing a distinct bucket where transactions are recorded and aggregated for reporting.
Source: Investopedia — Chart of Accounts