Accounting Course: Lesson 1 - Understanding Chart of Accounts

A chart of accounts is the listing of all accounts, a company needs to use for recording of transactions. Chart of accounts is designed by keeping in view the needs of the company.

Accounts are usually listed in chart of accounts as below;

Balance Sheet

1. Assets
2. Liabilities
3. Equity/ Capital

 

Income Statement

 

1. Revenues
2. Expenses
3. Non Operating Revenues
4. Non Operating Expenses

 

Expenses are usually breakdown into further categories;

 

Production expenses

Selling Expenses

Marketing expenses

Human Resource Expenses

 

Sample Chart Of Accounts :

 

Current Assets: (Account numbers : 0001-0100)

 

0001 Raw Material 1

0002 Raw Material 2

0003 Raw Material 3

0004 Work in Progress 1

0005 Work In progress 2

0006 Cash

0007 Trade receivables

Sub Ledgers: 0007-001 ABC debtor

                      0007-002 CDE debtor & so on

 

Property Plant & Equipment : (Account numbers : 0101-0200)

 

0101 Vehicles

0102 Furniture

0103 Plant

0104 Land & so on

 

Current Liabilities :( Account numbers : 0201 -0300)

 

0201 Bank Loan

0202 Notes

0203 Suppliers

        Sub ledger : 0203 -001 ABC Supplier

 

Long Term Liabilities : (Account numbers 0301-0400)

 

0301 Bank Loan

0302 Lease Liability

 

Equity : (Account numbers 0401-0500)

 

0401 Paid up Share Capital

0402 Retained Earnings

0403 Treasury Stock

 

Income statement accounts shall be explained in detail in Lesson 2. Keep visiting us for a 1 month Accounting course.