What is Chart of Accounts

1. What is Chart of Accounts? A listing of accounting detail that includes the index of all the financial accounts in the general ledger of a company is called the Chart of Accounts (COA). It provides a detailed breakdown of all the financial activities or transactions that a company conducted during a specific accounting period, broken down into subcategories. How it Works Chart of Accounts (COA) is used by organization or Companies to organize their accounting and financial data of investor and shareholders, with the help of Chart of Accounts you will clear insight to analyse the financial health of businesses. It separates expenditures, revenue, assets, and liabilities which help to achieve this and ensure that financial statements are in compliance with reporting standards. The list of each account a company owns is typically shown in the order the accounts appear in its financial statements. That means that balance sheet accounts, assets, liabilities, and shareholders' equity are listed first, followed by accounts in the income statement — revenues and expenses. Chart of Accounts might include these sub-accounts under the assets account: Cash Savings account Petty cash balance Accounts receivable Undeposited funds Inventory assets Prepaid insurance Vehicles Buildings          Sub-accounts of Liabilities account The company credit card Accrued liabilities Accounts Payable Payroll liabilities Notes payable    

2. Shareholders' equity can be broken down into the following accounts: Common stock Preferred stock Retained earning    For making the process easier locate the specific accounts, which each chart of accounts contain name, description in brief and as well as a identification code. Multi-digit number assigned foreach chart in the list is assigned. Let’s explain how COAs relate to your own finances. Suppose you have a checking account, a savings account, and a certificate of deposit (CD) at the same bank. When you log inyour online accounts, you’ll typically go to an overview page that shows the balance in each account. Similarly, if you use an online program that helps you manage all your accounts in one place, like Mint or Personal Capital, what you’re looking at is basically the same thing as a company’s COA. You can see all your assets and liabilities, all on one page. Special Considerations You can customize you Chart of your accounts according to your need by following the guidelines that is issues by the Financial Accounting Standards Board (FASB) and generally accepted accounting principles (GAAP). Of crucial importance is that COAs are kept the same from year to year. Doing so ensures that accurate comparisons of the company’s finances can be made over time. Accounting Software to Create and manage chart of Accounts. There are many accounting software which help to create and manage Chart of Accounts. Like QuickBooks helps to manage Chart of Accounts easily. It has multiple tools and feature which help in preparation and manage of chart of Accounts Source: https://theprofessionguru.com/article/what-is-chart-of-accounts