Chart of Accounts (COA) is
the list of accounts used by business entity to identify each class of items for
which any value of money or the equivalent cash in and out. The chart of
accounts used to organize the finances of the business and to place in
different category the expenses, revenue, assets and liabilities in order to
help the users of financial statements.
The list can be numerical,
alphabetic, or alpha-numeric identifiers. It is typically arranged in the order
of the customary presentation of accounts in the balance sheet, income
statement and other financial reports.
The account in the chart of
accounts has its name and a unique code number for their identification
specifically for any adapted company software. Code numbers might be three,
four, five, or more digits to represent each designated accounts.
The following sample of
chart of accounts accompanied with their categories:
Balance
Sheet Accounts
Assets
Accounts
Asset accounts represent the
different types of economic resources of the company and used in the business
operation to generate income.
1010 Cash on Hand
1020 Cash in Bank
1030 Petty Cash Fund
1040 Accounts Receivables
1041 Allowance for Doubtful Accounts / Bad Debts
1050 Deposits
1060 Advances to Employees
1070 Marketable Securities
1080 Merchandise Inventory
1090 Investment
1100 Prepaid Rent
1110 Prepaid Insurance
1120 Prepaid Supplies
Fixed
Assets / Property, Plant & Equipment
1210 Land
1220 Building
1221 Accumulated Depreciation – Building
1230 Leasehold Improvement
1231 Accumulated Depreciation – Leasehold Improvement
1240 Furniture & Fixtures
1241 Accumulated Depreciation – Furniture & Fixtures
1250 Office Equipment
1251 Accumulated Depreciation – Office Equipment
1260 Vehicle
1261 Accumulated Depreciation – Vehicle
Intangible
Assets
1310 Goodwill
Liability
Accounts
Liability accounts represent
the different types of economic obligations of the business.
Current
Liabilities
2010 Accounts Payable
2020 Notes Payable
2030 Accrued Expenses
2040 Accrued Rent
2050 Accrued Interest
2060 Accrued Salaries
2070 Tax Payable
2080 SSS Premium Payable
2090 Philhealth Premium Payable
2100 HDMF Premium Payable
2110 Deferred Income
2120 Salaries Payable
2130 Interest Payable
2140 Unearned Revenues
Long-term
Liabilities
2210 Mortgage Loan Payable
2220 Bonds Payable
2221 Discount on Bonds Payable
Stockholders'
Equity Accounts
Equity accounts represent
the residual equity of the business.
2310 Common Stock
2320 Treasury Stock
2330 Retained Earnings
2340 Dividends
2350 Drawings
Profit
& Loss Accounts
Revenue
Accounts
Revenue accounts or income represents
the company's gross earnings.
4010 Sales Revenue
4011 Sales Returns & Allowances
4012 Sales Discounts
4020 Interest Income (Non-Operating Revenue)
Expense
Accounts
Expense accounts represent
the company's expenditures used to operate the business in order to generate
income.
Cost
of Goods Sold Accounts
5010 Purchases
5011 Purchase Returns & Allowances
5012 Purchase Discount
Selling
and Administrative Expenses
6010 Commission Expense
6020 Professional Fee
6030 Audit Fees
6040 Legal Fees
6050 Salaries
6060 SSS Contribution Expenses
6070 Philhealth Contribution Expenses
6080 HDMF Contribution Expenses
6090 Rent Expense
6100 Insurance Expense
6110 Interest Expenses
6120 Advertising Expense
6130 Supplies Expense
6140 Bank Fees
6150 Training Expense
6160 Income Tax Expense
6170 General Expense
6180 Maintenance Expense
6190 Communication Expense
6200 Traveling & Conveyance Expenses
6210 Depreciation Expense
6220 Utilities Expense
6230 Telephone Expense
6240 Doubtful Accounts
6250 Miscellaneous Expense
The chart of accounts lists help
financial statements to record the accounting transactions. It makes the double
entry easy to classify the correct accounting system. Every entry has a minimum
of two accounts needed for every transaction. The entry should be one account
is debited and one account is credited.
To debit and to credit the
accounts there are some general rules:
- Asset accounts normally have debit balances
- To increase an asset account, debit the account
- To decrease an asset account, credit the account
- Liability accounts normally have credit balances
- To increase a liability account, credit the account
- To decrease a liability account, debit the account
- Expense accounts are debited and have debit balances
- Revenue accounts are credited and have credit balances
