Chart of Accounts

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.

Current Assets

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