Financial Glossary
Chart of Accounts (COA)
What is a Chart of Accounts?
A Chart of Accounts (COA) is a list of all financial accounts used by a business, organised into categories like assets, liabilities, income, and expenses. It serves as the foundation of the general ledger.
📋 How is a Chart of Accounts Structured?
|
Category |
Description |
Examples |
|
Assets |
Resources owned by the business |
Cash, inventory, equipment |
|
Liabilities |
Obligations owed to others |
Loans, accounts payable |
|
Equity |
Owner’s interest in the business |
Retained earnings, capital |
|
Income |
Revenue generated from business activities |
Sales revenue, interest income |
|
Expenses |
Costs of operating the business |
Rent, utilities, salaries |
💡 Setting Up a Chart of Accounts
- Determine Account Categories: Based on your business model.
- Assign Account Numbers: Create a logical numbering system.
- Use Accounting Software: Automate and manage accounts efficiently.
📌 Related: Double-Entry Accounting | Bookkeeping
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