Chart of Accounts

Chart of Accounts (Definition)

A Chart of Accounts is a financial organizational tool that provides a complete listing of every account in an accounting system.

Key aspects of a Chart of Accounts include:

1. Serves as an index of all financial accounts in the general ledger
2. Typically divided into five main categories: assets, liabilities, equity, revenue, and expenses
3. Each account is assigned a unique identifier, usually a number
4. Provides a structure for organizing financial transactions
5. Can be customized to fit the specific needs of a business
6. Helps in preparing financial statements and tax returns
7. Facilitates tracking and reporting of financial information

A well-designed Chart of Accounts is essential for accurate financial record-keeping and reporting.