Chart of Accounts
What is a Chart of Accounts?
A chart of accounts is a list of all the accounts in your general ledger – separated into account type.
![coa1](https://seeaccountingnow.online/wp-content/uploads/2021/06/coa1.jpg)
How it Works
A company may have hundreds of accounts.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/coa2.jpg)
When working with these accounts, you refer to them by number.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/coa3.jpg)
To provide a record of account names and numbers, the business sets up a chart of accounts.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/coa4.jpg)
It lists all the accounts in your general ledger.
![coa8](https://seeaccountingnow.online/wp-content/uploads/2021/06/coa8.jpg)
The general ledger comprises every account in your accounting system.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/coa6.jpg)
It is divided up into several categories.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/coa7.jpg)
Likewise, the chart of accounts is divided into account categories.
![coa8](https://seeaccountingnow.online/wp-content/uploads/2021/06/coa8.jpg)
Each account is assigned a number.
![coa9](https://seeaccountingnow.online/wp-content/uploads/2021/06/coa9.jpg)
The numbers are prefixed according to category.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/coa10.jpg)
Asset accounts are prefixed with a 1.
![coa11](https://seeaccountingnow.online/wp-content/uploads/2021/06/coa11.jpg)
Liability accounts are prefixed with a 2 and so on.
![coa12](https://seeaccountingnow.online/wp-content/uploads/2021/06/coa12.jpg)
When numbering accounts, spaces are left in between.
![coa13](https://seeaccountingnow.online/wp-content/uploads/2021/06/coa13.jpg)
This allows you to add further accounts later on, if necessary.
![coa14](https://seeaccountingnow.online/wp-content/uploads/2021/06/coa14.jpg)
© R.J. Hickman 2020