Chart of Accounts
Categories: Accounting
At some point in history, an accountant somewhere ran out of work to do one day. So he stupidly went to his boss and bragged that he was all out of things to do. The boss, not willing to let the poor shmuck go home, came up with an idea. What if the accountant pulled together a big list of every account owned by the company? It would include all of the balance sheet accounts, and the income statement account information, and break down every other type of asset owned by the company. It would look like a chart, but it would just be a list of accounts that the firm has recorded transactions with on its general ledger.
And they would (and did) call it the Chart of Accounts.
The Chart of Accounts, or COA, as the kids in the biz call it, lists all of the company accounts as they appear on the firm’s statements. Cash, petty cash, inventory, vehicles, expenses, depreciation, buildings…it’s all there, painstakingly broken down into individual categories.
For example, the Current Assets account might look like the following in a larger Chart of Accounts:
Current Assets (account numbers 00100 - 05500)
• 00100 Cash - Company Checking Account
• 00200 Cash - Payroll Checking Account
• 00400 Petty Cash Account
• 02000 Accounts Receivable
• 03000 Inventory
• 04000 Company Supplies
• 05000 Insurance Policies
It’s typed up neatly so that this boss can just let it sit on his desk, and then refer to it while he’s on the phone with his boss, so it sounds like he knows what he’s talking about when asked.
