What is Chart of Accounts?

Chart of Accounts

Also known as COA, chart of accounts is a list of all accounts in a company’s general ledger. They are the identified accounts which are available for a company to record transactions. ERPs such as Oracle, SAP, etc., can allot each account a unique number as defined. With this it can be identified and modified according to the business’ needs.


Think of chart of accounts as a Tree!

  • “Assets” will be branches of the tree.
  • “Current assets, fixed assets, other assets” are its sub branches.
  • Finally, accounts such as Cash, Bank, Debtor, Prepaid Insurance are like leaves of the sub branches. 

Keeping the same fundamentals, chart of accounts tree can be differently designed for separate businesses depending on need, size and divisions inside a company.


Below is a sample listing of the order where accounts appear inside chart of accounts.

   Type of Accounts  Sub Classification Examples
 Balance Sheet  Accounts  Assets  E.g. Current Assets, Fixed Assets, Other Assets
   Liabilities  E.g. Current Liabilities, Long Term Liabilities
   Capital  E.g. Equity
 Profit & Loss Accounts  Operating Revenues & Gains  E.g. Sales
   Non-Operating Revenues & Gains  E.g. Profit on sale of asset
   Operating Expenses  E.g. Cost of goods sold
   Non-Operating Expenses & Losses  E.g. Loss on sale of asset


Few reasons for using chart of accounts

  • Chart of accounts helps in differentiating and properly recording different types of transactions such as Assets, Liabilities, Capital, Revenue, Expenditure, etc.
  • Chart of accounts also helps in efficiently organizing and managing the financial data.


Sample Chart of Accounts Format

Current Assets – Account No. 2001 to 2999

 Cash  2001
 Receivables  2002
 Prepaid Expenses  2003
 Stock  2004
 Example Current Asset  2xxx


Fixed Assets – Account No. 3001 to 3999

 Building  3001
 Land  3002
 Furniture  3003
 Stock  3004
 Example Fixed Asset  3xxx


Current Liabilities – Account No. 4001 to 4999

 Overdraft  4001
 Payables  4002
 Wages Payable  4003
 Accrued Expenses  4004
 Example Current Liability  4xxx


Just like the above accounts, chart of accounts will have different groups such as capital, revenue and expenditure with their sub types, accounts and individual account numbers to record transactions.