The Chart of Accounts is normally arranged
or grouped by the Major Types of Accounts. The Balance Sheet Accounts (Assets,
Liabilities, & Equity) are presented first, followed by the Income
Statement Accounts (Revenues & Expenses).
The list can be numerical, alphabetic, or
alpha-numeric. The structure and headings of accounts should assist in
consistent posting of transactions. Each nominal ledger account is unique to
allow its ledger to be located. The list is typically arranged in the order of
the customary appearance of accounts in the financial statements, profit and
loss accounts followed by balance sheet accounts.
When we
introduced financial transactions, we
showed them as, e.g.,
cash / 1000+ equity / 1000–
cash / 200+ revenue / 200–
cash / 100– xpense / 100+
receivable / 200+ revenue / 200–
payable / 100– xpense / 100+
The names (cash,
equity, revenue, etc) are the "accounts" and the
numbers are the "amounts" and the transactions are shown in "acct
/ amt acct / amt ..." format.
In practice,
"accounts" are typically represented by numbers (e.g., cash might be
account 110, money market, 115, receivables, 130, payables, 420, etc.).
There's nothing magic about that — it's just generally easier to remember that
110 is cash than it is to remember whether we've chosen to represent cash as
"cash", or "csh", or "ch". (A good practice
is to use 3-digit numbers for assets, liabilities and equity, and 4-digit
numbers for revenue and expenses).
Note: The balances
in your 3-digit accounts get carried over from year to year. The balances
in your 4-digit accounts get "closed out" at the end of each year
(into Retained Earnings) and start the new year afresh at zero.
The
"key" that relates account numbers to account names is called the Chart
of Accounts.
The Chart of
Accounts for a small product-line manufacturer might look like that shown
below. This is just an example. Yours might contain fewer,
different, or more accounts — depending on what you find important to track
(i.e., measure).
The accounts
are shown as account-number account-name, e.g., 101 Petty Cash, etc. The
uppercase names, e.g., ASSETS (0—399), etc., are account summaries that you may
wish to print out on your Balance Sheet and Earnings Statement (e.g., ASSETS
(0—399) says that the amount to be shown for ASSETS on your Balance Sheet is to
equal the sum of the balances in all account-numbers from 0 through 399).
We'll talk about most of these accounts in subsequent columns.
Chart of Accounts List
ASSETS (0—399)
CASH (100—129)
101 Petty Cash
110 Cash in Bank
112 Payables Checking
115 Payroll Checking
117 Money Market
RECEIVABLES (130—139)
130 Receivable
132 Reinvoiceable
139 Other
INVENTORIES (140—179)
140 Purchased Materials
150 Subassembly Inventory
170 Product Inventory
PREPAID EXPENSES (180—199)
180 Insurance
190 Other
FIXED ASSETS (200—299)
210 Land
220 Buildings
221 Building Equipment
229 BE Depreciation
250 Machinery & Equipment
259 M&E Depreciation
270 Furniture & Fixtures
279 F&F Depreciation
280 Transportation Equipment
289 TE Depreciation
OTHER ASSETS (300—399)
343 Employee Advances
LIABILITIES & EQUITY (400—9999)
PAYABLES (400—429)
420 Accounts Payable
424 Commissions Payable
426 State Sales/Use Tax Payable
PAYROLL & WITHHOLDINGS (430—459)
431 Accrued Wages
435 Vacation
452 WH-FIT (federal income tax)
453 WH-FICA (social security)
454 WH-FICM (medicare)
455 WH-SIT (state income tax)
ACCRUED EXPENSES (460—479)
461 AT-FICA
463 AT-FICM
465 AT-FUT (federal unemployment tax)
467 AT-SUT (state unemployment tax)
471 FIT
473 SIT
475 Property Tax
479 Other
OTHER LIABILITIES (600—699)
601 Bank Loan
EQUITY (900—9999)
901 Common Stock
920 Paid-In Capital
950 Retained Earnings
NET EARNINGS (1000—9999)
REVENUE (1000—1999)
1100 Domestic
1200 Export
1900 Other
EXPENSE (2000—9999)
COST OF SALES (2000—2999)
2100 Material
2200 Labor
2990 Other
MANUFACTURING EXPENSE (3000—3999)
3210 Labor - General
3220 Labor - Area1
3230 Labor - Area2
3295 Overtime
3350 Vacation
3351 Vacation Rate Change
3352 Bonuses
3353 Holidays
3410 Small Parts
3420 Other Materials
3490 Material Discounts
3520 Manufacturing Supplies
3550 Heat Light Power
3560 Freight Out
3565 Freight In
3570 Outside Services
ENGINEERING EXPENSE (5000—5999)
5250 Labor
5295 Overtime
5350 Vacation
5351 Vacation Rate Change
5352 Bonuses
5353 Holidays
5520 Supplies
5570 Outside Services
5580 Royalties
5990 Other
SELLING EXPENSE (6000—6999)
6250 Labor
6251 Commissions
6295 Overtime
6350 Vacation
6351 Vacation Rate Change
6352 Bonuses
6353 Holidays
6502 Advertising
6520 Supplies
6568 Postage
6570 Outside Services
6600 Travel & Entertainment
6660 Bad Debts
6661 Sales Allowances
ADMINSTRATIVE EXPENSE (7000—7999)
7250 Labor
7295 Overtime
7301 FICA
7305 FUT
7306 SUT
7340 Workers Comp
7345 Employee Insurance
7348 Sick Leave
7350 Vacation
7351 Vacation Rate Change
7352 Bonuses
7353 Holidays
7390 Benefits
7481 Equipment Maintenance
7482 Facility Maintenance
7520 Supplies
7555 Telephone
7570 Outside Services
7575 Legal & Audit
7600 Travel & Entertainment
7605 Automotive
7690 Other Expense
7701 Depreciation
7730 Corporate Insurance
7740 Real Property Tax
7750 Personal Property Tax
7752 Sales/Use Tax
7755 Other Tax
OTHER EXPENSE (8000—8999)
8100 Loan Interest
8900 Other
OTHER TAX (9000—9999)
9800 SIT (state income tax)
9900 FIT (federal income tax)
(Source: wikipedia.org; dwmbeancounter.com;
http://tenonline.org)
