How To Read A Set Of Accounts

Introduction to Chart of Accounts

A nautical chart of accounts is a listing of the names of the accounts that a visitor has identified and made bachelor for recording transactions in its general ledger. A company has the flexibility to tailor its nautical chart of accounts to all-time suit its needs, including adding accounts as needed.

Within the chart of accounts y'all will detect that the accounts are typically listed in the following society:

Within the categories of operating revenues and operating expenses, accounts might be further organized by business organization role (such every bit producing, selling, administrative, financing) and/or past company divisions, product lines, etc.

A company's arrangement nautical chart can serve every bit the outline for its accounting nautical chart of accounts. For case, if a company divides its business organization into ten departments (production, marketing, human resources, etc.), each department will likely be accountable for its ain expenses (salaries, supplies, phone, etc.). Each section volition take its ain phone expense business relationship, its own salaries expense, etc.

A nautical chart of accounts will likely be as large and equally complex as the visitor itself. An international corporation with several divisions may need thousands of accounts, whereas a minor local retailer may need as few as one hundred accounts.

Sample Nautical chart of Accounts For a Large Corporation

Each account in the chart of accounts is typically assigned a name and a unique number by which information technology can be identified. (Software for some minor businesses may not require account numbers.) Account numbers are often five or more digits in length with each digit representing a division of the company, the section, the type of account, etc.

As you lot will run across, the first digit might signify if the account is an asset, liability, etc. For example, if the first digit is a "one" it is an asset. If the commencement digit is a "5" it is an operating expense.

A gap between account numbers allows for adding accounts in the future. The following is a fractional listing of a sample nautical chart of accounts.

Electric current Assets (business relationship numbers 10000 - 16999): 10100 Cash - Regular Checking
10200 Greenbacks - Payroll Checking
10600 Piffling Greenbacks Fund
12100 Accounts Receivable
12500 Assart for Doubtful Accounts
13100 Inventory
14100 Supplies
15300 Prepaid Insurance
Property, Found, and Equipment (account numbers 17000 - 18999): 17000 Land
17100 Buildings
17300 Equipment
17800 Vehicles
18100 Accumulated Depreciation - Buildings
18300 Accumulated Depreciation - Equipment
18800 Accumulated Depreciation - Vehicles
Electric current Liabilities (account numbers 20000 - 24999): 20100 Notes Payable - Credit Line #ane
20220 Notes Payable - Credit Line #2
21000 Accounts Payable
22100 Wages Payable
23100 Involvement Payable
24500 Unearned Revenues
Long-term Liabilities (account numbers 25000 - 26999): 25100 Mortgage Loan Payable
25600 Bonds Payable
25650 Disbelieve on Bonds Payable
Stockholders' Equity (account numbers 27000 - 29999): 27100 Common Stock, No Par
27500 Retained Earnings
29500 Treasury Stock
Operating Revenues (account numbers 30000 - 39999): 31010 Sales - Segmentation #ane, Product Line 010
31022 Sales - Division #ane, Product Line 022
32015 Sales - Division #ii, Product Line 015
33110 Sales - Division #3, Product Line 110
Toll of Goods Sold (account numbers 40000 - 49999): 41010 COGS - Sectionalisation #ane, Production Line 010
41022 COGS - Sectionalization #1, Product Line 022
42015 COGS - Division #ii, Product Line 015
43110 COGS - Division #iii, Product Line 110
Marketing Expenses (account numbers 50000 - 50999): 50100 Marketing Dept. Salaries
50150 Marketing Dept. Payroll Taxes
50200 Marketing Dept. Supplies
50600 Marketing Dept. Telephone
Payroll Dept. Expenses (account numbers 59000 - 59999): 59100 Payroll Dept. Salaries
59150 Payroll Dept. Payroll Taxes
59200 Payroll Dept. Supplies
59600 Payroll Dept. Phone
Other (account numbers 90000 - 99999): 91800 Proceeds on Sale of Assets
96100 Loss on Sale of Assets