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Chart of Accounts Definition, How to Set Up, Categories

October 2, 2020

chart of accounts in accounting

Accounts are usually listed in order of their appearance in the financial statements, starting with the balance sheet and continuing with the income statement. Thus, the chart of accounts begins with cash, proceeds through liabilities and shareholders’ equity, and then continues with accounts for revenues and then expenses. The exact configuration of the chart of accounts will be based on the needs of the individual business. These account types are also classified in the chart of accounts list under two financial statements – the balance sheet and income statement. Assets, liabilities, and equity is classified under the balance sheet while Revenue and expenses form a part of the income statement.

What is a standard chart of accounts?

In accounting, a standard chart of accounts is a numbered list of the accounts that comprise a company's general ledger. Furthermore, the company chart of accounts is basically a filing system for categorizing all of a company's accounts as well as classifying all transactions according to the accounts they affect.

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Accounts payable are the typical amounts you owe to vendors for raw materials or parts, needed equipment, and any subcontractor-related services. FloQast™ Ops is a workflow manager that extends the power of FloQast Close, providing greater control over accounting operations and optimizing workflows across every function. FloQast’s suite of easy-to-use and quick-to-deploy solutions enhance the way accounting teams already work. Learn how a FloQast partnership will further enhance the value you provide to your clients.

It also provides external parties with a snapshot view of an organization’s fiscal health for prudent investment, purchase, or approval of credit. Each of the accounts in the chart of accounts corresponds to the two main financial statements, i.e., the balance sheet and income statement. The chart of accounts is a listing of all accounts chart of accounts used in the general ledger of an organization. The chart is used by the accounting software to aggregate information into an entity’s financial statements. The chart is usually sorted in order by account number, to ease the task of locating specific accounts. The accounts are usually numeric, but can also be alphabetic or alphanumeric.

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chart of accounts in accounting

Chart of accounts helps these companies consolidate and compile their financial records. This provides an insight into all the financial transactions of the company. Here, anaccountis a unique record for each type of asset, liability, equity, revenue and expense. Within the accounts of the income statement, revenues and expenses could be broken into operating revenues, operating expenses, non-operating revenues, and non-operating losses. In addition, the operating revenues and operating expenses accounts might be further organized by business function and/or by company divisions.

Posted in Bookkeeping

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