Chart of accounts

Nomenclature, classification and codification

Each account in the chart of accounts is typically assigned a name and a unique number by which it can be identified. Software for some small businesses, such as QuickBooks, 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 department, the type of account, etc.

The first digit might signify the type of account (asset, liability, etc.). For example, if the first digit is a "1," it is an asset. If the first digit is a "6," it is an operating expense.

A gap between account numbers allows for adding accounts in the future.

International aspects and accounting information interchange - Charts of accounts and tax harmonisation issues

Most countries have no national standard charts of accounts, public or privately organized. In many countries, there are general guidelines, and in France the guidelines have been codified in law. The European Commission has spent a great deal of effort on administrative tax harmonisation, and this harmonization is the main focus of the latest version of the EU VAT directive, which aims to achieve better harmonization and support electronic trade documents, such as electronic invoices used in cross border trade, especially within the European Union Value Added Tax Area. However, there is still a great deal to be done to realize a standard chart of accounts and international accounting information interchange structure.

Trial balance

The trial balance is a list of the active general ledger accounts with their respective debit and credit balances. A balanced trial balance does not guarantee that there are no errors in the individual ledger entries.

Types of accounts

1. Asset accounts the different types of economic resources owned or controlled by an entity. Common examples of asset accounts are cash on hand, cash in bank, real estate, inventory, prepaid expenses, goodwill, and accounts receivable.
2. Liability accounts represent the different types of economic obligations of an entity, such as accounts payable, bank loans, bonds payable, and accrued expenses.
3. Equity accounts represent the residual equity of an entity (the value of assets after deducting the value of all liabilities). Equity accounts include common stock, paid-in capital, and retained earnings. The type and captions used for equity accounts are dependent on the type of entity.
4. Revenue or income accounts represent the company's earnings and common examples include sales, service revenue and interest income.
5. Expense accounts represent the company's expenditures. Common examples are utilities, rents, depreciation, interest, and insurance.
6. Contra-accounts are accounts with negative balances that offset other balance sheet accounts. Examples are accumulated depreciation (offset against fixed assets), and the allowance for bad debts (offset against accounts receivable).

Balance Sheet Accounts

Asset Accounts

101 Bank/Cash at Bank

102 Cash

108 Deferred Expense

110 Other Assets

112 Accounts Receivable

116 Supplies

130 Prepaid Insurance

157 Equipment

158 Accumulated Depreciation Equipment

Liability Accounts

200 Notes Payable

201 Accounts Payable

209 Unearned Service Revenue

210 Tax Payable

211 Bonds Payable

212 Salaries and Wages Payable

230 Interest Payable

Equity Accounts (for sole proprietorship and partnerships)

300 Owner's capital

311 Share Capital-Ordinary

320 Retained Earnings

330 Capital contributions

332 Dividends

350 Income Summary

360 Drawings (Distributions)

Equity Accounts (for corporations)

300 Common Stock

310 Capital in excess of par

330 Retained earnings

Profit & Loss Accounts

Revenue Accounts

400 Rental Income

420 Interest Income

Expense Accounts

570 Office Expense

585 Computer Expenses

595 Communication Expense

597 Labour & Welfare Expenses

598 Advertising Expenses

599 Printing & Stationery Expenses

631 Supplies Expense

711 Depreciation Expense

722 Insurance Expense

726 Salaries and Wages Expense

729 Rent Expense

732 Utilities Expense

905 Interest Expense

French GAAP Chart of Accounts Layout

The French generally accepted accounting principles chart of accounts layout is used in France, Belgium, Spain and many francophone countries. The use of the French GAAP chart of accounts layout (but not the detailed accounts) is stated in French law.

In France Liabilities and Equity are seen as negative Assets and not account types of themselves, just balance accounts.

Balance Sheet Accounts

Class 1 Equity and long term debts

Class 2 Fixed Assets

Class 3 Stocks Accounts

Class 4 Third-Party Accounts

Class 5 Bank & Cash

Profit and Loss Accounts

Class 6 Costs Accounts

Class 7 Revenues Accounts

Special Accounts

Class 8 Special Accounts

Spanish GAAP Chart of Accounts Layout

The Spanish generally accepted accounting principles chart of accounts layout is used in Spain. It's very similar to the French one.

Balance Sheet Accounts

Class 1 Equity and long term debts

Class 2 Fixed Assets

Class 3 Stocks Accounts

Class 4 Third-Party Accounts

Class 5 Bank & Cash

Profit and Loss Accounts

Class 6 Costs Accounts

Class 7 Revenues Accounts

Special Accounts

Class 8 Expenses Recognised In Equity

Class 9 Income Recognised In Equity

Swedish BAS chart of accounts layout

The complete Swedish BAS standard chart of about 1250 accounts is also available in English and German texts in a printed publication from the non-profit branch BAS organisation.

BAS is a private organisation originally created by the Swedish industry and today owned by a set general interest groups like, several industry organisations, several government authorities (incl GAAP and the revenue service), the Church of Sweden, the audits and accountants organisation and SIE (file format) organisation, as close as consensus possibly (a Swedish way of working without legal demands).

The BAS chart use is not legally required in Sweden. However, it is politically anchored and so well developed that it is commonly used.

The BAS chart is not an SIS national standard because SIS is organised on pay documentation and nobody in the computer world are paying for standard documents. BAS were SIS standard but left. SIS Swedish Standards Institute is the Swedish domestic member of ISO. This is not a government procurement problem due to the fact all significant governmental authorities are significant members/part owners of BAS.

An almost identical chart of accounts is used in Norway.

Balance Sheet Accounts

Asset accounts

1100 Buildings and land assets

1200 Inventories, Machines

1210 Alterna

1220 IngDirect Savings

1230 Tangerine chequing

1240 Account Receivable

Liability accounts

2300 Loans

2400 Short debts (payables 2440)

2500 Income Tax Payable

2600 VAT Payable

2700 Wages Payable

2800-2999 other liabilities

Profit & Loss accounts

Revenue accounts

3000 Revenue Accounts

Expense accounts

4000 Costs directly related to revenues

5000-7999 General expense Accounts

8000 Financial Accounts

9000 Contra-accounts