Charts of Accounts (COA)

- Is a financial tool that lists all the accounts for a given accounting system.
- A list of the account names a company uses to label transactions and keep tabs on each finances. You
use COA to organize transactions into groups, which in turn helps you track money coming in and
out of the company. You can think of each account as a bucket or box where we group each receipt.
- A Chart of Accounts (COA) is an index of all of the financial accounts in a company’s general
ledger and acts as the backbone of a company’s financial system. The chart of accounts is carefully
organized by categories and line items, making it one of the most important and detailed resources
for tracking financial activities and for financial reporting.

A typical chart of accounts has five primary types of accounts:

 Assets.
 Liabilities.
 Equity.
 Revenue.
 Expenses.

Assets: Any resource your company owns that provides value. Assets may include the following.
  Cash.
 Accounts receivable.
 Inventory.
 Equipment.
 Vehicles.

Liabilities: Any debt your company owes. Liabilities may include the following.

 Accounts payable.
 Business loans.
 Taxes payable.

Equity: What’s left after subtracting a company's liabilities from its assets. Equity accounts may include the
following.

 Common stock.
 Preferred stock.
 Retained earnings.

Revenue: The money your business brings in from the sale of its goods or services. Revenue accounts may
include the following.

 Sales or operating revenue.

 Interest revenue.

Expenses: All the types of money and resources a business spends in an effort to generate revenue. To
calculate net income, subtract expenses from revenue. Expense accounts may include the
following.

 Payroll.
 Rent.
 Travel expenses.
 Depreciation.
 Utilities bills.
 Cost of goods sold.

3 Types of Ledgers

 Sales Ledger
 Purchase Ledger
 General Ledger

Sales Ledger – Sales Ledger is a ledger in which the company maintains the transaction of selling the
products, services or cost of goods sold to customers. This ledger gives the idea of sales revenue and income
statement.

Purchase Ledger – Purchase Ledger is a ledger in which the company organizes the transaction of
purchasing the services, products, or goods from other businesses. It gives the visibility of how much amount
the company paid to other businesses.
 General Ledger – A complete record of a company’s transactions over a period of time , documenting
changes to assets, liabilities, equity, expenses, and revenue. General Ledger is divided into two types – Nominal
Ledger and Private Ledger. Nominal ledger gives information on expenses, income, depreciation, insurance, etc.
And Private ledger gives private information like salaries, wages, capitals, etc. Private ledger is not accessible to
everyone.

Ledger Account Examples

Assets
 Cash
 Land
 Accounts receivable
 Equipment
Liabilities
 Debt
 Accounts Payable
 Loans
 Accrued expenses
Stock
 Stockholders Equity
 Common Stocks
 Retained Earnings
Operative Revenues
 Sales
 Services Fees
Operating Expenses
 Salaries and wages
 Office Expenses
 Depreciation Expense

Sample General Ledger