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ACCOUNTANCY,
BUSINESS &
MANAGEMENT 1
SPECIALIZED SUBJECT
BY
MANUEL L. HERMOSA, Ed.D
Chart of Accounts.

• A chart of accounts is a listing of the accounts used by co

mpanies in their financial records.
• The chart of accounts helps to identify where the money i
s coming from and where it is going.
• The chart of accounts is the foundation of the financial sta
tements.
The following are the steps in the preparation of a basic chart of
accounts:
1. Create two columns.
2. Prepare the assets first, then liabilities, then equity, then reven
ue and expenses.
3. List all assets, liabilities, equity, revenue and expenses account
in the first column.
4. On the second column, choose an account code (discretion of
the company).
5. On the third column, write the description for each account o
n when to use it.
ANSWERS: 1. Liabilities 2. Property, Plant and Equipment
3. Intangible Assets 4. Owner’s Equity 5. Cash
6. Rent Expense 7. Assets 8. Notes Receivable