A chart of accounts (COA) is a systematic list of all the financial transactions and accounts of a business entity, organized in a structured manner.
It serves as the backbone of the accounting system and provides a comprehensive and standardized way to categorize and record financial transactions. The chart of accounts is tailored to the specific needs of a business and helps in organizing, classifying, and summarizing financial information for reporting and analysis purposes.
Each account in the chart of accounts is assigned a unique number for identification purposes. This numbering system is usually hierarchical, with different ranges or digits representing different types of accounts (e.g., assets, liabilities, equity, revenue, expenses).
Explain Charts of account