Final answer:
The Chart of Accounts is organized by numerical range, with Assets: 1000-1999, Liabilities: 2000-2999, and Equity: 3000-3999, allowing effective tracking of financial transactions. These representations are evident in a T-account, where assets equal liabilities plus net worth.
Step-by-step explanation:
The Chart of Accounts is broken down by numerical series to organize types of accounts within a company's general ledger. The correct breakdown for a typical Chart of Accounts by numerical series is: Assets: 1000-1999, Liabilities: 2000-2999, Equity: 3000-3999, etc. This system helps in maintaining a structured approach to account numbering, which is crucial for financial reporting and tracking of financial transactions within a firm.
Each category in the Chart of Accounts corresponds to a specific range of numbers. For example, assets cover various types of resources owned by a company, such as cash, inventory, and property, and are typically numbered between 1000 and 1999. Liabilities represent the company's obligations like loans and accounts payable, and typically fall within the 2000-2999 range. Equity represents the owner's interest in the company and is categorized within the 3000-3999 range. Revenue and expenses accounts would follow subsequently, often using the ranges 4000-4999 for revenue and 5000-5999 for expenses.
The provided illustration of a T-account highlights the representation of assets on the left and liabilities and equity (net worth) on the right side of the account, contributing to the overall financial structure and stability of a business. In a bank's T-account, these components ensure that assets always match the sum of liabilities and net worth.