Chart of Accounts (COA)

A Chart of Accounts (COA) is an organized listing of all financial accounts used by a company in its general ledger. It provides a systematic structure for categorizing all transactions, enabling accurate financial reporting and analysis.

Structure:

Accounts are usually grouped into five main categories:

  1. Assets

  2. Liabilities

  3. Equity

  4. Revenue

  5. Expenses

Each account within these groups is assigned a unique code for easy identification.

Example:

  • 1000–1999: Assets

  • 2000–2999: Liabilities

  • 3000–3999: Equity

  • 4000–4999: Revenue

  • 5000–5999: Expenses

Benefits:

  • Simplifies bookkeeping and financial reporting.

  • Ensures consistency in transaction recording.

  • Facilitates financial audits and regulatory compliance.

  • Forms the backbone for financial statements like the P&L, Balance Sheet, and Cash Flow Statement.