Business RecordkeepingNext Previous Contents Chart of AccountsWhen we introduced financial transactions (back in the Accounting Basics column), we showed them as, e.g.,
cash/200+ revenue/200- cash/100- expense/100+ receivable/200+ revenue/200- payable/100- expense/100+ In practice, "accounts" are typically represented by numbers (e.g., cash might be account 110, money market, 115, receivables, 130, payables, 420, etc.). There's nothing magic about that -- it's just generally easier to remember that 110 is cash than it is to remember whether we've chosen to represent cash as "cash", or "csh", or "ch". (A good practice is to use 3-digit numbers for assets, liabilities and equity, and 4-digit numbers for revenue and expenses). Note: The balances in your 3-digit accounts get carried over from year to year. The balances in your 4-digit accounts get "closed out" at the end of each year (into Retained Earnings) and start the new year afresh at zero. The "key" that relates account numbers to account names is called the Chart of Accounts. The Chart of Accounts for a small product-line manufacturer might look like that shown below. This is just an example. Yours might contain fewer, different, or more accounts -- depending on what you find important to track (i.e., measure). The accounts are shown as account-number account-name, e.g., 101 Petty Cash, etc. The uppercase names, e.g., ASSETS (0-399), etc., are account summaries that you may wish to print out on your Balance Sheet and Earnings Statement (e.g., ASSETS (0-399) says that the amount to be shown for ASSETS on your Balance Sheet is to equal the sum of the balances in all account-numbers from 0 through 399). We'll talk about most of these accounts in subsequent columns. Chart of Accounts ASSETS (0-399)
110 Cash in Bank 112 Payables Checking 115 Payroll Checking 117 Money Market
132 Reinvoiceable 139 Other
150 Subassembly Inventory 170 Product Inventory
190 Other
220 Buildings 221 Building Equipment 229 BE Depreciation 250 Machinery & Equipment 259 M&E Depreciation 270 Furniture & Fixtures 279 F&F Depreciation 280 Transportation Equipment 289 TE Depreciation
424 Commissions Payable 426 State Sales/Use Tax Payable
435 Vacation 452 WH-FIT (federal income tax) 453 WH-FICA (social security) 454 WH-FICM (medicare) 455 WH-SIT (state income tax)
463 AT-FICM 465 AT-FUT (federal unemployment tax) 467 AT-SUT (state unemployment tax) 471 FIT 473 SIT 475 Property Tax 479 Other
920 Paid-In Capital 950 Retained Earnings
1200 Export 1900 Other
2200 Labor 2990 Other
3220 Labor - Area1 3230 Labor - Area2 3295 Overtime 3350 Vacation 3351 Vacation Rate Change 3352 Bonuses 3353 Holidays 3410 Small Parts 3420 Other Materials 3490 Material Discounts 3520 Manufacturing Supplies 3550 Heat Light Power 3560 Freight Out 3565 Freight In 3570 Outside Services
5295 Overtime 5350 Vacation 5351 Vacation Rate Change 5352 Bonuses 5353 Holidays 5520 Supplies 5570 Outside Services 5580 Royalties 5990 Other
6251 Commissions 6295 Overtime 6350 Vacation 6351 Vacation Rate Change 6352 Bonuses 6353 Holidays 6502 Advertising 6520 Supplies 6568 Postage 6570 Outside Services 6600 Travel & Entertainment 6660 Bad Debts 6661 Sales Allowances
7295 Overtime 7301 FICA 7305 FUT 7306 SUT 7340 Workers Comp 7345 Employee Insurance 7348 Sick Leave 7350 Vacation 7351 Vacation Rate Change 7352 Bonuses 7353 Holidays 7390 Benefits 7481 Equipment Maintenance 7482 Facility Maintenance 7520 Supplies 7555 Telephone 7570 Outside Services 7575 Legal & Audit 7600 Travel & Entertainment 7605 Automotive 7690 Other Expense 7701 Depreciation 7730 Corporate Insurance 7740 Real Property Tax 7750 Personal Property Tax 7752 Sales/Use Tax 7755 Other Tax
8900 Other
9900 FIT (federal income tax)
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