Business Recordkeeping


Next Previous Contents

Chart of Accounts


When we introduced financial transactions (back in the Accounting Basics column), we showed them as, e.g.,

    cash/1000+ equity/1000-
    cash/200+ revenue/200-
    cash/100- expense/100+
    receivable/200+ revenue/200-
    payable/100- expense/100+
The names (cash, equity, revenue, etc) are the "accounts" and the numbers are the "amounts" and the transactions are shown in "acct/amt acct/amt ..." format.

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)

    CASH (100-129)
      101 Petty Cash
      110 Cash in Bank
      112 Payables Checking
      115 Payroll Checking
      117 Money Market
    RECEIVABLES (130-139)
      130 Receivable
      132 Reinvoiceable
      139 Other
    INVENTORIES (140-179)
      140 Purchased Materials
      150 Subassembly Inventory
      170 Product Inventory
    PREPAID EXPENSES (180-199)
      180 Insurance
      190 Other
    FIXED ASSETS (200-299)
      210 Land
      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
    OTHER ASSETS (300-399)
      343 Employee Advances
LIABILITIES & EQUITY (400-9999)
    PAYABLES (400-429)
      420 Accounts Payable
      424 Commissions Payable
      426 State Sales/Use Tax Payable
    PAYROLL & WITHHOLDINGS (430-459)
      431 Accrued Wages
      435 Vacation
      452 WH-FIT (federal income tax)
      453 WH-FICA (social security)
      454 WH-FICM (medicare)
      455 WH-SIT (state income tax)
    ACCRUED EXPENSES (460-479)
      461 AT-FICA
      463 AT-FICM
      465 AT-FUT (federal unemployment tax)
      467 AT-SUT (state unemployment tax)
      471 FIT
      473 SIT
      475 Property Tax
      479 Other
    OTHER LIABILITIES (600-699)
      601 Bank Loan
    EQUITY (900-9999)
      901 Common Stock
      920 Paid-In Capital
      950 Retained Earnings
    NET EARNINGS (1000-9999)
    REVENUE (1000-1999)
      1100 Domestic
      1200 Export
      1900 Other
    EXPENSE (2000-9999)
    COST OF SALES (2000-2999)
      2100 Material
      2200 Labor
      2990 Other
    MANUFACTURING EXPENSE (3000-3999)
      3210 Labor - General
      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
    ENGINEERING EXPENSE (5000-5999)
      5250 Labor
      5295 Overtime
      5350 Vacation
      5351 Vacation Rate Change
      5352 Bonuses
      5353 Holidays
      5520 Supplies
      5570 Outside Services
      5580 Royalties
      5990 Other
    SELLING EXPENSE (6000-6999)
      6250 Labor
      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
    ADMINSTRATIVE EXPENSE (7000-7999)
      7250 Labor
      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
    OTHER EXPENSE (8000-8999)
      8100 Loan Interest
      8900 Other
    OTHER TAX (9000-9999)
      9800 SIT (state income tax)
      9900 FIT (federal income tax)


Next Previous Contents