Business Recordkeeping
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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– xpense / 100+
- receivable / 200+ revenue / 200–
- payable / 100– xpense / 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)
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