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Chart of Accounts

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Chart of Accounts
Assignment # 1

1. What is chart of accounts?

Chart of accounts (COA) is a list of the accounts used by an organization. The list can be numerical, alphabetic, or alpha-numeric. The structure and headings of accounts should assist in consistent posting of transactions. Each nominal ledger account is unique to allow its ledger to be located. The list is typically arranged in the order of the customary appearance of accounts in the financial statements, profit and loss accounts followed by balance sheet accounts.

It is a numerical listing of all identified accounts used by a company to record transactions. As part of the accounting cycle, the chart of accounts is used in the journaling process (i.e., performing journal entries) and also serves as the title for each ledger. All the accounts will be filed under one of five categories: • Assets • Liabilities • Owner’s Equity • Revenue • Expenses
Each account can be assigned a number for identification purposes. Most systems will assign a block of numbers to one of the five categories to be applied to the sub-categories. Some charts leave gaps of numbers between the sub-category listings to allow for the addition of new accounts.

Sample Chart of Accounts

Chart of Accounts: Bogus Manufacturing

100-199 Assets

• 100-109 Cash o 101 Cash – Regular Checking o 102 Cash – Payroll Checking o 103 Cash, Change, or Petty Cash Fund • 110-119 Receivables o 111 Accounts Receivable o 112 Due from Employees o 113 Notes Receivable • 120-129 Property, Plant, and Equipment o 121 Land o 122 Buildings o 123 Equipment o 124 Vehicles

200-299 Liabilities

• 200-209 Current Liabilities o 201 Notes Payable – Credit Line o 202 Accounts Payble o 203 Wages and Salaries Payable o 204 Taxes Payable • 210-219 Long-term Liabilities

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