The chart of accounts (COA) is a listing of all accounts used by a company in its accounting system. The accounts listings are used to classify the type and nature of transactions that the company uses. All financial transactions of a company are posted to the accounts, and all these transactions become the company’s general ledger.

Typically, a COA contains the account’s name, description and account type.

The accounts listings are grouped in the categories that form the financial statements

Balance sheet


Current Assets:

  • Cash and bank
  • Prepaid Expenses
  • Accounts Receivables
  • Inventory

Non-Current Assets:

  • Fixed Assets (Property, Plant & Equipment)
  • Long-term investments
  • Liabilities

Current Liabilities:

  • Accounts Payables
  • Taxes Payable
  • Credit card payable
  • Payroll liabilities
  • Unearned Revenues

Non-Current Liabilities

  • Loans
  • Long-term leases
  • Warranties
  • Equity
  • Retained Earnings
  • Common stock

Income statement

  • Income
  • Cost of Goods Sold
  • Expenses

If you are starting a new business and setting up your accounting system, most accounting software programs like QuickBooks, Sage 50, Xero, Freshbooks, Zoho Books, etc. will have standard charts of accounts that you can select for your business type. Using the standard chart of accounts provided by your accounting software is the easiest way to start off. You can always add accounts or edit to suit your business needs.

If you are not familiar with accounting, do not attempt to set up your bookkeeping system and chart of accounts on your own! Have an accountant or bookkeeper get you started.

Example of a chart of accounts

Account Type Description
RBC Chequing Bank Chequing
Accounts Receivable (A/R) Current assets Accounts Receivable (A/R)
Inventory Asset Current assets Inventory
Prepaid expenses Current assets Prepaid Expenses
GST/HST Payable Current Liabilities GST/HST Payable
Accounts Payable Current Liabilities Accounts Payables (A/P)
Opening Balance Equity Equity Opening Balance Equity
Retained Earnings Equity Retained Earnings
Billable Expense Income Income Other Primary Income
Fees Billed Income Service/Fee Income
Refunds-Allowances Income Discounts/Refunds Given
Sales of Product Income Sales of Product Income
Services Income Service/Fee Income
Cost of Goods Sold Cost of Goods Sold Supplies and materials – COS
Advertising Expenses Advertising/Promotional
Bad Debt Expenses Bad debts
Bank charges Expenses Bank charges
Commissions and fees Expenses Other Miscellaneous Service Cost
Dues and Subscriptions Expenses Office/General Administrative Expenses
Insurance Expenses Insurance
Legal and professional fees Expenses Legal, Accounting fees
Meals and entertainment Expenses Meals and entertainment
Office expenses Expenses Office/General Administrative Expenses
Promotional Expenses Advertising/Promotional
Purchases Expenses Supplies
QuickBooks Payments Fees Expenses Other selling expenses
Rent or lease payments Expenses Rent or Lease of Buildings
Repair and maintenance Expenses Office/General Administrative Expenses
Stationery and printing Expenses Office/General Administrative Expenses
Supplies Expenses Supplies
Taxes and Licenses Expenses Taxes Paid
Travel Expenses Travel
Travel meals Expenses Travel meals
Utilities Expenses Utilities
Interest earned Other Income Interest earned
Other Portfolio Income Other Income Income
Miscellaneous Other Expense Other Miscellaneous Expense
Penalties and settlements Other Expense Non-deductible Expense


You can chose to add an account code or account number to make it easy to reference. The numbering system you chose should be representative of the account type. As an example, assets would have 1xxx number series, liabilities would be the 2xxx number series, income 4xxx series, expenses 5xxx series, and so on.

For example:

Account Number Account Type Description
1000 RBC Chequing Bank Chequing
1200 Accounts Receivable (A/R) Current assets Accounts Receivable (A/R)
2200 Accounts Payable Current Liabilities Accounts Payables (A/P)
4000 Sales of Product Income Income from product sales
5600 Legal and Professional Fees Expenses Legal, Accounting fees

As you do business, you will find that you may need to add more accounts to better reflect your business activities. That is perfectly fine, but make sure to be consistent and maintain the integrity of your accounting records.

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