Chart of Accounts Example

A chart of accounts is an important part of the accounting system and serves as a base for preparing accounts. It lists all the accounts that a company uses in the accounting system. It does not include other information about the accounts, including their balances, either debits or credits. Before moving to the chart of accounts example, it is crucial to know what is a chart of accounts. We recommend reading the article – Chart of Accounts prior to moving toward the example.

Refer to the chart of accounts example below to get a basic idea of how companies number their chart of accounts.

Chart of Accounts

Chart of Accounts Example

A company first needs to define the range of numbers it will use for numbering its assets, liabilities, revenues, and expenses. Below is a table that defines the range of numbers that the company ABC has used.

Account Group Description Account Numbers
From To
Assets 10000 19999
Equities & Liabilities 20000 29999
Revenue 30000 39999
Expenses 40000 49999

Here, we have used five-digit codes. A company can also use up to ten-digit codes for its chart of accounts depending on the number of ledgers it is required to maintain.

After defining the range, the next step is to divide this range among the account groups and sub-groups such as the assets group will have current assets, property & equipment, etc. while liabilities include current liabilities and long-term liabilities. The following table shows how the above range is divided among various account groups.

Account Group Description Account Numbers
From To
Current Assets
Cash & Cash Equivalents 10000 10999
Account Receivables 11000 13999
Other Current Assets 14000 14999
Property & Equipment
Land & Building 15000 15999
Plant & Machinery 16000 16999
Furniture 17000 17999
Intangible Assets
Trademark 18000 18999
Patent 19000 19999
Share Capital 20000 20999
Accounts Payable 21000 24999
Other Current Liabilities 25000 27999
Long-term Liabilities 28000 29999
Revenue from Operations 30000 35999
Other Income 36000 39999
Cost of Revenue 40000 42999
Services & Others 43000 43999
General & Administrative 44000 45999
Sales & Marketing 46000 46999
Research & Development 47000 47999
Other Expenses 48000 48999
Provision for Income Tax 49000 49999

This range is assigned on the basis of the expectation of the number of ledgers that will be covered under each account group.

Now the accounts (general ledgers) falling under these account groups will be numbered from the range allowed to these account groups. Look below to know how.

COA Example

How to Edit Chart of Accounts

In the future, if there is a new account, ABC company can adjust it between the same range of numbers. Usually, a company sets a range of numbers for a particular account type. In the above case, ABC has set numbers 10000-19999 for assets, 20000-29999 for equities & liabilities, 30000-39999 for revenue, and 40000-49999 for expenses.

For instance, if there is a new asset account for prepaid insurance. The company can list it as 14979 or any other number between 14000-14999 that has not been allocated. If the numbers are allocated, then the company can give it a sub-number, such as 14999-1.

Though an option to add a sub-number is available, the company should always try to avoid such situations. It should frame its chart of accounts in a manner that the range defined for an account group should have enough codes available for the addition of new ledgers.

A point to note is that the chart of accounts of one company may not be suitable for another company. Ledgers under the account group “inventory” in a company operating in the FMCG industry will be more as compared to the one operating in the Iron & Steel industry.

Sanjay Borad

Sanjay Bulaki Borad

MBA-Finance, CMA, CS, Insolvency Professional, B'Com

Sanjay Borad, Founder of eFinanceManagement, is a Management Consultant with 7 years of MNC experience and 11 years in Consultancy. He caters to clients with turnovers from 200 Million to 12,000 Million, including listed entities, and has vast industry experience in over 20 sectors. Additionally, he serves as a visiting faculty for Finance and Costing in MBA Colleges and CA, CMA Coaching Classes.

Leave a Comment