Introduction to Chart of Accounts

Introduction to Chart of Accounts

Charts of Accounts or also known as COA is the foundation of bookkeeping. It plays a role in every single transaction you enter in your general ledger or Financio account as it helps you track your business transactions.

Beginning to sound like rocket science? Well, it isn’t. In Financio, it is made up of two areas: Balance Sheet Accounts and Profit & Loss Accounts. It is given different names to make it easier for those without accounting knowledge.

Standard Name	What is it?
Balance Sheet Accounts	A list of accounts for current assets such as cash, accounts receivable, inventory, fixed assets, intangible assets, and liabilities such as accounts payable.
Profit & Loss Accounts	A list of categories for the type of income and expenses the business is getting. It varies greatly depending on the nature of the business. It can be very general as “Sales Income” or very specific as “Mouse (#Model No) Income”.

Areas	Accounts	Categories
Recorded	Assets Liabilities Owner’s (Stockholders’) Equity	Income Other Income Cost of Sales Expenses Other Expenses

Assets

Types of Assets	Current Assets	Fixed Assets
Explanation	Can be liquidated within 12 months	Cannot be liquidated in 12 months
Common Sub-Accounts	Cash Petty Cash Fund Accounts Receivable Allowance for Doubtful Accounts Inventory Prepaid Insurance	Land Buildings Vehicles Accumulated Depreciation - Buildings Accumulated Depreciation - Equipment Accumulated Depreciation -Vehicles

Liabilities

Types of Liabilities	Current Liabilities	Long-term Liabilities
Explanation	To be paid back in the next 12 months	To be paid back beyond 12 months
Common Sub-Accounts	Notes Payable Accounts Payable Payroll Taxes Customer Deposits	Mortgages Construction Loans

Equity

Account	Equity
Explanation	Equity is essentially the book value of your company. If you subtract what you owe (liabilities) from what you own (assets), the balance is the amount of equity.
Common Sub-Accounts	Owner’s Capital Owner’s Draw Investments Distributions

Cost of Goods Sold

Account	Cost of Goods Sold
Explanation	Cost of Goods Sold accounts are used to track the direct costs of products manufactured or sold. If your business primarily deals in services, then it is quite possible that you would not have any Cost of Goods Sold accounts.
Common Sub-Categories	Labor Materials Subcontractor Mileage Credit Card Fees (optional) Employee Overheads Job Costing

Expenses

Account	Expenses
Common Sub-Categories	Accounting Advertising Bad Debts Bank Charges Cleaning Computers Contributions Education and Training Employees Benefit Program Equipment Rental/Lease Freight & Delivery Gifts

Other Income/Expenses

Account	Other Income	Other Expenses
Common Sub-Categories	Bank interest Dividends Gain on foreign exchange Insurance claims Sale of an asset	Damages Fraud charges

Now that we have covered a brief introduction to Chart of Accounts (COA), let’s dive right into the steps of setting it up in Financio. There are 3 ways to start setting up your Chart of Accounts (COA):

1) Business Setup (Malaysia, Singapore, and Hong Kong)
2) Accounts & Categories (Balance Sheet Accounts and Profit & Loss Accounts)
3) While recording transactions, invoices, or bills

Articles in this section

Assets

Liabilities

Equity

Cost of Goods Sold

Expenses

Other Income/Expenses

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Articles in this section

Assets

Liabilities

Equity

Cost of Goods Sold

Expenses

Other Income/Expenses

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