First published on: https://www.rsm.global/kenya/insights/consulting-insights/7-things-consider-when-setting-chart-accounts
A Chart of Accounts (COA) refers to the listing of every account in an accounting system – it organises the list for each records type i.e. assets, liabilities, equity, income, cost of sales and expenses. This is then incorporated into the accounting software to allow recording of transactions in its general ledger. Usually, it has the account number code, name of the account and a brief explanation of what is to be included in that account.
- Use account numbers to group the different categories together logically, for example, fixed assets codes from 1000 to 1999, current liabilities from 2000 to 2999, income from 4000 to 4999, cost of sales from 5000 to 6999, expenses from 7000 to 9999 etc.
- Ensure enough room has been left to expand each category – consider the future, not only the past