Chart of accounts in business accounting

2.1. Example of a chart of accounts with the balance sheet elements

Let us look at two simple charts of accounts listed below. The tables include columns showing what section of a balance sheet each account belongs in.

Illustrations 1: Balance sheet chart of accounts for small businesses

Number	Account Title	Balance Sheet Section
100	Cash in Checking	Asset
101	Cash in Savings	Asset
102	Cash on Hand	Asset
103	Accounts Receivable	Asset
104	Merchandise Inventory	Asset
105	Office Supplies	Asset
106	Prepaid Insurance	Asset
110	Land	Asset
111	Equipment	Asset
112	Accumulated Depreciation-Equipment	Asset
113	Building	Asset
114	Accumulated Depreciation-Building	Asset
115	Leasehold Improvements	Asset
116	Accumulated Depreciation-Leasehold Improvements	Asset
117	Furniture and Fixtures	Asset
118	Accumulated Depreciation-Furniture and Fixtures	Asset
120	Organization Costs	Asset
121	Amortization-Organization Costs	Asset
130	Patents	Asset
131	Amortization-Patents	Asset
200	Accounts Payable	Liability
201	Salaries Payable	Liability
202	Sales Taxes Payable	Liability
203	Unearned Rent	Liability
210	Notes Payable	Liability
211	Loans Payable-National Bank	Liability
212	Credit Card Payable-MasterCard	Liability
220	Accrued Expenses	Liability
250	Long-term Notes Payable	Liability
300	Retained Earnings	Equity
310	Capital	Equity
311	Drawing	Equity

See some accounts explained below:

Cash in Checking: cash used to pay expenses or deposit revenue
Cash in Savings: cash kept in a depository account
Cash on Hand: cash kept for small expenditures (Petty Cash) or cash kept in cash registers
Accounts Receivable: sales on credit
Leasehold Improvements: expenses incurred to accommodate leased space to the business needs
Furniture and Fixtures: desks, chairs, store fixtures
Organization Costs: start-up costs
Capital: initial investment by owners
Drawing: withdrawals by business owners.

A three-digit account code can be sufficient for a small business as such code would allow creating up to 1,000 accounts. However, a larger business might need to use a four-digit code that would allow up to 10,000 accounts.

Illustrations 2: Balance sheet chart of accounts for corporations

Number	Account Title	Balance Sheet Section
1000	Cash	Asset
1010	Petty Cash	Asset
1020	Accounts Receivable	Asset
1030	Inventory	Asset
1040	Prepaid insurance	Asset
1100	Land	Asset
1110	Equipment	Asset
1111	Accumulated Depreciation-Equipment	Asset
1120	Building	Asset
1121	Accumulated Depreciation-Building	Asset
1130	Leasehold Improvements	Asset
1131	Accumulated Depreciation-Leasehold Improvements	Asset
2000	Accounts Payable	Liability
2010	Salaries Payable	Liability
2020	Accrued Expenses	Liability
2100	Notes Payable	Liability
2110	Bonds Payable	Liability
3000	Common Stock	Equity
3010	Retained Earnings	Equity
3020	Dividends	Equity

Note that only some numbers within a sequence are assigned. For instance, Cash and Petty Cash have been assigned the numbers 1000 and 1010, respectively. As no account was assigned a number within the 1001-1009 range, the company can add more accounts within that range when the need arises: for instance, 1001: Cash - X Bank; and 1002: Cash - Y Bank.

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