There is no prescribed chart of accounts and every business has its own chart of accounts depending on its nature, size, and complexity. In this chapter, we’ll share a sample chart of accounts for a small organization just to visualize how it looks like. As explained in previous chapter, first digits of the account numbers tell us about the type of account. In this sample chart of accounts, following information can be extracted by seeing the first digits of account numbers.
- First digit is 1 – It is an asset account
- First digit is 2 – It is a liability account
- First digit is 3 – It is an equity account
- First digit is 4 – It is an income account
- First digit is 5 – It is an expense account
Now let’s have a look at our sample chart of accounts.