![]() ![]() While shareholders’ equity may consist of the following sub-accountsįurthermore, you may decide to structure your chart of accounts so that revenue and expenses is categorised according to business function, product line, or company division.Įach account on the chart of accounts contains an identification code, description, and name. Liabilities may also be broken down into these sub-accounts: For example, assets can include the following sub-accounts: Within your chart of accounts, these broad categories are likely to have a significant number of subcategories. Consequently, assets, liabilities, and shareholders’ equity (balance sheet accounts) are shown first, followed by revenue and expenses (income statement accounts). In a chart of accounts, accounts are shown in the order that they appear on your financial statements. ![]() By separating out your revenue, liabilities, assets, and business expenditures, a chart of accounts enables you to gain insight into the effectiveness of different areas of your business. It allows you to break down all the transactions that your business made during a specific period into different subcategories. Chart of accounts explainedįirst off, what is a chart of accounts? In short, it’s an index of all the financial accounts in your company’s general ledger. Explore the definition of a chart of accounts and find out why a chart of accounts is important with our comprehensive guide. That’s why a chart of accounts can be a beneficial addition to your financial analytics tools. Keeping track of all the money moving in and out of your business can be a challenge, but it’s important for anyone who wants an insight into their cash flow, as well as an overview of the general financial health of their company. ![]()
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