Glossary · Bookkeeping basics
Chart of accounts (COA)
A chart of accounts is the list of every account a business uses to record its transactions, grouped into assets, liabilities, equity, income and expenses, often with a number for each. It is the structure of the books: every transaction is posted to accounts on this list, and every report is built from them.
Glossary / Chart of accounts
How it works
A good chart is short enough to use and detailed enough to answer your questions. Too few accounts and you cannot see where money goes. Too many and entries land in the wrong place. Most small businesses need somewhere between 40 and 80 accounts.
Numbering usually follows a pattern: 1000s for assets, 2000s for liabilities, 3000s for equity, 4000s for income, 5000s for cost of goods sold and 6000s and up for expenses. It helps to match the expense accounts to the lines on your tax form, so year-end totals map straight across.
Worked example: A starter chart for a small trades business
A plumbing company sets up its chart with a bank account, receivables, a truck as a fixed asset, payables, a loan, owner's equity, two income accounts and its main costs.
When it buys $640 of fittings for a job, the cost goes to 5000 Materials. When it pays the truck insurance, it goes to 6200 Insurance. At year-end the profit and loss lists each of these accounts with its total.
| Number | Account | Type |
|---|---|---|
| 1000 | Checking | Asset |
| 1100 | Accounts Receivable | Asset |
| 1500 | Truck | Fixed asset |
| 2000 | Accounts Payable | Liability |
| 3100 | Owner's Equity | Equity |
| 4000 | Service Income | Income |
| 5000 | Materials | Cost of goods sold |
| 6200 | Insurance | Expense |
In AcboBooks
Every new company file starts with a starter chart you can rename, delete or add to, including Checking (1000), Accounts Receivable (1100), Undeposited Funds (1200), Accounts Payable (2000), Opening Balance Equity (3000), Owner's Equity (3100), Owner's Draw (3200) and Retained Earnings (3900). The chart can also be imported from a QuickBooks Desktop export.
Related terms
- General ledger (GL)
- Double-entry bookkeeping
- Balance sheet
- Profit and loss statement (P&L)
- Owner's equity
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Updated October 25, 2026. General information, not tax, legal or accounting advice. Rules and rates change; check with the IRS, the CRA, your state or province, or your accountant.
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