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Chart of Accounts

A Chart of Accounts is a list of all accounts in the general ledger.


Usually, the accounts are organized into Assets, Liability, Revenue, Expense and Equity accounts. The account will be structured using numerical values.


Example:


Asset Accounts: 1000

Liability Accounts: 2000

Revenue Accounts: 3000

Expense Accounts: 4000

Equity Accounts: 5000


Each account is then assigned additional values to denote type of account.


Example:


Assets account which are cash numbered as -001 as AR -002 -Inventory -003. Thus on the chart of accounts assets appear as


Cash: 1000-001

AR: 1000-002

Inventory: 1000-003


Bookkeeping and accounting requires organization to keep track of records. If there are 1-3 transactions per month, it is possible to keep recordkeeping in the Excel.



When an organization exceeds 1-3 entries per month, it is highly advisable to use specialized software to keep track of records. One of the most inexpensive and simple options is FreshBooks.


Below is an example of a chart of accounts already set up for your use in FreshBooks:





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