A chart of accounts is the organized list of categories used to record and report a business’s activity and balances. It should reflect the entity, accounting basis and reports the business needs. More categories do not automatically produce clearer reports; vague or overlapping categories can make classification less reliable.
Get help with your monthly booksPractical records guidance · Updated October 17, 2026 · Fictional examples
Cash, receivables, assets, liabilities and equity describe the financial position. Revenue and expense categories help describe performance over a period. A bank withdrawal may move a balance without creating an expense, such as repaying loan principal.
A project or location breakdown needs reliable source references. Avoid creating dozens of categories that nobody can apply consistently. Discuss new accounts with the responsible accountant so existing balances, historical comparisons and tax mappings remain understandable.
Illustrative example · Fictional data
Illustrative category set: cash, customer receivables, supplier payables, loan balance, owner equity, service revenue and software expense. A $1,000 loan repayment is not automatically assigned to software expense just because both are withdrawals; its principal and other components need their own treatment.
No. Inventory, multiple entities, project reporting and specialist obligations can change the account structure.
Assess existing activity, balances and reporting relationships first. Archiving, merging or deleting can have different effects depending on the software.
Discuss your monthly records, missing months or incorrect balances. We’ll agree the work, records and price before starting.
Talk about your bookkeeping