Chart of Accounts (COA) - definition & overview
Contents
What is a chart of accounts (COA)?
A chart of accounts (COA) is a list of all financial accounts used to record your business's income, expenses, assets, and liabilities. It acts as a filing system for your financial transactions, categorising them for easy tracking and reporting.
Key Points:
- Organisation: The Chart of Accounts or COA helps organise your financial data, making it simpler to find specific transactions and generate reports.
- Consistency: Using the same COA format over time ensures consistency in your financial records, allowing for accurate comparisons between periods.
- Account Types: The COA typically includes four main account types:
- Assets: Things of value your business owns, like cash, equipment, and inventory.
- Liabilities: Amounts you owe, such as accounts payable and loans.
- Income: Revenue earned from your business activities (sales, fees, etc.).
- Expenses: Costs incurred to run your business (rent, salaries, supplies, etc.).
- Account Details: Each account in the COA usually has an account number, name, and a brief description for clarity.
- Customisable: You can tailor your COA to suit the specific needs of your business, adding or removing accounts as required.
- Benefits:
- Improved financial tracking
- Simplified bookkeeping and reporting
- Easier tax preparation
- Better understanding of your business's financial health
Additional Notes:
- Many accounting software programs in Australia offer COA templates to get you started.
- Consider consulting a registered tax agent or bookkeeper for assistance in setting up your COA.
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