Chart of Accounts (COA) - definition & overview

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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