Chart of Accounts Example for Small Company

A Chart of Accounts is a listing of all the financial accounts in a business’s accounting system.

The accounts are grouped into categories that correspond to the layout of the businesses financial statements and are used to record every financial transaction that the business makes.

Every Chart of Accounts will be different, but there are some basic categories that most businesses will include:

Account	Description
Assets	Resources owned by the business
Liabilities	Debts or obligations owed by the business to others
Equity	The owners’ share of the business
Revenue	Income earned from selling goods or services.
Expenses	Costs incurred in running the business

Let’s now break those categories down even further as we provide a sample chart of accounts for a small business:

Assets

Account	Description
Cash	Available cash balance for day-to-day operations
Accounts Receivable	Money owed to the business by customers for sales made on credit
Inventory	Goods available for sale
Prepaid Expenses	Payments made in advance for expenses, such as rent or insurance
Equipment	Long-term assets used in business operations, like machinery and computers
PPE	Property, Plant, and Equipment (PP&E), are tangible assets with a useful life of more than one year, such as buildings and land

Liabilities

Account	Description
Accounts Payable	Money the business owes to suppliers for purchases made on credit
Accrued Expenses	Expenses that have been incurred but not yet paid, such as wages or utilities
Deferred Revenue	Money received for goods or services not yet delivered or completed
Short-term Debt	Loans and financial obligations that are due within one year
Long-term Debt	Loans and financial obligations that are due after one year

Equity

Account	Description
Owner’s Equity	The initial investment and additional contributions made by the owners
Retained Earnings	Accumulated profits or losses that have been reinvested in the business
Drawings	Amount that the owner has withdrawn for personal use

Revenue

Account	Description
Sales Revenue	Income earned from selling goods
Service Revenue	Income from providing services
Interest Income	Earnings from interest on bank accounts or other investments
Gain on Sale	Profit or loss after sale of assets

Expenses

Account	Description
Cost of Goods Sold	Direct cost of producing or purchasing the goods a business sells, including materials and labour
Salaries and Wages	Payments made to employees for hours worked
Rent Expense	Cost of leasing business premises
Utilities Expense	Costs for services such as electricity, water, and internet
Depreciation Expense	Allocation of the cost of tangible assets over their useful lives
Marketing and Advertising	Costs incurred to promote the businesses products or services
Insurance Expense	Payments for insurance policies to protect the business against risks
Office Supplies	Cost of items used daily in the workplace
Professional Fees	Fees paid for professional services such as legal, accounting, and consulting
Bank fees	Charges from the bank for transactions