Chart of accounts
Chart of accounts - a list of all the accounts and their assigned account numbers in the ledger
Accounts are assigned numbers consisting of 2 or more digits. The number of digits used is dependent on how many accounts a company has in their ledger. A small company may use only 2 digits while a large corporation may use 5 digit account numbers.
The first digit is used to identify the main category in which the account falls under.
1 is used for Asset accounts
2 is used for Liability accounts
3 is used for Owner's Equity accounts
4 is used for Revenue accounts
5 is used for Expense accounts
The second digit indicates the sub classification of the account if there are any.
Asset Accounts
1 is used to represent Current Assets
2 is used to represent Plant Assets
3 is used to represent Investments
4 is used to represent Intangible Assets
Liability Accounts
1 is used for Current Liabilities
2 is used for Long Term Liabilities
Expense Accounts
1 is used for Selling Expenses
2 is used for General and Administrative Expenses
All other digits are used just to indicate the order in which the accounts are listed in the chart of accounts.