Chart of Accounts Template

What Is a Chart of Accounts Template?

A Chart of Accounts Template is an index and guide for all main accounts and subaccounts used inside your company. It helps identify chains of related accounts that belong to the same parent account. The chart of accounts covers four main account categories that form the core of the general ledger:

• Assets
• Liabilities and Equity
• Expenses
• Revenue

Why Is a Chart of Accounts Template Important?

A Chart of Accounts Template can be viewed as a foundation for your company's accounting because it provides the following benefits:

1- A Primary Method for Organizing Financial Transactions

By classifying accounts and creating subaccounts and secondary accounts for each main account, your company can determine which account each financial transaction belongs to and identify the accounts with the highest transaction activity.

2- A Flexible List That Adapts to Your Business Field

The structure of the Chart of Accounts Template changes according to the nature of the business. For example, operating expenses may be added or removed depending on the company's needs, including research and development, security, software licenses, and other expense categories.

3- Easier Access to a Clear View of Financial Performance

Your company cannot obtain a clear view of its financial performance without a well-organized and accurate account structure. The Chart of Accounts Template provides that structure.

What Are the Elements of a Chart of Accounts Template?

The template displays the accounts used in your company and organizes them as follows:

1- Classification

The template includes main accounts and subaccounts. Each subaccount belongs to one of the following main accounts:

• Assets
• Liabilities and Equity
• Revenue
• Expenses

Subaccounts may also be divided into multiple levels to provide more accuracy for each type of transaction related to a group, category, or department inside the company.

2- Account Code

The template includes a code for each account, whether it is a main account or a subaccount. A subaccount code is usually derived from the main account code. For example, assets may carry the code 1, current assets 11, cash under current assets 1101, and cash on hand 110101.

3- Description

The template includes the chart of accounts along with a description for each account, so the correct account can be used easily in the appropriate situation.

How to Use a Chart of Accounts Template

You can use the Chart of Accounts Template as follows:

1- Identify Your Company's Main Accounts

Use the four categories mentioned earlier as your main accounts. You can also separate equity from liabilities, making five main accounts instead of four.

2- Review the Codes Assigned to Each Account

To work efficiently with accounts, each account should have a clear code. This makes it easier to reference the account correctly in journal entries.

3- Start Refining the Accounts

You can add new subaccounts or remove some existing accounts based on your company's needs.

Who Benefits from a Chart of Accounts Template?

This template benefits users and employees in both financial and management accounting because organization is essential to many accounting tasks. Financial accountants and management accountants who work directly with company accounts often refer to the chart of accounts to identify the relevant account code, its position in the account structure, and the main account it belongs to.