Chart of accounts

Chart of accounts
COA) is a list of the accounts used by an organization. The list can be numerical, alphabetic, or alpha-numeric. The structure and headings of accounts should assist in consistent posting of transactions. Each nominal ledger account is unique to allow its ledger to be located. The list is typically arranged in the order of the customary appearance of accounts in the financial statements, profit and loss accounts followed by balance sheet accounts.

Simple Chart of Accounts

Group headings - Sales, Cost of Goods Sold, Direct Expenses, Administration Expenses, Selling Expenses, Distribution Expenses, Establishment Expenses, Financial Expenses
Within each of these headings will be the individual nominal ledger accounts that make up the chart of accounts. Establishment expenses may consist of rent, rates, repairs
Balance Sheet Accounts

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Asset Accounts ----
Cash, Bank Accounts, Accounts Receivable (Debtors), Prepaid Expenses, Inventory (Stock on Hand), Land, Buildings, Vehicles & Equipment, Investments & Stocks, Accumulated Depreciation and Other Assets

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Liability Accounts ----
Accounts Payable (Creditors), Credit Cards, Tax Payable, Employment Expenses Payable, Bank Loans,

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Stockholders' Equity Accounts ----
Common Stock (Share Capital), Retained Earnings (Revenue Reserves), Drawings
Profit & Loss accounts

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Revenue Accounts ----
Sales Revenue, Sales Returns & Allowances, Sales Discounts, Interest Income,

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Cost of Goods Sold Accounts----
Purchases and sales Expense All sales Expense Purchase Returns & Allowances

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Expense Accounts ----
Advertising Expense, Bank Fees, Depreciation Expense, Payroll Expense, Payroll Tax Expense, Rent Expense, Income Tax Expense, Office Expense, Utilities Expense

Trial Balance

The trial balance is a list of the active general ledger accounts with debit and credit balances. A balanced trial balance does not guarantee that there are no errors in the nominal ledger entries.

Types of accounts

1. Asset accounts: represent the different types of economic resources owned by a business, common examples of Asset accounts are cash, cash in bank, building, inventory, prepaid rent, goodwill, accounts receivable^{[citation needed]}
2. Liability accounts: represent the different types of economic obligations by a business, such as accounts payable, bank loan, bonds payable, accrued interest.^{[citation needed]}
3. Equity accounts: represent the residual equity of a business (after deducting from Assets all the liabilities) including Retained Earnings and Appropriations.^{[citation needed]}
4. Revenue accounts or income: represent the company's gross earnings and common examples include Sales, Service revenue and Interest Income.^{[citation needed]}
5. Expense accounts: represent the company's expenditures to enable itself to operate. Common examples are electricity and water, rentals, depreciation, doubtful accounts, interest, insurance.^{[citation needed]}
6. Contra-accounts: from the term ciccia, meaning to deduct, the value of which are opposite the 5 above mentioned types of accounts. For instance, a contra-asset account is Accumulated depreciation. This label represents deductions to a relatively permanent asset like Building

Asset

In financial accounting, assets are economic resources. Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset. Simply stated, assets represent ownership of value that can be converted into cash (although cash itself is also considered an asset).
The balance sheet of a firm records the monetary value of the assets owned by the firm. It is money and other valuables belonging to an individual or business. Two major asset classes are tangible assets and intangible assets. Tangible assets contain various subclasses, including current assets and fixed assets. Current assets include inventory, while fixed assets include such items as buildings and equipment

Financial accountancy

Financial accountancy (or financial accounting) is the field of accountancy concerned with the preparation of financial statements for decision makers, such as stockholders, suppliers, banks, employees, government agencies, owners, and other stakeholders. Financial capital maintenance can be measured in either nominal monetary units or units of constant purchasing power. The fundamental need for financial accounting is to reduce principal-agent problem by measuring and monitoring agents' performance and reporting the results to interested users.
Financial accountancy is used to prepare accounting information for people outside the organization or not involved in the day to day running of the company. Management accounting provides accounting information to help managers make decisions to manage the business.
In short, Financial Accounting is the process of summarizing financial data taken from an organization's accounting records and publishing in the form of annual (or more frequent) reports for the benefit of people outside the organization.
Financial accountancy is governed by both local and international accounting standards.