Chart of Accounts

๐˜พ๐™๐™–๐™ง๐™ฉ ๐™ค๐™› ๐˜ผ๐™˜๐™˜๐™ค๐™ช๐™ฃ๐™ฉ๐™จ

Easily explained, they are the categories of where you need to allocate the money that comes in and goes out of your bank account through your bank feeds if you are using a cloud accounting programme. There are generally 5 categories;

๐™„๐™ฃ๐™˜๐™ค๐™ข๐™š - this one is easy, Itโ€™s the money you get paid for your goods or your services

๐™€๐™ญ๐™ฅ๐™š๐™ฃ๐™จ๐™š๐™จ - this is a little more tricky and has many sub categories. This is what you pay for to run your business.

๐˜ผ๐™จ๐™จ๐™š๐™ฉ๐™จโ€“ This is where it will show your bank accounts and equipment you have purchased for the business. Like cars, machinery, large tools, office equipment and bank balance.

๐™‡๐™ž๐™–๐™—๐™ž๐™ก๐™ž๐™ฉ๐™ž๐™š๐™จ โ€“ This one shows you who you owe money to. Like bank loans, credit cards, tax, GST, superannuation & PAYG tax (for employees).

๐™€๐™ฆ๐™ช๐™ž๐™ฉ๐™ฎ โ€“ And this is a favourite because it will show you how much your business is worth. It will take the profit earned, assets owned and deduct the money you owe and Voila thatโ€™s your net worth. (in a nutshell)

Keep your eye out for our next post - we will explain how the chart of accounts is used to build a Profit & Loss and Balance sheet report.

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