Sample Chart of Accounts for Small and Medium Businesses

Accounting is a necessary ingredient for your business and its foundation is the double-entry bookkeeping system.  This system relies on your chart of accounts or COA, which is a listing of all the accounts found in the general ledge that your business will use to record accounting transactions.  This article will give you sample chart of accounts for small and medium businesses.

Accounting Solutions Philippines - Sample Chart of Accounts

As a business owner, specially if you are a small and medium business you should not over complicate your chart of accounts.  You do now need many of the accounts that big companies use.  It is important to know that your chart of accounts will depend on the nature of your business.  If you are a service business then you do not need inventory accounts.  If you are a retail business you will need merchandise inventory and purchases, while if you are into manufacturing you need raw materials and finished goods inventory.

You might also want to consider your reporting requirement.  Would you like to report your revenue and have one sales account or would you rather report it by segment of your business?  Creating a business chart of accounts is therefore based on what you need and what you offer. (Read the steps to proper bookkeeping here)

Chart of Accounts Creation Guide

To create a sample chart of accounts you have to first know the basic thing that a COA consists which are the Account Code, Account Name, Financial Statement and Group.

Account Core is a reference number or any kind of identification given to the account.  This coding will depend on your accounting system as long as it groups similar accounts together.  We highly recommend that you use the number system for accounts since it is easier.

Accounting Solutions Philippines - Sample Chart of Accounts

Account Name is the name referring to your account in the general ledger.  This depends on your type of business and industry.  The most common account names include Cash, Cash in Bank, Accounts Receivable, Accounts Payable, and Sales.  These account names are often present in all types of business.

Financial Statement refers to the financial statement where the account is included for example Sales is included in the Profit and Loss Statement while Cash, Cash in Bank, Accounts Receivable and Accounts Payable are included in the Balance Sheet.

Group is the grouping where the account belongs.  Accounts are divided into Assets, Liabilities and Capital.  It can be generally divided as follows:

1.  Balance Sheet Accounts

    • Current assets
    • Long term assets
    • Current liabilities
    • Long term liabilities
    • Equity

2.  Profit and Loss Accounts

  • Income
  • Cost of sales
  • Expense

Besides having Groups of accounts you can also create Sub-Groups in order to further classify accounts as follows:

  • Current assets
    • Cash and cash equivalents
    • Accounts receivable
    • Inventory
  • Other current assets
    • Long term assets
    • Property, plant and equipment
  • Current liabilities
    • Accounts payable
    • Other current liabilities
  • Long term liabilities
    • Mortgages
    • Loans
  • Equity
    • Capital
    • Retained earnings
  • Income
    • Revenue
    • Other Income
  • Cost of sales
    • Cost of sales
  • Expense
    • Research and development
    • Sales and marketing
    • General and administrative
    • Depreciation
    • Finance costs
    • Income tax expense

Accounting Equation

Remember the following accounting equation which is very useful in your bookkeeping needs:

  1. Assets = Liabilities + Equity
  2. Net Income = Sales – Cost of Sales – Expenses

Accounting Solutions Philippines - Sample Chart of Accounts

Normal Balances of Accounts in a Sample Chart of Accounts

This should be noted very carefully when doing transactions. The “Normally” column indicates the usual balance of this account and is also the recording method in the “double-entry system” used to increase that account.  For example to increase an asset account it should normally be debited while to increase a liability account it is normally credited.  Same with revenue accounts which are credited while expenses are debited.  (Find out more about debits and credits click here)

When doing an accounting transaction there should be at least two accounts that are involved.  One account should be debited and the other should be cedited.  The total of both the debit and the credit side should always be balanced.

You can download a sample chart of accounts for small and medium businesses here –  We will be sending the sample chart of accounts to your e-mail just accomplish the form.

If you have further questions about sample chart of accounts and how to create them just send us a message or comment below and we will respond to it.



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