What is aChart of Accounts? A chart of accounts (often abbreviated to COA) is an organisational tool that lists every financial account in an accounting system.
A COA helps you to organise transactions correctly and allows you to generate reports to assist you in running your business better.
One of the most important functions of a chart of accounts is to separate revenue, expenditure, assets and liabilities so that the company's financial health can be easily understood.
Need help with your small business's financial responsibilities? Let the friendly experts at Engine Room Chartered Accountants in Tauranga and Auckland take care of your accounts. Contact us today on 0800 236 446 for a no obligation chat about your business.
How is a Chart of Accounts Organised?
A COA contains the name of the account along with a brief description and an identification code. The identification code (or numbering system) is used by companies that use a computerised or cloud-based system. The numbering system can vary depending on the size of the company and whether or not the business has subsidiaries. Numbering systems range from 3-digit codes for small businesses to 7-digit codes for larger companies.
If you operate a small business in Tauranga or Auckland then the 3-digit numbering system will most likely be adequate.
Account Code Numbering System
The account code structure and numbering system aims to organise the general ledger by grouping similar accounts together in ranges. For ease of use, these groupings follow the accounts used in a typical balance sheet layout.
Small business 3-digit account code example:
|Revenue||200 – 299|
|Expenses||300 - 499|
|Assets||600 – 799|
|Liabilities||800 – 899|
|Equity||900 – 999|
The general format of the 3-digit COA numbering system is XXX. In the example above, expenses has been allocated the range 300 - 499, so for example the wages expense might be given the code 475.
The 3-digit chart of accounts numbering system allows for up to 999 (0-999) separate general ledger accounts.
Still unsure how to structure your COA? Contact Engine Room Chartered Accountants in Tauranga and Pukekohe today on 0800 236 446 for a no obligation chat.
Tauranga & Auckland Chartered Accountants
If you're a small or medium business owner in Auckland or Tauranga and you're struggling with clunky accountancy process and finding it difficult to manage your financial responsibilities — the friendly team at Engine Room Chartered Accountants is here to help.
At Engine Room Chartered Accountants we believe SMEs are the backbone of the New Zealand economy. We are dedicated to helping small business owners in Tauranga and Pukekohe understand the numbers, grow profits, and streamline their processes.
At Engine Room Chartered Accountants we do this by taking the time to evaluate your Auckland or Tauranga business to make sure it's running efficiently, ensuring your accounting and taxation needs stay compliant, help you to up-skill with the latest cloud-based technology to improve your systems, and offer on-going support to help you grow and improve.
Want to know about Engine Room Chartered Accountants? Click here to find out more about us or call 0800 236 446 to speak with one of our friendly team members.
Contact Engine Room Chartered Accountants Auckland & Tauranga
Spending too much time working on your accounts and not on growing your business? Contact Engine Room Chartered Accountants today by calling our Auckland office on 09 238 5939 or our Tauranga branch on 07 579 5011.