A chart of accounts (COA) lists all the financial accounts in a company's general ledger. Basically, it is an organizational tool used to break down all the financial transactions a company has made during a specific accounting period into digestible sections.
Charts of accounts (COAs) are used by companies to organize their finances and provide insights into their financial health to interested parties, including investors and shareholders. It helps to separate expenditures, revenue, assets, and liabilities to achieve this and ensure that financial statements comply with reporting standards.
A company's accounts are typically listed in the order they appear on its financial statements. As a result, balance sheet accounts, assets, liabilities, and shareholders' equity are listed first, followed by revenue and expense accounts.
Every chart of accounts typically contains a name, a brief description, and an identification code to help readers locate specific accounts. A multi-digit number is assigned to each chart, so for example all asset accounts start with 1.