Chart of Accounts

Chart of Accounts

The Chart of Accounts is a list of all the accounts a company uses in its accounting system. Five categories of are generally used in the chart of accounts:

  • Assets
  • Liabilities
  • Owner’s Equity
  • Revenues
  • Expenses

These categories are then broken down into accounts into which the financial transactions are recorded. Many of these account names are commonly used across most types of companies (i.e. cash) and some accounts are more specialized (i.e. rental income). In most accounting software, the account names can be customized based on the needs of your company and industry.

The accounts available in your chart of accounts will be used to record and classify all of your business financial transactions. These account totals are then aggregated together and reported as the line items on your financial statements, such as the Income Statement and Balance Sheet.

Below are some examples of accounts used in each of the five categories in the chart of accounts.


Account examplesDescription
CashThe balance in the company bank accounts.
InventoryThe value of raw materials and goods available for sale.
EquipmentThe cost of fixed assets used by the business such as vehicles, machinery, computers, etc.


Account examplesDescription
Accounts PayableThe amount due to vendors for supplies and inventory.
Notes PayableAmounts due to lenders under written lending agreements.
Payroll Tax PayablePayroll taxes that have accrued in the current period but not yet remitted to the IRS.

Owner’s Equity

Account examplesDescription
Capital StockThe amount of ownership issued for investments made into the company.
Shareholder DistributionsAmount of distributions of money or property made to shareholders.
Retained EarningsAccumulated profits not distributed to shareholders.


Account examplesDescription
Services IncomeIncome for services rendered, usually for skilled labor.
Product IncomeIncome from physical products sold.
Rental IncomeIncome from the rental of property or equipment.


Account examplesDescription
Cost of Goods SoldThe cost of materials and labor to produce a product.
AdvertisingThe costs for advertising such as online ads and flyers.
SuppliesThe costs for items needed to run the business such as shop rags, printer paper, paper cups, etc.