Accounting Software & Systems
Chart of Accounts Setup
5 question(s)
What is a chart of accounts (CoA)?
Beginner
A structured, coded list of every ledger account a business uses, grouped by type: assets, liabilities, equity, income and expenses.
1000 Cash | 1200 Accounts Receivable | 2000 Accounts Payable | 4000 Sales | 5000 COGS
Real-world example
Every transaction in the system posts to an account defined in the CoA.
How is a chart of accounts usually numbered?
Beginner
By ranges per account type so codes sort logically — e.g. 1000s assets, 2000s liabilities, 3000s equity, 4000s income, 5000s+ expenses.
1xxx Assets, 2xxx Liabilities, 3xxx Equity, 4xxx Income, 5xxx Expenses
Real-world example
Consistent numbering makes reports and account lookups predictable.
How do you design a CoA for a growing business?
Intermediate
Keep it as simple as possible, use segments (account, department, cost centre) instead of hundreds of accounts, allow gaps in numbering for growth, and map to reporting needs.
Account-Department-CostCentre: 5000-SALES-NORTH
Real-world example
Using a department segment lets you report profit per branch without new accounts.
What is the difference between a control (header) and a posting (detail) account?
Intermediate
Posting accounts receive transactions; control/header accounts summarise groups of them for reporting and cannot usually be posted to directly.
Header: Current Assets -> posting: 1000 Cash, 1200 AR, 1300 Inventory
Real-world example
Reports roll detail accounts up under their headers automatically.
How do you handle multiple entities or currencies in the CoA?
Advanced
Use a shared/standard CoA mapped across entities, add entity and currency dimensions, and maintain a mapping to a group consolidation CoA for reporting.
Local account 61000 -> group account 5000 (Operating Expenses)
Real-world example
A group standardises the CoA so subsidiaries consolidate cleanly.