How do you draw a business chart of accounts?


Quick Answer

To draw up a business chart of accounts, create categories labeled assets, liabilities, owner's equity, revenue and expenses, advises About.com. List all the company's categorized accounts using a four-digit numbering system similar to that used on balance sheets and in accounting software.

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Full Answer

Start the chart of accounts by listing the company's assets and labeling each asset account beginning with the number 1,000, states About.com. Include assets such cash and bank accounts, vehicles, inventory, business equipment and real estate. At the end of the assets portion, provide spaces to deduct the value of depreciated assets. Start the second section of the chart by listing the company's liabilities, then number each account starting with 2,000. Liabilities include short-term and long-term accounts such as debts to suppliers, payroll taxes and mortgages.

For the third section, list the business owner's equity, labeling the accounts starting with 3,000, advises About.com. Include equity accounts such as stock owned in the company and earnings the owner retains from profits. For the revenue section, list sales accounts with labels starting at 4,000. Include any income from investments as revenue. Number the expenses section chart starting with 5,000, and list the same expenses reportable on IRS income tax Schedule C. Expense accounts include costs such as advertising, office expenses, taxes, employee benefits and wages.

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