The organized list of every account a business uses to categorize money.
The chart of accounts is the master list of every account a business uses to categorize its money — every asset, liability, equity, income, and expense account, usually in that order. It's the filing system the whole bookkeeping operation sorts into.
A good chart of accounts fits the business: detailed enough that reports answer real questions ('what did we spend on software?'), lean enough that categorizing stays fast and consistent. Sub-accounts add report detail without clutter. The most common mistake is endless near-duplicate accounts — 'Supplies', 'Office Supplies', 'Misc Supplies' — which turn reports into noise.
A freelance designer's chart might be: checking account and A/R (assets); credit card (liability); owner's equity; design income; then software, advertising, education, and home-office expenses. Ten accounts, clean reports. Our free chart of accounts generator builds a sensible starting set.
General Ledger · Debits and Credits · Journal Entry — or browse the full plain-English glossary.
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