Typical Chart Of Accounts For A Small Business
Introduction
As a small business owner, it's crucial to have an accurate and organized record of financial transactions. This is where a chart of accounts comes in handy. A chart of accounts is a list of all the accounts that a business uses to organize its financial transactions. In this article, we'll go over the typical chart of accounts for a small business.
Assets
Assets are resources owned by a business that have a monetary value. They can be physical or intangible. Here are some common asset accounts:
- Cash
- Accounts Receivable
- Inventory
- Prepaid Expenses
- Land
- Buildings
- Equipment
Liabilities
Liabilities are obligations that a business owes to creditors. They can be short-term or long-term. Here are some common liability accounts:
- Accounts Payable
- Loans Payable
- Accrued Expenses
- Notes Payable
- Mortgages Payable
Equity
Equity represents the residual interest in the assets of a business after deducting liabilities. It's what's left over for the owners of the business. Here are some common equity accounts:
- Common Stock
- Retained Earnings
- Owner's Equity
Revenue
Revenue is the income a business earns from its operations. Here are some common revenue accounts:
- Sales
- Service Revenue
- Interest Income
- Rental Income
Expenses
Expenses are the costs incurred by a business to earn revenue. Here are some common expense accounts:
- Cost of Goods Sold
- Rent
- Utilities
- Salaries and Wages
- Insurance
- Advertising
- Depreciation
Conclusion
A chart of accounts is an essential tool for any small business owner. It helps keep track of financial transactions and makes it easier to generate financial statements. By following this typical chart of accounts, you'll be on your way to better financial organization and success.