Chart of accounts

Meaning

The chart of accounts (دليل الحسابات, often called شجرة الحسابات, the accounts tree) is the list every entry is posted to. Each account has a number and a name, and the numbers follow the five types: assets usually start with 1, liabilities with 2, equity with 3, income with 4 and expenses with 5. Parent accounts group the detail, so Cash and Banks sits under Current Assets, which sits under Assets.

A good chart is detailed enough to answer the questions management and the tax return ask, and no more. VAT needs its own input and output accounts; zakat needs the accounts its base is built from kept apart; payroll needs GOSI and end-of-service accounts. Accounting software starts from a standard chart for the country and lets accounts be added; renaming is safe, but an account that already holds entries is deactivated, never deleted.

Also called: COA · account list · account tree · دليل الحسابات · شجرة الحسابات

Example

A trading company's chart might hold 1101 Cash on hand, 1102 Al Rajhi Bank, 1201 Accounts receivable, 1301 Inventory, 2101 Accounts payable, 2201 Output VAT, 2202 Input VAT, 3101 Capital, 3201 Retained earnings, 4101 Sales, 5101 Cost of sales and 5201 Salaries.