26. Chart of Accounts

By Roger Bryan

The financial section of a business plan includes another part called the chart of accounts. This section is basically the listing of various accounts associated with the financial record book. Each and every account listed comes with a reference number. To draft out the chart of accounts, first you should classify all the associated accounts under various categories.

Further, each account should have an associated number for its recognition. If you have a small business plan, then this number can be of three digits but higher number of digits is certainly more flexible as it allows for the addition of more accounts in a logical fashion. It is imperative that some thought process is invested in choosing the account reference digits logically in accordance with the industry norms.

Defining an account is also important. One can define accounts based on the segment they deal with i.e. manufacturing accounts, retail accounts etc. This helps keep the chart of accounts more coherent and accessible.

There are also some pre-conceived notions with respect to the listing of accounts. Like balance sheet accounts list accounts with maximum liquid assets first. Sometimes, these accounts are simply listed according to the reference number or in alphabetical order.

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