Chart of Accounts

It contains a detailed list of general ledger accounts for a manufacturing company, organized into categories such as assets, liabilities, owner's equity, revenue, and expenses. Each account is assigned a number and a descriptive name. Each row lists a numerical code followed by the corresponding account name. There's a brief explanation about using these code numbers to identify accounts. The table appears to focus on expense-related accounts, including cost of goods sold, variances, production expenses, selling expenses, and administration and general expenses. • The account numbening scheme used in the chapters before this has been a simple one in which the accounts have been numbered consecu- tively. Such a scheme is satisfactory in a small business. However, in a larger more complicated accounting system. account numbers com- monly become code numbers that not only identify accounts but also tell their statement classifications. For example. in one numbering system three-digit numbers with each digit having a significant meaning are used. In this system the first digit in each account number tells the major balance sheet or income statement classification of the account to which it is assigned. For example. account numbers with first digits of 1. numbers 111 to 199. are assigned to asset accounts. and liability accounts are assigned numbers with the first digits of 2. numbers 211 to 299. When this system is used. main balance shect and income state- ment account classifications are assigned the following numbers: 111 to 199 are assigned to asset accounts. 211 to 299 are assigned to liability accounts. 311 to 399 are assigned to owner equity accounts. 411 to 499 are assigned to sales or revenue accounts. 511 to 599 are assigned to cost of goods sold accounts. 611 to 699 are assigned to operating expense accounts. 711 to 799 are assigned to other revenue and expense accounts. When accounts are assigned code numbers having several digits, all of the digits have a significant meaning. In the system under discussion where the first digit indicates the main balance sheet or income state- ment classification, the second and third digits further classify the ac- count. For example. the second digits under each of the following main classifications indicate the subclassification shown: 111 to 199. Asset accounts 111 to 119. Current asset accounts (second digits of 1) 121 to 129. Long-term investment accounts (second digits of 2) 131 to 139. Plant asset accounts (second digits of 3) 141 to 149. Intangible asset accounts (second digits of 4) 211 to 299. Liability accounts 211 to 219. Current liability accounts (second digits of 1) 221 to 229. Long-term liability accounts (second digits of 2) 611 to 699. Operating expense accounts 611 to 629. Selling expense accounts (second digits of 1 and 2) 631 to 649. Delivery expense accounts (second digits of 3 and 4) 651 to 669. General administrative expense accounts (second digits of 5 and 6) The third digit in each number further classifies the account. For example, in the system under discussion. all selling expense accounts, which have account numbers with first digits of 6 and second digits of 1 and 2, are further classified as follows: 611 to 699. Operating expense accounts 611 to 629. Selling expense accounts 611. Sales salaries expense (third digit of 1) 612. Advertising expense (third digit of 2) 613. Depreciation expense. store equipment (third digit of 3)