Did you know that in accounting that the chart of accounts is the first and foremost important step to take before a company even starts to input transactions into their financial records? It is considered like a foundation. Everything builds up from it. Without a good foundation, everything on it will fall. In considering your chart of accounts, it can be rather basic but can become more complicated the larger the business is. When you set up a chart of accounts, you must first make sure you assign account numbers to all the accounts. This will make your chart of accounts easier to read, and if you have any subaccounts, it will allow you to create those with ease after you have created your original chart of accounts. The numbering scheme is important since it will categorize your types of transaction and group them accordingly in a numerically ordered fashion. Looking at an example below, here is how you would set up the numbering.
|Libilities and equity|
|Long Term Liabilities|
|2700||line of credit|
|Sales and Cost of Goods Sold|
|Cost of Goods Sold|
|6067||cleaning and maintenance|
|6100||meals and entertainment-owner|