A standard chart of accounts is organized according to a numerical system. Chart of Accounts – Numbering Convention states that each major category will begin with a certain number, and then the sub-categories within that major category will all begin with the same number.
If assets are classified by numbers starting with the digit 1, then cash accounts might be labeled 101, accounts receivable might be labeled 105, inventory might be labeled 112, and so on. Whereas, if liabilities accounts are classified by numbers starting with the digit 2, then accounts payable might be labeled 201, short-term debt might be labeled 202, and so on.
Chart of Accounts – Numbering Convention
|Starting #||Account Type*||Comments|
|1200||Other Current Asset||This would contain your Inventory account|
|2200||Other Current Liability|
|2300||Long Term Liability|
|5000||Cost of Goods Sold|
|6000||Expense||AKA: Overhead. Contains fixed and variable.|
- These are the fifteen different account types found in Total Office Manager. Within each type, you would enter your own specific account. An example would be “Rent” or “Utilities”.
- When entering your accounts, please be sure to separate each account by at least ten numbers (such as 1010, 1020, 1030, etc).