Key takeaways
What this article covers, in order:
- Why there is no one official chart, and where there is
- The numbering convention, range by range
- Worked example: a sample chart for a two-vet clinic
- How the numbers turn into statements
- Rules that keep a chart of accounts useful
- Common mistakes
A standard chart of accounts is a numbered list of every account in your general ledger, ordered so that balance sheet accounts come first and income statement accounts follow. The most widely used convention is 1000–1999 for assets, 2000–2999 for liabilities, 3000–3999 for equity, 4000–4999 for revenue and 5000 upwards for expenses, often with 5000s for cost of sales, 6000s for operating expenses and 7000s for other income and expense. There is no single universal standard, but this structure is what most accountants and accounting software expect.
Why there is no one official chart, and where there is
In the US, the UK, India and many other countries, the law tells you what your financial statements must show, not what your ledger accounts must be called or numbered. You are free to design your own chart as long as it produces accurate statements and tax returns. That is why charts look similar from business to business but are rarely identical.
Some countries do prescribe one. France's Plan comptable général is the best-known example: accounts are organised into numbered classes, with classes 1 to 5 covering balance sheet items and classes 6 and 7 covering expenses and income. If you operate in a country with a prescribed chart, use it; your accountant and the tax authority will expect it.
The numbering convention, range by range
- 1000–1999 Assets — what the business owns or is owed, from the most liquid (cash) to the least (long-term assets).
- 2000–2999 Liabilities — what it owes, from current (supplier bills, tax due) to long-term (loans).
- 3000–3999 Equity — owners' contributions, drawings or distributions, and retained earnings.
- 4000–4999 Revenue — income from your main activities.
- 5000–5999 Cost of sales — costs that rise directly with what you sell.
- 6000–6999 Operating expenses — running costs such as rent, salaries and software.
- 7000–7999 Other income and expenses — interest, gains and losses on disposals, and other items outside day-to-day trading.
Smaller businesses often stop at 5000 and use 5000s for all expenses. Larger ones may use five-digit numbers (10000, 10100…) to leave room for departments. What matters is that the first digit tells you the account type at a glance, and that the order follows the financial statements.
Worked example: a sample chart for a two-vet clinic
Fernhill Veterinary Clinic is a two-vet practice that sells consultations, surgery, boarding and pet medicines. Here is a chart that would serve it well. Notice the gaps between numbers; they leave space for accounts you have not thought of yet.
Assets (1000s)
- 1000 Operating bank account
- 1010 Savings account
- 1050 Petty cash
- 1100 Accounts receivable
- 1150 Allowance for doubtful accounts (contra-asset)
- 1200 Inventory — medicines and pet food
- 1300 Prepaid expenses
- 1500 Clinical equipment
- 1510 Accumulated depreciation — clinical equipment
- 1600 Vehicles
- 1610 Accumulated depreciation — vehicles
- 1700 Leasehold improvements
- 1800 Rental deposit
Liabilities (2000s)
- 2000 Accounts payable
- 2100 Credit card payable
- 2200 Accrued expenses
- 2300 Sales tax, VAT or GST payable
- 2400 Payroll liabilities
- 2500 Client deposits (unearned revenue)
- 2700 Loan — current portion
- 2800 Loan — long-term portion
Equity (3000s)
- 3000 Owners' capital (or share capital)
- 3100 Owners' drawings (or dividends)
- 3900 Retained earnings
Revenue (4000s)
- 4000 Consultation fees
- 4100 Surgery and procedures
- 4200 Medicine and product sales
- 4300 Boarding and grooming
- 4900 Discounts given (contra-revenue)
Cost of sales (5000s)
- 5000 Medicines and supplies used
- 5100 External laboratory fees
- 5200 Cost of retail products sold
Operating expenses (6000s)
- 6000 Rent
- 6100 Utilities
- 6200 Salaries — veterinary nurses and reception
- 6250 Employer payroll taxes and benefits
- 6300 Insurance
- 6400 Marketing
- 6500 Software and subscriptions
- 6600 Professional fees
- 6700 Bank and card processing fees
- 6800 Depreciation
- 6900 Repairs and maintenance
Other income and expense (7000s)
- 7000 Interest income
- 7100 Interest expense
- 7200 Gain or loss on disposal of assets
How the numbers turn into statements
The payoff of a well-ordered chart is that reports almost build themselves. Suppose Fernhill's October totals are:
- 4000 Consultation fees — $38,000
- 4100 Surgery and procedures — $22,000
- 4200 Medicine and product sales — $9,000
- 5000 Medicines and supplies used — $11,500
- 5100 External laboratory fees — $4,200
Revenue is the sum of the 4000s: $69,000. Cost of sales is the sum of the 5000s: $15,700. Gross profit is $69,000 − $15,700 = $53,300, a gross margin of about 77%. Every 6000-series account then comes off gross profit to give operating profit, and the 7000s take you to profit before tax. The balance sheet is the 1000s, 2000s and 3000s in order.
Because the clinic split revenue into four accounts rather than one, the owners can see that surgery brings in almost a third of revenue. Because medicines used (5000) is separate from retail products sold (5200), they can price each correctly.
Posting a few October transactions
- A client pays $420 for a consultation by card → Dr 1000 Operating bank account $420, Cr 4000 Consultation fees $420 (with card fees later charged to 6700).
- A wholesaler bills $3,600 for medicines → Dr 1200 Inventory $3,600, Cr 2000 Accounts payable $3,600.
- Medicines costing $2,900 are used in treatments → Dr 5000 Medicines and supplies used $2,900, Cr 1200 Inventory $2,900.
- A client pays a $500 deposit for planned surgery → Dr 1000 Operating bank account $500, Cr 2500 Client deposits $500, moved to 4100 once the surgery is done.
Rules that keep a chart of accounts useful
- Leave gaps. Number in tens or hundreds so a new account can slot in where it belongs.
- Do not create an account per customer or supplier. That is what the receivables and payables ledgers are for. One accounts receivable control account, many customer records.
- Use tracking for locations and projects. If Fernhill opens a second clinic, tag transactions by location rather than duplicating every revenue and expense account.
- Match the detail to decisions. Create a separate account only if someone will look at it separately. Twenty kinds of office supplies help nobody.
- Align expense accounts with your tax return. If your return asks for certain expense categories, having accounts that map to them saves hours at year-end.
- Keep names precise and consistent. Sundry, miscellaneous and general expenses tend to fill up with things that belong elsewhere.
- Deactivate, do not delete. An account with past transactions should be made inactive so history stays intact.
- Avoid renumbering mid-year. Restructure at a year-end, and keep a mapping of old to new numbers for comparisons.
Common mistakes
- Putting loan repayments in an expense account. Only the interest is an expense; the principal reduces the liability in the 2000s.
- Booking owner withdrawals as wages in a sole proprietorship or partnership, where they belong in drawings in the 3000s.
- Recording contra accounts such as accumulated depreciation or discounts in the wrong range, which breaks automatic subtotals.
- Starting with a generic template and never tailoring it, so the largest revenue streams are lumped together.
hellobooks< / a > -helps-you-set-it-up-and-keep-it-tidy">How HelloBooks helps you set it up and keep it tidy
HelloBooks gives you a customisable chart of accounts that you can number and name to your own convention, with multi-currency accounts if you hold foreign-currency balances. Tracking by class, location or project lets you analyse branches and jobs without multiplying accounts, and the general ledger and trial balance reports read straight off the structure you build.
Bank rules and AI auto-categorisation of bank transactions post everyday items to the right accounts once you have taught them, and a person approves what the AI proposes. If you are moving from QuickBooks, Xero, Zoho Books, Tally or FreshBooks, the one-time migration import brings your existing chart and balances across so you can tidy them in place rather than start from scratch. Your accountant can then review and adjust the chart before the first close.
