Accounting

  Introduction to Chart of Accounts A chart of accounts is a listing of the names of the  accounts   that a company has identified and made available for recording transactions in its  general ledger .  A company has the flexibility to tailor its chart of accounts to best suit its needs, including adding accounts as needed. Within the chart of accounts you will find that the accounts are typically listed in the following order: Within the categories of operating revenues and operating expenses, accounts might be further organized by business function (such as producing, selling, administrative, financing) and/or by company divisions, product lines, etc. A company's  organization chart   can serve as the outline for its accounting chart of accounts. For example, if a company divides its business into ten departments (production, marketing, human resources, etc.), each department will likely be accountable for its own expenses (salaries, supplies, phone, etc.). Each department will h

  Introduction to Debits and Credits What are debits and credits? Debits and credits are terms used by bookkeepers and accountants when recording transactions in the accounting records. The amount in every transaction must be entered in one account as a debit (left side of the account)  and  in another account as a credit (right side of the account). This  double-entry system  provides accuracy in the accounting records and financial statements. The initial challenge is understanding which account will have the debit entry and which account will have the credit entry. Before we explain and illustrate the debits and credits in accounting and bookkeeping, we will discuss the accounts in which the debits and credits will be entered or posted. What Is An Account? To keep a company's financial data organized, accountants developed a system that sorts transactions into records called  accounts .  When a company's accounting system is set up, the accounts most likely to be affected by