Chart Of Accounts

The Chart of Accounts is the blueprint of the accounts in your organization.

The overall structure of your Chart of Accounts is based on a system of double entry accounting that has become a standard all over the world to quantify how a company is doing financially.

Chart of Accounts is a tree view of the names of the Accounts (Ledgers and Groups) that a Company requires to manage its books of accounts. ERPNext sets up a simple chart of accounts for each Company you create, but you can modify it according to your needs and legal requirements.

For each company, Chart of Accounts signifies the way to classify the accounting entries, mostly based on statutory (tax, compliance to government regulations) requirements.

CoA Tree

The Chart of Accounts helps you to answer questions like:

  • What is your organization worth?
  • How much debt have you taken?
  • How much profit are you making (and hence paying tax)?
  • How much are you selling?
  • What is your expense break-up?

As someone managing a business, it is very valuable to see how well your business is doing.

Tip: If you can’t read a Balance Sheet it's a good opportunity to start learning about this. It will be worth the effort. You can also take the help of your accountant to set up your Chart of Accounts.