A chart of accounts (COA) is a financial organizational tool that provides a complete listing of every account in your financial system. In other words, it is a map of your financial statement and it provides clear breakdown of the various accounts within your system.

An account is a unique record for each type of asset, liability, equity, revenue and expense. These records represent different sections of your financial statement.

Here’s an example of a Chart of Accounts used for a restaurant business.

Parent-Child Accounts

A child account is a subset of a parent account. Essentially, the parent-child hierarchy gives your financial statement a structure as well as an easier way to navigate complex information. This is very common especially in large corporations where some may even have 2-3 generations of children accounts.

In the example above, the Cash account (1100) is the parent of four children accounts (1110, 1120, 1130 & 1140).