What is a chart of accounts?

Misbah Jalal Siddiqui

What is a chart of accounts?

You are here:

Chart of Accounts

The general ledger is a book that contains all of the accounts where business transactions are recorded. The list of all the accounts contained in the general ledger is called the chart of accounts and they appear in the order that they occur on the financial reports[1][2] as follows:



Owner’s Equity

Operating Revenue

Operating Expenses

Non-Operating Revenues and Gains

Non-Operating Expenses and Losses

When you set up your accounting program, create your chart of accounts and make as few changes to it as possible so that you can compare the results in the same account over the course of multiple years.[1] Law firms, which are not as complex as other organizations, will require a less-complex a chart of accounts.[2] It is smart to adopt “account names and account groupings and an overall format” that is based on the company’s tax return format.[3]

For example if your firm is a LLC or PLLC, you will want to set up your expense accounts so that they mirror the expenses you are required to report on your Schedule C as follows[4]:


Car and Truck Expense

Commissions and Fees

Contract Labor



Employee benefit programs

Insurance (other than health)




Legal and professional services

Office expense

Pension and profit-sharing plans

Rent or lease


Other business property

Repairs and maintenance


Taxes and licenses

Travel and meals



Other Expenses


Most charts of accounts assign a number to each account using the following system:

Assets  (100-199 or 1000-1999)

Liabilities (200-299 or 2000-2999)

Owner’s Equity (300-399 or 3000-3999)

Revenues (400-499 or 4000-4999)

Cost of Goods Sold (500-599 or 5000-5999)

Expenses (600-699 or 6000-6999)

Other Revenue (700-799 or 7000-7999)

Other Expenses (800-899 or 8000-8999)


The Cost of Goods Sold applies to manufacturers only, so law firms shouldn’t have any account numbers that begin with a 5.


1. The chart of accounts
2. Introduction to Chart of Accounts
3. Setting Up Your Chart of Accounts in QuickBooks
4. Profit or Loss From Business

Sign up now to get more tips and news from CosmoLex

How can CosmoLex improve your law practice?

Book A Demo

Search Resources

Recent Articles

Table of Contents