Glossary
What is a chart of accounts?
The list of every bucket your money is recorded in. Keep it short and every report reads clearly.
Updated
In short
A chart of accounts is the organised list of every account a business records transactions in, grouped as assets, liabilities, equity, income and expenses. SimpleERP seeds a complete chart at sign-up and keeps it out of sight until needed.
A chart of accounts is the organised list of every account a business records transactions in, grouped into five types: assets, liabilities, equity, income and expenses. Every journal line posts to one of these accounts, and every financial report is built by adding them up. A clear, short chart makes the books easier to read, easier to audit and harder to post to the wrong place.
Chart of accounts: a worked example
Part of the chart of accounts of Lakshmi Steel Furnitures, with balances on 30 September 2026:
| Type | Account | Balance |
|---|---|---|
| Asset | HDFC current account | ₹2,71,000 |
| Asset | Inventory | ₹4,85,000 |
| Liability | Accounts payable | ₹1,92,400 |
| Equity | Owner's Capital (share capital) | ₹5,00,000 |
| Income | Sales | ₹18,42,600 |
| Expense | Cost of goods sold | ₹10,38,900 |
| Expense | Rent | ₹72,000 |
FAQ
Questions, answered
How many accounts should a small business have?
As few as answer your real questions. Most small traders and manufacturers need between 40 and 80. Add an account when you want to see a figure on its own in the P&L, such as power and fuel for a factory, and avoid a new account for every small kind of spend.
Is a chart of accounts the same as ledgers in Tally?
Close. In Tally each ledger sits under a group, and groups roll up into the statements. A chart of accounts is the same idea: each account belongs to a type, and the types roll up into the trial balance, P&L and balance sheet.
Should each customer have its own account?
Not in the chart. A single accounts receivable account holds the total, and each customer's balance is tracked against it by party. That keeps the chart short while still showing what each customer owes. Suppliers work the same way under accounts payable.
Can I rename or delete accounts later?
Renaming is usually fine. Deleting an account that already has posted entries is not, because past reports depend on it. Stop using it instead. Accounts the software posts to automatically, such as GST or inventory, should be left as they are.
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