Chart of accounts is the list of accounts and the account numbers that identify their location in the ledger.
Chart of account is made by organization to prefix what accounts are used in the business. It has the following facilities:
- All accounts are listed here to deal with the business.
- It ensures a definite number of account titles.
- It indicates the scope of accounts to deal with the business.
- It ensures the limits of transactions.
- It protects the problems of title fixation.
- It locates the position of each account easily.
To gist up, chart of accounts is the controlling tool of account titles for every business.