Three digit chart of accounts
/A three digit chart of accounts allows a business to create a numerical sequence of accounts that can contain as many as 1,000 potential accounts. The three-digit format is most commonly used by small businesses that do not break out the results of any departments or divisions in their financial statements. A sample three digit chart of accounts is shown below.
In the example, each block of related accounts begins with a different set of account numbers. Thus, current liabilities begin with “300,” revenue items begin with “600,” and cost of goods sold items begin with “700.” This numbering scheme makes it easier for the accounting staff to remember where accounts are located within the chart of accounts. This type of account range format is also required by the report writing module in many accounting software packages.
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When a company increases in size and wants to track information for individual subsidiaries or departments, it should instead adopt a five-digit or seven-digit chart of accounts. The five-digit format can be used to identify individual departments, while the seven-digit format can be used to identify both departments and divisions. The seven-digit approach is used by larger organizations.
| Account Number | Description |
| 010 | Cash |
| 020 | Petty cash |
| 030 | Accounts receivable |
| 040 | Reserve for bad debts |
| 050 | Marketable securities |
| 060 | Raw materials inventory |
| 070 | Work-in-process inventory |
| 080 | Finished goods inventory |
| 090 | Reserve for obsolete inventory |
| 100 | Fixed assets – Computer equipment |
| 110 | Fixed assets – Computer software |
| 120 | Fixed assets – Furniture and fixtures |
| 130 | Fixed assets – Leasehold improvements |
| 140 | Fixed assets – Machinery |
| 150 | Accumulated depreciation – computer equipment |
| 160 | Accumulated depreciation – Computer software |
| 170 | Accumulated depreciation – Furniture and fixtures |
| 180 | Accumulated depreciation – Leasehold improvements |
| 190 | Accumulated depreciation – Machinery |
| 200 | Other assets |
| 300 | Accounts payable |
| 310 | Accrued payroll liability |
| 320 | Accrued vacation liability |
| 330 | Accrued expenses liability – other |
| 340 | Unremitted sales taxes |
| 350 | Unremitted pension payments |
| 360 | Short-term notes payable |
| 370 | Other short-term liabilities |
| 400 | Long-term notes payable |
| 500 | Capital stock |
| 510 | Retained earnings |
| 600 | Revenue |
| 700 | Cost of goods sold – materials |
| 710 | Cost of goods sold – direct labor |
| 720 | Cost of goods sold – manufacturing supplies |
| 730 | Cost of goods sold – applied overhead |
| 800 | Bank charges |
| 805 | Benefits |
| 810 | Depreciation |
| 815 | Insurance |
| 825 | Office supplies |
| 830 | Salaries and wages |
| 835 | Telephones |
| 840 | Training |
| 845 | Travel and entertainment |
| 850 | Utilities |
| 855 | Other expenses |
| 860 | Interest expense |