Chart of Accounts Law and Legal Definition

Chart of accounts is a complete list of a business's expense and income accounts in a ledger. The list is arranged either by category such as asset, liability, revenue, expense or in the order of the appearance in the financial statements. This coded list of accounts is used to properly classify record, and report for purposes of constructing financial statements. By assigning all transaction to a specific account, a business is able to use the double-entry bookkeeping method to record debits and credits (assigning them to specific accounts) in a way that the books are always balanced.