Chart of Accounts for Client Books

A chart of accounts is the account list that groups a client’s transactions into assets, liabilities, equity, income and expenses. Start with the sample below, adapt it to the client and reconcile every old balance before changing their books.

Define the Chart’s Job

A chart of accounts gives each kind of transaction a consistent destination and reporting group. When a client buys equipment, its account type determines whether the cost appears as an asset or an expense. The account code helps staff select and find that account.

A reporting group combines related accounts in financial reports. For example, computer equipment and office furniture can sit in separate asset accounts under property, plant and equipment. A number alone does not determine the accounting treatment. The account’s configured type and reporting mapping must agree with its purpose.

Keep these records separate when you take over a client’s books:

• The chart of accounts lists available accounts and their settings.
• A trial balance shows each account’s debit or credit balance at a reporting point.
• A transaction list shows the entries that make up those balances.
• Tax return labels group figures for the return, with adjustments where tax treatment differs from the books.

For example, book depreciation goes to depreciation expense and accumulated depreciation. The tax workpaper separately determines the allowable deduction. Naming an expense account after a tax label does not establish deductibility.

Before you redesign the chart, obtain the current account list and a trial balance, plus access to the supporting records. Agree who can approve changes. Record the client’s entity type, reporting needs and GST settings before choosing accounts.

Build a Useful Account List

Build the chart around the transactions the client actually records, leaving room for extra accounts within each group. The illustrative numbering below uses 1xxx for assets, 2xxx for liabilities and 3xxx for equity. Income starts at 4xxx, direct costs at 5xxx and operating expenses at 6xxx.

The gaps between codes allow later additions. Use these example codes for a small trading or service company. The client’s reporting needs determine the final chart, and the destination software determines its import format.

Sample Account List

All opening balances in the template are zero. Replace them only through an approved opening-balance procedure. A chart imported into existing books must not add balances that are already there.

Use company equity accounts only for a company. A sole trader needs capital and drawings accounts instead of share capital. Partnerships and trusts need accounts that reflect the relevant partners or beneficiaries and the amounts actually owing.

Choose GST Settings Separately

An expense name does not establish a GST credit. The Australian Taxation Office’s GST credit guidance ties entitlement to GST registration, business use and the purchase itself. GST must be included in the purchase, and supporting evidence is required. Private use limits the claim, while purchases relating to input-taxed sales generally need separate consideration.

For office expenses, a taxable stationery purchase and a purchase from an unregistered supplier can use the same expense account with different transaction tax treatment. Wages have no GST credit. Review insurance components individually instead of applying one calculation to the entire premium.

The template deliberately leaves vendor tax codes unassigned. Choose them after reviewing the client’s registration, supplies and evidence. Keep the GST reporting basis separate from the financial reporting basis.

Receivables and payables are control accounts: their balances must agree with the customer and supplier subledgers. Payroll, bank and GST accounts also need reconciliations. Use the software’s existing managed accounts where required, and map the sample to them instead of creating duplicates.

Adapt the Sample to the Client

Add an account when it supports a recurring recording or reporting decision. Use job, project or department tracking for detail that cuts across several account types.

For a construction business, separate materials from direct subcontractor costs when the client needs to review each cost category. Track individual projects through job records. Creating a materials account for every building site makes the chart harder to maintain and obscures comparisons between jobs.

Retention receivables and contract liabilities can need separate accounts. Classify each balance from the contract and expected recovery or settlement timing. Work in progress and contract assets need an agreed accounting policy, not a new account name alone.

For a subscription business, separate subscription revenue from implementation revenue when the services have different recognition patterns. Add a deferred subscription revenue account where advance receipts remain a liability under the applicable accounting policy.

Under AASB 15’s contract liability principle, advance consideration for services still owed can create a liability. A fictional business that receives payment for a year of service must consider when it earns that revenue. Its invoice date alone does not settle the accounting treatment. Assess GST timing separately.

Use a payment-provider clearing account where customer payments arrive net of fees. Reconcile gross receipts, refunds and fees to the bank settlement. Recording only the net deposit as income can understate both sales and expenses.

CSV Template and Printable List

Download the chart of accounts CSV template to open in Excel. The plain printable account list contains the same accounts and review notes. Open the text file to print it or save it as a PDF through your print dialogue.

The Australian Charities and Not-for-profits Commission’s National Standard Chart of Accounts is a separate, optional resource for charities and other not-for-profits. Its purpose and reporting categories differ from this commercial company sample.

To prepare the sample for a client:

1. Save a working copy and identify the entity and reporting period in your workpaper.
2. Remove unused sample accounts and adapt the equity section to the entity.
3. Add accounts for recurring transactions that need separate reporting.
4. Record each account’s reporting group and approved tax treatment in the workpaper.
5. Translate the approved list into the destination software’s import fields and permitted account types.

Keep account codes as text in Excel if the destination uses leading zeros. The CSV’s debit and credit columns are review fields. Transfer balances only where the chosen import procedure requires them.

Map an Existing Ledger

Map each old account to a destination account before you rename, merge or archive anything. Save the original exports and reports so the practice can explain every change later.

A chart redesign changes account organisation within a set of books. A full ledger migration also moves transactions or opening balances between systems. For that wider cutover, the MYOB to Xero migration guide covers the separate conversion task.

1. Export the old chart and trial balance for the agreed cutover point. Save the bank reconciliations and customer and supplier balance reports with them.
2. Give every old account one mapping outcome: retain, rename, merge, split or archive. Record the destination code and the reason.
3. Reconcile control accounts before mapping them. Retain separate balances for each bank account and each distinct loan.
4. Review every merger or split with the accountant responsible for the client. A split needs transaction evidence supporting each destination amount.
5. Retain historical account references and comparative reports. Archive unused accounts only after confirming how the software preserves their transaction history.

Worked Mapping Example

This fictional midyear trial balance keeps current-period expenses open. The practice merges two office expense accounts into code 6300. It retains every other balance.

After mapping, office expenses has a $2,000 debit balance. Total debits remain $42,000 and total credits remain $42,000. The mapping file preserves both original expense codes and explains why the practice combines them.

Equal totals are only the first check. Mapping office expenses to equipment would still balance but would change profit and assets. Review the destination account types as well as the arithmetic.

Check the Chart Before Use

Approve the chart only when its account settings and mapped balances agree with the source records. Use a copy or supported preview before applying changes to the client’s books.

1. Check that every code is unique and every account has the correct type. Accumulated depreciation remains a credit-balance contra asset, while loan principal stays outside expenses.
2. Confirm the unpopulated sample totals zero debits and zero credits. For a populated chart, compare opening balances with the approved trial balance.
3. Confirm every source account has a destination or a documented archive decision. Include zero-balance accounts with transactions in the historical review.
4. Compare total debits and credits before and after mapping. Reconcile each control account and confirm the balance sheet and profit and loss changes are explained.
5. Review tax defaults against sample transactions. Test a sale and a purchase, plus a payment against an existing invoice, to catch duplicated income or GST.
6. Have the responsible accountant approve the mapping and any accounting-policy decisions. Have the client or authorised manager approve changes to the reports they use.
7. Save the approved chart, mapping explanation and before-and-after reports together. Record the preparer, reviewer and approval date, then restrict who can change account settings.

If totals change, check for missing accounts, duplicate opening balances or a reversed debit or credit. If receivables stop matching, compare the customer balances and control-account mapping before entering a balancing journal. An unexplained journal can conceal the original fault.

Use the trial balance template for the balance check. Release the chart for use when totals reconcile, account classifications are approved and staff know which accounts to select for the next transaction.