A chart of accounts is a list of the names (and sometimes numbers) of the accounts used to record transactions into the General Ledger. These accounts are used by your accounting software to aggregate information into your financial reports. As such, a properly designed chart of accounts is key to providing you with relevant information about your business.
When you set-up your accounting software, it likely provided you with a list of standard accounts. Although these accounts may have been adjusted based on the type of business/industry, I always find further customization is required. For example, adding income accounts for your major products or services and creating sub-accounts for expense items can provide more relevant data.
While it's easy to add and remove accounts, maintaining a consistent list will enable you to benefit from the information provided in financial period comparison reports; these will provide insight into your business growth.
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