Accounting glossary

Chart of accounts

What a chart of accounts is, how Xero and QuickBooks structure it, and the per-country conventions for UK, AU, CA, NZ, and SG SMBs in 2026.

By ExpenseFlow team
· 18 May 2026

Definition

The chart of accounts (CoA) is the structured list of every general ledger account a business uses to record financial transactions. It organises accounts by category (assets, liabilities, equity, revenue, expenses) and ties each one to a specific line on the balance sheet or P&L through an account code. The chart is the spine of the bookkeeping system: every journal entry posts to one or more of its accounts.

What a chart of accounts means in practice

For a bookkeeper, the CoA is the design decision that determines how readable the books are. A well-structured chart makes it trivial to pull a P&L by department or a balance sheet by segment. A sprawling chart with hundreds of accounts and inconsistent naming is a nightmare to maintain and produces reports nobody trusts.

Most modern accounting platforms ship with sensible jurisdiction-specific defaults. Xero and QuickBooks Online have country-specific default CoAs that align with the local tax-return labels (UK VAT return boxes, AU BAS labels, CA T2 GIFI codes). Starting from the default and customising lightly is the standard pattern. Building a CoA from scratch is almost always a mistake and usually produces a chart that bears no resemblance to the conventions accountants expect to see.

A practical example: a UK consultancy on Xero starts with the default UK CoA (around 60 accounts). They add three custom revenue accounts (one per service line: Consulting, Training, Subscriptions) and two custom expense accounts (Software Subscriptions, Contractor Fees) to match their business model. Total: 65 accounts. The P&L groups revenue by service line automatically; the balance sheet uses the default groupings. Everything reconciles to the VAT return labels because the underlying tax codes are mapped to the default accounts.

How the chart of accounts works by country

United Kingdom

There is no statutory CoA template. Most SMBs use a 4-digit code structure aligned with the FRS 102 or FRS 105 small-company accounts format. The default Xero UK CoA is the de facto standard for owner-managed businesses on Xero. ICAEW publishes a recommended CoA for owner-managed businesses that maps to the small-company accounts disclosure format and is widely adopted in firms that work with Xero or QuickBooks.

Australia

There is no statutory CoA template. The Xero AU default CoA aligns with the small-business reporting framework and the BAS labels (G1 total sales, G3 export sales, G10-G14 GST inputs, W1-W2 PAYG withholding). Mapping each account to a BAS label at setup means the BAS report runs automatically each quarter without manual adjustment. The ATO publishes a recommended GL code list for tax-return mapping but does not mandate it.

Canada

There is no statutory CoA template. ASPE Section 1500 governs financial statement presentation for private companies. The Xero CA and QuickBooks Online Canada defaults align with the T2 corporate tax return labels, which makes the GIFI (General Index of Financial Information) mapping straightforward at year-end. GIFI is the schedule of financial-statement line codes the CRA uses on the T2.

New Zealand

There is no statutory CoA template. Most SMBs use the Xero NZ default CoA, which aligns with the financial reporting framework for tier 2 and tier 3 entities under XRB (External Reporting Board) standards. The default already includes GST tracking accounts that match the GST101A return labels.

Singapore

There is no statutory CoA template. The ACRA / IRAS preferred structure aligns with SFRS(I) for incorporated entities. The default SG Xero CoA and QuickBooks Online SG defaults follow this structure. SG businesses also need GST tracking accounts aligned to the F5 return labels for businesses above the SGD 1 million threshold.

The chart of accounts is the structural spine of the bookkeeping system:

  • The general ledger is the cumulative posting against every account in the chart.
  • The balance sheet presents the asset, liability, and equity accounts.
  • The income statement presents the revenue and expense accounts.
  • Every journal entry posts to one or more accounts in the chart.
  • The trial balance is the periodic snapshot of every account’s net position.

See also

For the practical mechanics of customising the chart of accounts in Xero, see the per-software workflow guides as they ship.

FAQ

See the answered questions above for typical account counts, custom-account discipline, and how the chart maps to the financial statements.

Questions, answered

Common questions

How many accounts should a typical SMB have?

For a service-based SMB, 40 to 80 accounts is typical: roughly 10 to 15 asset accounts, 5 to 10 liability accounts, 5 equity accounts, 5 to 10 revenue accounts, and 15 to 40 expense accounts. Product businesses with inventory carry more. Going much above 100 accounts usually signals over-categorisation that makes the books harder to read, not easier.

Can I add my own custom accounts?

Yes in every accounting platform. The risk is fragmentation: a bookkeeper who adds a new account for every novel expense ends up with a 200-account chart that is unusable for reporting. The standard discipline is to add accounts sparingly and to use tracking categories (Xero) or classes (QuickBooks) for sub-analysis instead.

How does the chart of accounts map to the financial statements?

Each account is assigned to a financial-statement section: assets and liabilities to the balance sheet, equity to the statement of changes in equity, revenue and expenses to the P&L. The reporting engine in Xero or QuickBooks rolls up each account to the right line of each statement based on this assignment. Misassigning an account corrupts every report.

Keep exploring

General ledger

The complete record of every financial transaction posted by a business, organised by account in keeping with the chart of accounts, from wh

Balance sheet

A financial statement presenting a snapshot of what a business owns (assets), what it owes (liabilities), and the residual interest of its o

Income statement

A financial statement summarising revenue, costs of sales, gross profit, operating expenses, and net profit (or loss) over a defined account

Journal entry

The fundamental unit of double-entry bookkeeping: a dated record that debits one or more accounts and credits one or more others by equal am

Trial balance

A periodic report listing every general ledger account with its closing debit or credit balance, used by bookkeepers to confirm the total de

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