A chart of accounts is a systematic listing of all accounts used in the general ledger of a company. It is usually arranged according to categories, such as assets, liabilities, equity, income, and expenses. Each account is assigned a unique number for easy identification.

Usefulness:

• Organization: It helps in organizing financial data into clearly defined categories.
• Reporting: It ensures the accuracy of financial reports by categorizing transactions correctly.
• Consistency: It promotes consistency in recording transactions and preparing financial statements.
• Control: It aids in maintaining control over the business’s financial activities by tracking each account’s activity.