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Chart of Accounts

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A chart of accounts is the organized list of every account in a ledger. It determines what the books can describe: a well-designed chart makes reporting straightforward; a poorly designed one makes it impossible.

Structure

  • Accounts are grouped by type: assets, liabilities, equity, income, expenses.
  • Within each type, accounts are organized hierarchically. In plain-text accounting this uses colon-separated names: Assets:Bank:Checking, Expenses:Housing:Rent, Income:Salary.
  • The hierarchy should reflect how you actually want to see reports. If you need to know how much you spend on groceries versus dining out, those need separate accounts under Expenses:Food.

Design principles

  • Start coarse, refine as needed. Begin with broad categories and split them when you find yourself wanting a distinction the current chart cannot make. Do not pre-build a chart with fifty accounts you may never use.
  • Match your reporting needs. If you file taxes, your expense categories should align with the categories on your tax forms. If you budget by category, your chart should match your budget categories.
  • Be consistent. Use the same naming convention throughout. Decide on singular vs. plural, capitalization, and hierarchy depth and stick with it.
  • Separate accounts by institution. Bank accounts, credit cards, and investment accounts should each be their own account so you can reconcile each one independently.

Common domestic accounts

  • Assets:Bank:Checking, Assets:Bank:Savings — liquid cash
  • Assets:Receivables — money owed to you
  • Liabilities:CreditCard:Visa — debts organized by instrument
  • Equity:Opening-Balances — the offset account for initial balances
  • Income:Salary, Income:Freelance — revenue sources
  • Expenses:Housing:Rent, Expenses:Food:Groceries, Expenses:Transport — spending categories

In Beancount

Each account must be opened with a directive before it can be used:

2024-01-01 open Assets:Bank:Checking USD
2024-01-01 open Expenses:Food:Groceries USD

Closing an account prevents further postings after the close date:

2025-06-30 close Assets:Bank:OldSavings

Graph View

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