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Overview

The Chart of Accounts (COA) defines all accounts used for recording transactions within a company. Each account has:
  • Account number (4-digit numbering convention)
  • Account type (Asset, Liability, Equity, Revenue, Expense)
  • Account category (detailed classification within type)
  • Normal balance (Debit or Credit)
  • Hierarchy (optional parent-child relationships)
Accounts are company-specific. Each company maintains its own chart of accounts, allowing different account structures across legal entities.

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Account Data Model

packages/core/src/accounting/Account.ts
export class Account extends Schema.Class<Account>("Account")({
  id: AccountId,
  companyId: CompanyId,
  accountNumber: AccountNumber,
  name: Schema.NonEmptyTrimmedString,
  accountType: AccountType,
  accountCategory: AccountCategory,
  normalBalance: NormalBalance,
  parentAccountId: Schema.OptionFromNullOr(AccountId),
  hierarchyLevel: Schema.Number,
  isPostable: Schema.Boolean,
  isCashFlowRelevant: Schema.Boolean,
  cashFlowCategory: Schema.OptionFromNullOr(CashFlowCategory),
  isIntercompany: Schema.Boolean,
  currencyRestriction: Schema.OptionFromNullOr(CurrencyCode),
  isActive: Schema.Boolean,
  isRetainedEarnings: Schema.Boolean
})

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Account Types

The five main account classifications per US GAAP:
packages/core/src/accounting/Account.ts
export const AccountType = Schema.Literal(
  "Asset",
  "Liability",
  "Equity",
  "Revenue",
  "Expense"
)
Resources owned by the entity
  • Normal Balance: Debit
  • Examples: Cash, Accounts Receivable, Inventory, Property

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Account Categories

Detailed subcategories within each account type:

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Asset Categories

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CurrentAsset
Asset category
Assets expected to be converted to cash within one year (Cash, AR, Inventory)
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NonCurrentAsset
Asset category
Long-term assets held for more than one year (Long-term Investments)
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FixedAsset
Asset category
Tangible long-term assets (Property, Plant, Equipment)
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IntangibleAsset
Asset category
Non-physical long-term assets (Patents, Trademarks, Goodwill)

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Liability Categories

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CurrentLiability
Liability category
Obligations due within one year (Accounts Payable, Short-term Debt)
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NonCurrentLiability
Liability category
Long-term obligations (Long-term Debt, Deferred Tax Liabilities)

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Equity Categories

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ContributedCapital
Equity category
Capital contributed by shareholders (Common Stock, Paid-in Capital)
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RetainedEarnings
Equity category
Accumulated earnings retained in the business
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OtherComprehensiveIncome
Equity category
Unrealized gains/losses not included in net income (AOCI)
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TreasuryStock
Equity category
Company’s own shares repurchased (contra-equity account)

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Revenue Categories

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OperatingRevenue
Revenue category
Revenue from primary business operations
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OtherRevenue
Revenue category
Revenue from non-operating activities (Interest Income, Gain on Sale)

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Expense Categories

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CostOfGoodsSold
Expense category
Direct costs of producing goods sold (COGS)
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OperatingExpense
Expense category
Day-to-day operating costs (Salaries, Rent, Marketing)
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DepreciationAmortization
Expense category
Non-cash expense for asset depreciation/amortization
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InterestExpense
Expense category
Interest paid on debt obligations
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TaxExpense
Expense category
Income tax expense
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OtherExpense
Expense category
Non-operating expenses (Loss on Sale, Impairment)

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Account Numbering Convention

Accountability uses a 4-digit numbering system with ranges for each account type:
packages/web/src/components/forms/AccountForm.tsx
// Account number ranges by type:
// - 1000-1999: Assets
// - 2000-2999: Liabilities
// - 3000-3999: Equity
// - 4000-4999: Revenue
// - 5000-9999: Expenses
1000-1499: Current Assets
  • 1000-1099: Cash and equivalents
  • 1100-1199: Accounts receivable
  • 1200-1299: Inventory
  • 1300-1399: Prepaid expenses
  • 1400-1499: Other current assets
1500-1999: Non-Current Assets
  • 1500-1599: Fixed assets
  • 1600-1699: Accumulated depreciation (contra-asset)
  • 1700-1799: Intangible assets
  • 1800-1899: Long-term investments

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Account Hierarchy

Accounts can be organized in a parent-child hierarchy for roll-up reporting:
1

Top-Level (Summary) Accounts

Parent accounts that summarize child accounts
  • parentAccountId: null
  • hierarchyLevel: 1
  • isPostable: typically false (summary only)
Example: 1000 - Cash and Cash Equivalents
2

Sub-Accounts

Child accounts that post to a parent
  • parentAccountId: parent account ID
  • hierarchyLevel: 2 or higher
  • isPostable: typically true
Example: 1010 - Operating Cash Account (parent: 1000)
3

Roll-Up

Parent account balance = sum of all child account balancesHierarchy allows detailed tracking while maintaining summary views

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Example Hierarchy

1000 - Cash and Cash Equivalents (Parent, Not Postable)
  ├─ 1010 - Operating Cash Account (Child, Postable)
  ├─ 1020 - Payroll Cash Account (Child, Postable)
  └─ 1030 - Money Market Account (Child, Postable)

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Creating Accounts

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UI Workflow

The account creation form auto-validates account numbers:
  • Account Number: 4-digit number (validated against type range)
  • Account Name: Display name
  • Account Type: Asset, Liability, Equity, Revenue, Expense
  • Category: Dropdown filtered by selected type
  • Normal Balance: Auto-filled from type (can override)

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Account Number Auto-Suggestion

When you enter a 4-digit account number, the form auto-suggests the account type:
packages/web/src/components/forms/AccountForm.tsx
export function suggestAccountTypeFromNumber(accountNumber: string): AccountType | null {
  const numValue = parseInt(accountNumber, 10)
  
  if (numValue >= 1000 && numValue <= 1999) return "Asset"
  if (numValue >= 2000 && numValue <= 2999) return "Liability"
  if (numValue >= 3000 && numValue <= 3999) return "Equity"
  if (numValue >= 4000 && numValue <= 4999) return "Revenue"
  if (numValue >= 5000 && numValue <= 9999) return "Expense"
  
  return null
}

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API Request

const { data, error } = await api.POST('/api/v1/accounts', {
  body: {
    organizationId,
    companyId,
    accountNumber: "1010",
    name: "Operating Cash Account",
    description: "Primary operating bank account",
    accountType: "Asset",
    accountCategory: "CurrentAsset",
    normalBalance: "Debit",
    parentAccountId: null,
    isPostable: true,
    isCashFlowRelevant: true,
    cashFlowCategory: "Operating",
    isIntercompany: false,
    currencyRestriction: null
  }
})

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Normal Balance

Each account has a normal balance direction:
packages/core/src/accounting/Account.ts
export const NormalBalance = Schema.Literal("Debit", "Credit")

export const getNormalBalanceForType = (type: AccountType): NormalBalance => {
  switch (type) {
    case "Asset":
    case "Expense":
      return "Debit"
    case "Liability":
    case "Equity":
    case "Revenue":
      return "Credit"
  }
}
Contra accounts have opposite normal balance from their account type:
  • Accumulated Depreciation (Asset type, Credit balance)
  • Treasury Stock (Equity type, Debit balance)
  • Sales Discounts (Revenue type, Debit balance)
You can override the normal balance in the form for contra accounts.

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Cash Flow Categories

For accounts that affect cash flow, specify the cash flow statement category per ASC 230:
packages/core/src/accounting/Account.ts
export const CashFlowCategory = Schema.Literal(
  "Operating",    // Principal revenue-producing activities
  "Investing",    // Acquiring/disposing of long-term assets
  "Financing",    // Debt, equity, and dividend transactions
  "NonCash"       // Significant non-cash activities (disclosed separately)
)
Cash flows from principal revenue-producing activities:
  • Cash received from customers
  • Cash paid to suppliers and employees
  • Interest received
  • Interest paid (US GAAP, can be financing under IFRS)
Cash flows from acquiring/disposing of long-term assets:
  • Purchase/sale of property, plant, equipment
  • Purchase/sale of investments
  • Loans made to others
Cash flows from debt, equity, and dividend transactions:
  • Proceeds from issuing stock or bonds
  • Repayment of debt principal
  • Payment of dividends
  • Repurchase of company stock
Significant investing/financing activities without cash:
  • Conversion of debt to equity
  • Acquisition of assets by assuming liabilities
  • Disclosed in supplemental schedule

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Intercompany Accounts

Accounts used for transactions between related companies: 
const intercompanyReceivable = Account.make({
  // ...
  accountNumber: "1150",
  name: "Intercompany Receivable - Acme UK",
  accountType: "Asset",
  accountCategory: "CurrentAsset",
  isIntercompany: true,
  intercompanyPartnerId: acmeUkCompanyId
})
Intercompany accounts are used for:
  • Intercompany receivables/payables
  • Intercompany revenue/expense
  • Tracking transactions between related entities for elimination during consolidation

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Currency Restriction

Optionally restrict an account to transactions in a specific currency: 
const eurBankAccount = Account.make({
  // ...
  accountNumber: "1015",
  name: "EUR Bank Account",
  currencyRestriction: "EUR"
})
When currencyRestriction is set:
  • Journal entry lines can only post to this account in the specified currency
  • Attempts to post in other currencies will fail validation
Most accounts have currencyRestriction: null allowing any currency. Use restrictions only for bank accounts or specific foreign currency accounts.

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Retained Earnings Flag

One account per company should be marked as the retained earnings account: 
const retainedEarnings = Account.make({
  // ...
  accountNumber: "3200",
  name: "Retained Earnings",
  accountType: "Equity",
  accountCategory: "RetainedEarnings",
  isRetainedEarnings: true  // Only one account should have this flag
})
This account is used during year-end closing:
  1. All Revenue accounts are closed (credited to zero)
  2. All Expense accounts are closed (debited to zero)
  3. Net income (Revenue - Expenses) is posted to Retained Earnings

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Helper Methods

packages/core/src/accounting/Account.ts
const account = Account.make({ /* ... */ })

// Hierarchy checks
account.isTopLevel           // No parent account
account.isSubAccount          // Has parent account

// Financial statement classification
account.isBalanceSheetAccount    // Asset, Liability, or Equity
account.isIncomeStatementAccount // Revenue or Expense

// Balance checks
account.hasNormalDebitBalance
account.hasNormalCreditBalance
account.hasStandardNormalBalance  // Normal balance matches type

// Other checks
account.hasCurrencyRestriction
account.isSummaryAccount      // Not postable (parent account)

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Best Practices

  • Use gaps: Number accounts 1010, 1020, 1030 (not 1001, 1002, 1003) to allow inserting accounts later
  • Group related accounts: Use ranges (1100-1199 for AR, 1200-1299 for Inventory)
  • Reserve ranges: Keep 9000-9999 for special purposes (intercompany, eliminations)
  • Summary accounts (isPostable: false): Used for roll-up reporting
  • Detail accounts (isPostable: true): Receive actual journal entries
Don’t post to summary accounts - posting should be at the detail level.
Write clear descriptions explaining:
  • Purpose of the account
  • What types of transactions should be posted
  • Any special handling or restrictions
Good descriptions help users select the correct account when creating journal entries.

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