Chart of Accounts
A chart of accounts is the complete list of asset, liability, equity, income, and expense buckets that every journal entry in a book posts into.
In short
Every bank account, credit card, and income or expense category your money can sit in or move through. Accounts sort into numbered blocks by type — 1000s for assets, 6000s for expenses — purely so related ones group together; the number itself carries no other meaning.
Also called: COA, account list
A chart of accounts is the full list of "buckets" money can sit in or move through — every bank account, every credit card, every category of income and expense, and the equity that represents what's actually yours. Every journal entry posts into two or more of these buckets. Without a chart of accounts, categorizing a transaction wouldn't mean anything, because there would be nothing to categorize it into.
Every account belongs to exactly one of five types: asset, liability, equity, income, or expense. That split determines whether the account grows with a debit or a credit, and it's what makes reports like a balance sheet or profit and loss possible to build at all. Accounts are grouped into numbered blocks so related ones sort together — assets in the 1000s, liabilities in the 2000s, equity in the 3000s, income in the 4000s, expenses in the 5000s and 6000s. The number is a sorting convention, not a ranking.
BalanceMCP seeds a new book with a full starter chart on creation — a Schedule-C-friendly business chart, or a simpler personal one — and that choice can't be swapped later; only individual accounts can be added or archived afterward. Each connected bank account or credit card gets its own dedicated account in the chart, allocated as a child code under the parent block (the first checking account you connect lands at 1011, the next at 1012), which is exactly what keeps a transfer between two of your own accounts visible as an actual movement rather than disappearing into one undifferentiated bucket.
Accounts aren't deleted once used, because the append-only journal needs somewhere permanent to point. An account no longer needed gets archived instead, closing it to new activity while its history stays fully intact, and it can be unarchived later if needed again. The temptation to add a new account for every vendor or every small distinction is worth resisting — every additional account is one more decision to get right every time something is categorized, and most of that specificity buys nothing anyone will ever look at.
What people get wrong
- Creating a separate account for every vendor instead of one per kind of spending — the memo already records who the money went to.
- Picking business vs. personal chart casually — the choice can't be swapped after the book is created, only individual accounts added.
- Trying to delete an account that has history — the journal is append-only, so archiving (not deleting) is the only option.
Common questions
- Can I switch from the business chart to the personal one later?
- No — the chart you pick at book creation is the one that book uses going forward. You can add or archive individual accounts afterward, but not swap the whole template.
- Do I need to set up an account for every bank card myself?
- No — BalanceMCP creates one automatically the first time you import a statement from a given bank account or card, giving it its own code so its activity stays visible on its own.
Machine-readable: /api/knowledge/concept:chart-of-accounts