The chart of accounts is an accounting term. The chart of accounts describes a list of all existing accounts of a company and is an elementary part of double-entry bookkeeping.
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Definition / explanation
The chart of accounts is developed from the chart of accounts individually for the company in question. It contains all accounts of the company, business or project. All companies that use double-entry bookkeeping are also required to keep a chart of accounts.
In general, the more extensive a company's chart of accounts, the more precise and meaningful the bookkeeping is in the end. This is due to the fact that more individual items can be differentiated from one another with a precise chart of accounts.
However, this becomes problematic if too many accounts are represented, as the bookkeeping can then quickly become confusing. However, if the chart of accounts is managed correctly and properly, it is an important and quite useful aid in any accounting.
Comparison and difference to the chart of accounts
Each company develops a suitable chart of accounts for itself from the chart of accounts. It is possible, for example, that in certain branches of the economy the chart of accounts may contain fewer or more accounts than the original chart of accounts.
This means that the chart of accounts is a special chart of accounts that is individually tailored to the company. Only the account classes and the account numbering are taken from the chart of accounts.
Retention period for the chart of accounts
The retention period for the chart of accounts is regulated in Germany in both the commercial code and the tax code. The corresponding paragraphs are Section 257 (4) HGB and Section 147 (3) AO. There, the retention period for the chart of accounts is set at 10 years.