Chart of Accounts is one of my favorite parts in accounting and bookkeeping!
It's just so important. I like to call it the Backbone of Accounting. Simply put, Chart of Accounts is a list of all the accounts used in financial statements.
Balance Sheet and Income Statement accounts comprise Chart of Accounts. Much like a backbone is to a body, if Chart of Accounts is in good shape, then the Financials have a good structure to be reported. Conversely, if Chart of Accounts is in disarray, then the Financials most likely do not convey the business's performance in a meaningful and clear way.
In order for a business to publish clean, sensible financials that can be used for tax returns, financing, and partners, Chart of Accounts have to be properly structured.
- Thomas Kim from Tabular LLC