The Chart of Accounts Classifies the Accounts to Make Identification

question 31

Essay

The chart of accounts classifies the accounts to make identification of the accounts easier. Discuss how companies set up a chart of accounts for use in their business.

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Definitions:

Corporation

A legal entity that is separate and distinct from its owners, who are shareholders. The corporation itself can own assets, borrow money, sue or be sued.

Debt-To-Equity Ratio

It's a financial indicator that compares the proportions of debt and shareholders' equity in funding company assets.

Total Assets

The aggregate of current and fixed assets held by a corporation.

Total Liabilities

The total amount of financial obligations or debts that a company owes to external parties.