When a company is formed, the accountant will produce the chart of accounts. In its most basic terms the chart of accounts is a listing of all a company's accounts with a corresponding number assigned to it.
These numbers are not randomly assigned to the accounts of a
business. In most cases the numbers are assigned in order that they
appear on the financial statements beginning with the balance sheet and
then moving to the income statement accounts.This is seemingly a basic and elementary task. However, most companies expect and plan to grow at some point in the future. Therefore, the accountant must ensure that the books posess the ablity to grow along with the company's growth (i.e. the ability to add additional accounts as needed).
