The chart of accounts is the basis upon which a trial balance is generated. A trial balance is a listing of all accounts, with their respective opening balances, debits and credits for the period, and ending balances. The trial balance, in turn, is the basis for producing the financial statements – the balance sheet and income statement. The chart of accounts generally follows the sequence of accounts as they would be presented in the balance sheet, followed by the accounts to be presented in the income statement. Therefore, the order of accounts is generally as follows:
Assets
Liabilities
Equity
Income
Expenses
Assets
Assets are generally classified in broad categories as:
Current assets
Property, plant and equipment
Other assets
The order in which accounts are generally presented on the balance sheet may vary in different countries. In Europe, for instance, it is more common to start with fixed assets, while in the Americas the balance sheet starts with the most liquid assets.