The provides a numerical label for each account, so that activity can easily be tracked for a given account.

Chart of accounts

Explanation:

Chart of accounts is defined as a list of accounts that a business uses in its transactions. They are associated with numerical labels that makes them easy to identify and monitor activity on.

These accounts are what appears in the general ledger.

They can be arranged as asset, liability, owner's equity, revenue, expenses, operating expense, and non operating expense.

For example asset accounts can begin with number 1 and liabilities with number 2.

This will make them easy to identify

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