iRealtee OS Glossary

Chart of Accounts

A COA serves as the foundation of any accounting system. It assigns a unique code and name to every account—assets, liabilities, equity, revenue, and expenses—s...

Chart of Accounts

Chart of Accounts (COA) is a structured index of all financial accounts used by an organization to classify and record transactions in the general ledger.

A COA serves as the foundation of any accounting system. It assigns a unique code and name to every account—assets, liabilities, equity, revenue, and expenses—so that every peso entering or leaving your business lands in the correct category.

Key Components

A standard Chart of Accounts contains five primary account types:

  • Assets (1000–1999) – Cash, receivables, property, equipment
  • Liabilities (2000–2999) – Payables, loans, accrued expenses
  • Equity (3000–3999) – Capital stock, retained earnings
  • Revenue (4000–4999) – Sales, service income, commissions earned
  • Expenses (5000–5999) – Rent, utilities, salaries, marketing costs

Each account type uses a numbering system for quick identification. Philippine real estate companies often add sub-accounts for project-specific tracking, such as separate revenue accounts per development or property type.

How it Works

You can think of the COA as a filing system for money. Here is how it operates in practice:

  1. Account Creation – You define each account with a code, name, and type. Example: Account 1110 = "Cash on Hand."
  2. Transaction Recording – When a buyer pays their monthly amortization, the system debits Cash (Asset) and credits Accounts Receivable.
  3. Ledger Posting – The double-entry bookkeeping system posts debits and credits to the respective accounts.
  4. Financial Reporting – At month-end, your balance sheet, income statement, and cash flow statement pull balances directly from the COA structure.

Pros & Cons

Advantages:

  • Standardizes financial classification across all transactions
  • Enables accurate financial statements and BIR tax reports
  • Supports audit readiness and compliance with Philippine tax regulations
  • Allows comparison across accounting periods

Disadvantages:

  • Requires upfront planning—poorly designed COAs create reporting headaches
  • Overly complex structures slow down data entry
  • Changes to account codes may affect historical report consistency

Real-World Application

In Philippine real estate, a well-structured Chart of Accounts helps brokerages and developers track:

  • Commission income by agent and upline hierarchy
  • Reservation fees and equity payments per project
  • Withholding tax liabilities (BIR Form 2307)
  • VAT payable under BIR regulations

Platforms like iRealtee's accounting software provide a pre-configured COA aligned with Philippine real estate operations. This lets realty hubs record journal entries, generate a trial balance, and produce BIR-compliant reports without manual account setup.

  • General Ledger – The master record where all COA accounts post transactions
  • Double-Entry Bookkeeping – The accounting method that requires balanced debits and credits
  • Trial Balance – A report verifying that total debits equal total credits across all accounts

References

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