The chart of accounts template above has four levels and three ready versions: a trading company, restaurants and cafes, and a contracting company. Edit it, then download it in Excel or PDF with a written guide to the coding rules.
Five classes: 1 assets, 2 liabilities, 3 equity, 4 revenue, 5 expenses. The trading company version has 108 accounts, of which 65 are posting accounts that take entries.
What a chart of accounts is and why every business needs one
A chart of accounts is the numbered list of every account a business posts its journal entries to, from the main class down to the posting account, and the financial statements are built from it. An accounts manual is the same chart with a written note on how each account is used, which is what the Coding and usage guide tab gives you. Take a cash sales invoice: debit 110101 Main cash box, credit 410101 Sales and 210301 Output VAT. Sales then show on the income statement and the cash box on the balance sheet.
How to code your accounts and levels
- Level one has one digit, level two two digits, level three four and level four six, and every account starts with its parent's code: 1, 11, 1101, 110101.
- Leave gaps for growth: when you open a second bank account it takes 110105 under 1101 Cash and cash equivalents, after the last account there.
- Never repeat a code or reuse one that was retired. Class and normal balance come from the code, so a wrong code shows up as a wrong class.
- On the guide tab, enter who owns the chart and who approved it, and download the guide to keep with it.
What each column in the chart means
| Column | Meaning |
|---|---|
| Type | Summary accounts take no entries; posting accounts carry the transactions. |
| Normal balance | Debit for assets and expenses, credit for liabilities, equity and revenue, and the opposite for a contra account such as accumulated depreciation. |
| Statement | Balance sheet for classes 1 to 3, income statement for classes 4 and 5. |
Trading, contracting and restaurant charts compared
All three versions share the VAT, zakat, end-of-service and cash float accounts, and differ in inventory, revenue and cost of revenue. Copying a generic chart onto a different sector leaves contract costs or food waste with no account, so they end up in "Other expenses".
Chart of accounts for a trading company
Merchandise and goods in transit, sales returns and discounts allowed as contra accounts, cost of goods sold and stock count differences.
Chart of accounts for a contracting company
Retentions held by customers and for subcontractors, work in progress, advances from project owners, contract costs split into materials, labor and subcontractors, and revenue from progress billings and variation orders.
Chart of accounts for restaurants
Separate dine-in, takeaway and delivery app sales, app commissions, food and packaging inventory, and a waste and spoilage account.
How to import the chart and tailor it in your accounting system
Download the chart in Excel, delete the calculated columns if your software only wants code, name and parent, and sort the rows by code so each parent comes before its children. After the import, set up cost centers for branches and projects instead of an account per branch, and map the VAT accounts to the invoicing settings in your system.
Common mistakes when building a chart of accounts
- Opening an account for every customer or supplier inside the chart instead of a subsidiary ledger.
- Keeping input and output VAT in one account, which makes the VAT return hard to reconcile.
- Deleting an account that has balances instead of deactivating it.
Accounting notes
The chart follows the usual classification under IFRS as endorsed in Saudi Arabia by SOCPA (the Saudi Organization for Chartered and Professional Accountants), and the standards do not prescribe any numbering.
When the chart grows and entries branch out
Microtec accounting software is an ERP system for businesses in Saudi Arabia that runs sales, purchasing, inventory, finance and HR on one chart of accounts.
Frequently asked questions
How many levels does a chart of accounts need?
Four levels cover most small and medium businesses: class, group, general account and posting account. Finer detail, such as branches or projects, is handled with cost centers rather than a fifth level.
Should I add an account for every customer?
No. One Customers account (110201) in the chart is enough, with each customer's detail in a subsidiary ledger. An account per customer bloats the chart and makes the balance sheet hard to read.
When do I use a cost center instead of a new account?
When you want the same revenue or expense split by branch, project or department. The account answers "what kind of expense?" and the cost center answers "where was it spent?", so Jeddah branch rent stays in the rent account under the Jeddah cost center.
Can I merge two charts for two activities in one business?
Yes. Start from the version closest to your main activity, add the inventory, revenue and cost accounts you are missing from the other one with new codes under the same group, and delete duplicates.
Should I download the chart of accounts as PDF or Excel?
Use Excel to edit it and import it into accounting software, and PDF to approve and print it. The written guide also comes in Word if you want to add your own company rules.