Supply WeaveDocumentation
Product guidesAccounting
Supply Weave
DocsAccountingChart of Accounts

Chart of Accounts

Purpose

The chart of accounts is the organized list of places where accounting amounts are recorded. An ADMIN manages it at Accounting Setup -> Chart of Accounts (/accounts). A good chart lets non-accountants select understandable accounts while preserving the classifications needed for financial reports.

Agree additions and classification changes with the finance owner or CA. Do not change an account merely to remove a Readiness finding if the accounting treatment is uncertain.

Account Types

Every account has one type:

Account type Plain-language purpose Normal statement
ASSET Resources controlled by the business, such as cash, bank, receivables, inventory, or equipment Statement of Financial Position
LIABILITY Amounts owed, such as supplier balances or accrued obligations Statement of Financial Position
EQUITY Owners’ interest, capital, and retained earnings Statement of Financial Position
REVENUE Income earned from ordinary or other activities Profit & Loss
EXPENSE Costs such as cost of goods sold, operating expenses, and other expenses Profit & Loss

Account type controls which report sections are valid. A parent and all its direct children must have the same type.

Parent Accounts And Leaf Accounts

A parent account has one or more children. It groups related accounts for the account tree and reports. A leaf account has no children and is the account used for posting.

Example:

Bank Accounts                 ASSET parent
  Operating Bank - BDT        ASSET leaf, BANK
  Payroll Bank - BDT          ASSET leaf, BANK

Rules to follow:

  • Do not post directly to a parent account. Readiness reports direct parent postings as a BLOCKER.
  • Accounts used by system transactions and manual journals must be active leaves.
  • A parent and child must have the same account type.
  • The hierarchy cannot contain a cycle.
  • A child may inherit a report section from its nearest explicitly classified ancestor.
  • A child’s explicit section cannot conflict with an inherited section.
  • An unclassified general parent can contain separately classified branches.
  • An account classified as CASH or BANK must remain a leaf and cannot gain children.

Use parents for reporting structure, not as transaction accounts.

Profit And Loss Sections

The P&L Section field is available only for REVENUE and EXPENSE accounts.

Account type Allowed P&L sections
REVENUE Revenue, Other Income
EXPENSE COGS, Operating Expense, Other Expense

An active Revenue or Expense account with posting activity must have an effective P&L section, either directly or inherited from an ancestor. Readiness checks lifetime activity, so an account is not ignored merely because old activity later netted to zero or was reversed.

Balance-Sheet Sections

The Balance Sheet Section field is available only for ASSET, LIABILITY, and EQUITY accounts.

Account type Allowed balance-sheet sections
ASSET Non Current Asset, Current Asset
LIABILITY Non Current Liability, Current Liability
EQUITY Equity

Accounts may inherit the nearest ancestor’s section. Asset, Liability, and Equity accounts carrying a balance through the current UTC date need an effective section for complete Statement of Financial Position reporting.

Do not classify Revenue or Expense accounts in a balance-sheet section. Do not classify Asset, Liability, or Equity accounts in a P&L section.

CASH And BANK Classification

Cash / Bank Classification is not an account type. It identifies liquidity accounts used by Receipt & Payment reporting and money-facing transactions.

  • Use CASH for physical cash or cash-on-hand accounts.
  • Use BANK for bank deposit accounts.
  • Use None for other accounts, including receivables, inventory, advances, and ordinary non-cash current assets.

A valid liquidity account must be all of the following:

  • Active
  • Type ASSET
  • A leaf account
  • Classified as CASH or BANK
  • Effectively classified in Current Asset

Petty Cash account code 1000 and every account used by expenses, supplier payments, customer receipts, advances, or LC realizations are included in Readiness liquidity checks. Missing or incorrect classification can make Receipt & Payment reporting incomplete. See Receipt & Payment for the monthly review and missing-section troubleshooting procedure.

Retained Earnings Eligibility

The Retained Earnings Account is selected under Accounting Setup -> Accounting Settings. It must:

  • Exist in the chart
  • Be active
  • Have account type EQUITY
  • Be a leaf account
  • Have an effective Equity balance-sheet section, directly or by inheritance

Once selected, account changes that would make it ineligible are rejected. Use a dedicated retained-earnings leaf rather than an Equity grouping parent. See Accounting Settings for field-by-field guidance.

Active And Inactive Accounts

Account Active controls whether an account is available in active account pickers. An inactive account remains in history and remains reportable when it has historical postings.

Use inactive status when an old account must no longer receive new postings. Do not delete its history, reuse its code for a different economic meaning, or rename it to represent an unrelated account. Required system accounts and the configured retained-earnings account must remain active leaves.

Before deactivating an account:

  1. Confirm it is not a required system account.
  2. Confirm it is not the configured retained-earnings account.
  3. Confirm no current workflow still needs it as a payment, deposit, bank, cash, or posting account.
  4. Preserve enough naming context for historical reports to remain understandable.

Printable Account Checklist

Use this for each new or changed account:

  • The account code is unique, stable, and follows the agreed numbering plan.
  • The account name describes one consistent accounting purpose.
  • The account type has been approved.
  • The selected parent has the same type.
  • The account belongs at the intended point in the hierarchy.
  • If this is a posting account, it has no children.
  • Its direct or inherited P&L section is correct, if it is Revenue or Expense.
  • Its direct or inherited balance-sheet section is correct, if it is Asset, Liability, or Equity.
  • CASH or BANK is set only when the account is an active current-asset leaf.
  • If proposed for retained earnings, it is an active Equity leaf with effective Equity classification.
  • Active status reflects whether the account should accept new selections.
  • The change has been reviewed against existing balances and historical use.

Verification

  1. Open Accounting Setup -> Chart of Accounts and review the tree, not only the filtered list.
  2. Filter or inspect accounts by type, P&L section, balance-sheet section, CASH/BANK classification, active status, and leaf status as needed.
  3. Confirm all transactional cash and bank accounts meet every liquidity rule.
  4. Open Accounting Setup -> Readiness, refresh the checks, and review affected codes for P&L classification, balance-sheet classification, liquidity, required-system-account, and parent-posting findings.
  5. Run the Trial Balance, Profit & Loss, Statement of Financial Position, Receipt & Payment, and relevant ledgers. Readiness does not replace report review.

Common Mistakes

  • Using a parent account for transactions because its name looks convenient.
  • Creating a child with a different account type from its parent.
  • Setting a conflicting section on a child instead of relying on correct inheritance or creating a separate branch.
  • Calling every current asset CASH or BANK.
  • Leaving a bank account without Current Asset classification.
  • Selecting an Equity parent as retained earnings.
  • Deactivating a required system or currently used transaction account.
  • Reclassifying an account with historical balances without CA review.
  • Assuming an inactive historical account disappears from reports.
  • Adding duplicate accounts instead of first checking the existing tree and codes.

Responsibility Boundaries

Supply Weave validates hierarchy, compatible sections, leaf-only liquidity, and retained-earnings eligibility. It also keeps inactive accounts visible in history. The business and its CA remain responsible for the chart design, account purpose, classification judgments, opening mapping, tax and VAT treatment, and whether a historical reclassification or adjustment journal is required.

Return to the Accounting User Guides index.

Reviewed against the application on: 2026-08-21