Heart of any accounting system is Chart of accounts and sometimes it will be summarized to term: "C.O.A" , whatever it is on paper or a computerized system. any voucher should show debit amount and credit amount on mentioned accounts. Actually, Accounts are like humans in a society of financial area. each accounts has its unique identity and behaviors. As your accounts are more clear and sorted then your income statement will be more useful.
At a glance C.O.A is list of all accounts but categorized in standard format to be understandable for any accountant. they are categorized in groups and each group has sub groups as term: "Subsidiary".
General Groups in Chart of Accounts
Typically 6 main groups will be find in coa as:
Some accountants as they need then they will add more groups and it is vary from company to company and accountant to accountant.
This group covers any things that shows a ownership of company at current time or will be occurs in future time like money will be received from trade debtors. subsidiaries in this groups are : Cash, Bank Accounts, Accounts Receivable, Paid loans to employees, ...
This groups will increase volume of capital
Any money should be pay to anybody or company out of company will be categorized in this group. for example, accounts payable (Trade creditors), bank loans, ...
This groups will decrease volume of capital