Chart of Accounts (part 3 of 4)

A chart of accounts must start with the end in mind. The end is always the reports that you want to generate and use for decision-making. What data do you need and how should that info be presented? That determines the format of the chart of accounts. For example, all information about age-level expenses in a church should be in the same area of the CoA and not spread out everywhere; in fact, all the children’s and youth expenses should be grouped together and then sub-totaled which then totaled with other age-level expenses let the reader know how much was spent in that category.


The numbering system in a CoA is very logical. I recommend that accounts have no more than five (5) numbers but I’ve seen some as short as three numbers and as long as 16 digits. Five is a happy medium!


Here is the basic accounting numbering system which is used pretty much everywhere in the US (where AICPA controls the accounting system).

1XXXX – Cash

2XXXX – Payables, Restricted or Designated Funds

3XXXX – Retained Equity or Net Assets

4XXXX – Revenue & Receipts

5XXXX – Usually reserved for revenues related to special projects

6XXXX – Expenses

7XXXX – Expenses

8XXXX – Expenses

9XXXX – Usually reserved for expenses related to special projects


The first digit is the accounting classification. The rest of the digits can be used for sub-categories and other classifications. For instance:

61XXX Missions

65XXX Worship

68XXX Care & Fellowship

70XXX Discipleship-General

71XXX Preschool

72XXX Children

73XXX Youth

74XXX College

75XXX Young Families

76XXX Median Adults

78XXX Senior Adults

81XXX Office & Administration

85XXX Building & Grounds

88XXX Personnel


Finally, when the system is set up, the last digit is usually zero (0) so that additional lines can be added over time as needed without having to renumber the entire CoA.


Be familiar with the standard accounting numbering system so that when you see an account number, you’ll have an idea of what its accounting classification is. It will help you when you meet with the finance committee.


Larger churches have more complicated accounting structures. See part 3 for larger church department and multisite accounting.


Lead On!