what is a chart of accounts?
a list of accounts in the ledger
accounts are listed in the order they appear in the financial statements
1st number in chart of acounts indiates the major account group of the ledger in which the account is located. i.e. assets, liabilities, owner's equity, revenue, and expenses
2nd number indicates it\s location of account within the group. where it falls within the assets, liability, etc. group