Question

Which of the following is false regarding a chart of accounts?

a. The total number of asset accounts must equal the total number of liability accounts

b. A chart of accounts is a listing of all the accounts that a company uses to record accounting information

c. Each account listing contains an account name and a numerical reference

d. Charts of accounts will vary across companies

Answer 1

Chart of Accounts:

The various accounts of the company listed to view the activities of the business is called chart of accounts. Chart of accounts varies from business to business. For example: a bank may contain the list of deposit holders in a deposit account.

What does a chart of accounts contain?

Chart of Accounts contains the following -

1. Shows all the balances of accounts of assets, liabilities, revenues and expenses

2. Shows all the account codes

3. Chart of accounts shows what does a company does over a period

Option A:

For the chart of accounts the total number of asset accounts need not be equal to the liability accounts. Therefore option A is false. Therefore is correct.

Option B:

A chart of accounts is a listing of all the accounts of the company used to record the accounting information. Since the statement is correct and therefore option B is not correct for the instant case.

Option C:

Each account in the chart of account contains an account name and a numerical reference. Since the statement is correct and therefore Option C is not correct for the instant case.

Option D:

Since Chart of account will vary across the companies, therefore the statement is not correct for the instant case.