What is a 'chart of accounts'?

A 'chart of accounts' serves as a foundational tool in the accounting system of a business. It is essentially a comprehensive list of all accounts that the business uses to categorize its financial transactions. This includes accounts related to assets, liabilities, equity, revenue, and expenses. Each account is typically assigned a unique identification number or code, making it easier for businesses to organize, track, and report their financial data accurately.

By maintaining a well-structured chart of accounts, a business can streamline its accounting processes, enhance the clarity of reports, and facilitate easier financial analysis. This tool is essential not only for bookkeeping but also for ensuring compliance with accounting standards and providing stakeholders with a clear view of the business's financial health.

The other options you considered, such as a detailed financial report or a summary of income and expenses, refer to specific types of financial documentation that utilize the accounts defined within the chart of accounts but do not represent the chart itself. Similarly, a record of bank transactions pertains to specific financial activities, rather than the system of categorizing all accounts used for broader financial management within the business.