The chart of accounts is designed to
A) alphabetize the accounts to make reading easier for its financial statement users.
B) analyze the accounts and organize them in order of dollar amount to simplify the accounting information for users.
C) summarize the transactions and determine their ending balances.
D) meet the information needs of a company and other financial statement users.

Question

Quizplus · Accepted Answer

The primary purpose of a chart of accounts is to meet the information needs of a company and other financial statement users by organizing the accounts in a logical and meaningful way that reflects the nature of the company's activities. The chart of accounts is a key tool in facilitating the preparation of financial statements, as it summarizes transaction data and determines the ending balance of accounts. Alphabetizing or organizing accounts by dollar amount are not the primary objectives of a chart of accounts.

The Chart of Accounts Is Designed to