Accounts and charts of accounts

In your company's bookkeeping, an account shows the aggregation of a certain type of business transactions. For example, you record all payments into the bank account in a separate account in the bookkeeping. 

A chart of accounts is a list of the accounts your company uses in its bookkeeping. 

Accounts in your bookkeeping 

In the company's bookkeeping, you record different types of business transactions in different accounts, e.g. accounts receivable in the account for accounts receivable. Thus, a bookkeeping account is an account in which you record (book) a certain type of business transaction. 

When you record different types of transactions in different accounts, the transactions are recorded in a systematic order. This is called the general ledger. 

Chart of accounts 

In your bookkeeping, you use different accounts to record the different business transactions of the companies. All of these accounts together make up your chart of accounts. 

BAS chart of accounts 

The BAS chart of accounts is a standardised chart of accounts used by most businesses, whatever their type. The chart of accounts consists of accounts and account classifications that are adapted to the Annual Accounts Act, the Swedish Tax Agency's standardised accounting data and the data you have to submit to Statistics Sweden (SCB). There is a special chart of accounts for sole traders who draw up simplified annual accounts.

The accounts in the BAS chart of accounts are divided into different classes so that accounts that belong together form a class. It contains the following: 

• account class 1 for assets 
• account class 2 for liabilities 
• account class 3 for income 
• account classes 4–8 for expenses. 

The accounts have 4 digits, where 

• the first digit indicates the account class 
• the first plus the second together indicate the account group 
• the four digits together indicate the account. 

The BAS chart of accounts contains a large number of accounts because it should be usable in all enterprises, regardless of their sector and size. Naturally, you do not have to use all of these accounts in your bookkeeping. You instead choose the ones that best suit your business. 

Use of the BAS chart of account is not a requirement. Instead, you can choose to create your own accounts with numbers and names and compile them into a chart of accounts that suits your business.If you keep accounts manually, they do not need to have a number. 

Most people choose to use the BAS chart of accounts because it makes it easier to submit data and tax returns. 

BAS chart of accounts at BAS.se (in Swedish) 

Double-entry bookkeeping 

When you have to record a business transaction, it should be recorded in at least two accounts – one in debit and the other in credit. This technique is called double-entry bookkeeping and is designed to be self-checking. It reduces the risk of missrecording in accounting. 

If the sum of the debit entries does not equal the sum of the credit entries, then an error has occurred somewhere. In accounting software, the program warns if debit and credit do not match. You will not be able to save the accounting entry as long as the amounts do not balance. 

Accounting example – double-entry bookkeeping

Debit and credit 

The meaning of debit and credit depends on the type of account: 

• Asset accounts – e.g. the bank account – increases in debit and decreases in credit. 
• Liability accounts – e.g. bank loans – increases in credit and decreases in debit. 
• Income accounts – e.g. sales – increases in credit and decreases in debit. 
• Expense accounts – e.g. purchases of goods – increases in debit and decreases in credit. 

So you normally record in credit in income accounts and in debit on expense accounts. This is become income generally means and increase and expenses always a decrease. In principle, it is only in the case of some kind of correction that these accounts are affected in the other direction. 

In asset and liability accounts, you make entries either in credit or debit. This is because the asset and liability accounts change when, for example, deposits and withdrawals are made.