Meritorious Consultants LLC - Sample Chart of Account of a Construction Company

A chart of accounts (COA) is a vital financial tool for any construction company, as it provides an organized listing of all accounts used for recording transactions in the company’s general ledger. A well-structured COA helps ensure accurate and efficient financial reporting, tracking, and auditing, essential for maintaining compliance and assessing the company’s financial health. For a construction company, the chart of accounts must reflect the unique nature of its operations, including project-based accounting, labor costs, materials, and subcontractor expenses. This article outlines a sample chart of accounts tailored for a construction business, detailing the key categories and accounts that help manage the financial complexities within the industry.

Before proceeding with the chart of accounts, it is important to understand the basics of the balance sheet and income statement for a clearer understanding.

A Balance Sheet is a financial statement that shows a company’s financial position at a specific point in time. It lists the company’s assets, liabilities, and equity, following the accounting equation:

Assets = Liabilities + Equity

Assets: Resources owned by the company (e.g., cash, inventory, property).
Liabilities: Obligations or debts the company owes to others (e.g., loans, accounts payable).
Equity: The residual interest in the assets after deducting liabilities (e.g., retained earnings, shareholders’ capital).

The balance sheet helps assess a company’s liquidity, financial health, and ability to meet its obligations.

A Profit and Loss (P&L) Account Statement, also known as the Income Statement, is a financial report that summarizes a company’s revenues, expenses, and profits or losses over a specific accounting period (monthly, quarterly, or annually). It reflects the company’s operational performance and profitability.

Key Components of the P&L Statement

Revenue (Sales): Income earned from business activities such as selling goods or services.
Cost of Goods Sold (COGS): Direct costs related to producing or delivering goods/services.
Gross Profit: Calculated as Revenue - COGS.
Operating Expenses: Indirect costs such as salaries, rent, utilities, and marketing expenses.
Operating Profit (EBIT): Gross Profit - Operating Expenses.
Other Income/Expenses: Includes interest, investment gains/losses, and non-operating items.
Net Profit (Net Income): Final profit after deducting all expenses, taxes, and interest.

The P&L statement helps stakeholders evaluate the company’s profitability, operational efficiency, and overall financial performance.

A brief description of each account category, followed by a sample chart of accounts for a construction company, is provided below.

Current Assets

Current Assets: Assets expected to be converted into cash, sold, or consumed within a year.

					Financial Statement	Normally
10000	Current Assets				BS	Debit
	10100	Cash and Cash Equivalents			BS	Debit
		10110	Bank Checking Account		BS	Debit
			10111	Bank-A	BS	Debit
			10112	Bank-B	BS	Debit
		10130	Bank Savings Account		BS	Debit
			10131	Bank-X	BS	Debit
			10132	Bank-Y	BS	Debit
		10140	Suspense Account		BS	Debit
		10150	Cash in Hand		BS	Debit
			10151	Bill.com Money in Clearing	BS	Debit
			10152	Bill.com Money out Clearing	BS	Debit
			10153	Expensify Clearing Account	BS	Debit
	10200	Short Term Marketable Securities			BS	Debit
		10210	STM Securities - AA		BS	Debit
		10211	STM Securities - BB		BS	Debit
	10300	Accounts Receivable			BS	Debit
		10310	Accounts Receivable - Retention		BS	Debit
			10311	Party-1	BS	Debit
			10312	Party-2	BS	Debit
		10330	Accounts Receivable - Trade		BS	Debit
			10331	Party-1	BS	Debit
			10332	Party-2	BS	Debit
		10370	Allowance for Doubtful Debts		BS	Credit
			10371	Debtor - ABC	BS	Credit
			10372	Debtor - DEF	BS	Credit
	10400	Inventory			BS	Debit
		10410	Inventory - Construction WIP		BS	Debit
			10411	Civil Works	BS	Debit
			10412	Plumbing Works	BS	Debit
			10413	Electricity Works	BS	Debit
			10414	HVAC Works	BS	Debit
		10420	Inventory - Finished Units		BS	Debit
			10421	Villas	BS	Debit
			10422	Shops	BS	Debit
			10423	Buildings	BS	Debit
			10424	Others	BS	Debit
		10430	Inventory - General		BS	Debit
			10431	Civil Works	BS	Debit
			10432	Plumbing Works	BS	Debit
			10433	Electricity Works	BS	Debit
			10434	HVAC Works	BS	Debit
			10450	Un-Categorized	BS	Debit
	10500	Other Current Assets			BS	Debit
		10510	Other Receivables		BS	Debit
			10511	NNN	BS	Debit
		10520	Prepayments		BS	Debit
			10521	Insurance	BS	Debit
			10522	Advances	BS	Debit

Non-Current (Fixed) Assets

Non-Current (Fixed) Assets: Long-term assets not easily converted into cash, used in operations.

					Financial Statement	Normally
20000	Long Term Assets				BS	Debit
	20100	Long Term Marketable Securities			BS	Debit
		20110	LTM Securities - AAA		BS	Debit
		20120	LTM Securities - BBB		BS	Debit
	20200	Property, Plant and Equipment			BS	Debit
		20210	Land		BS	Debit
			20211	Land - A	BS	Debit
		20220	Building		BS	Debit
			20221	Offce Building	BS	Debit
			20222	Ware House	BS	Debit
		20230	Accumulated Depreciation - Building		BS	Credit
			20231	Acc. Depreciation - Offce Building	BS	Credit
			20232	Acc. Depreciation - Ware House	BS	Credit
		20240	Plant and Machinery		BS	Debit
			20241	Batching Plant	BS	Debit
			20242	Excavator	BS	Debit
			20243	Crane	BS	Debit
			20244	Dumpers	BS	Debit
		20250	Accumulated Depreciation - P&M		BS	Credit
			20251	Acc. Depreciation - Batching Plant	BS	Credit
			20252	Acc. Depreciation - Excavator	BS	Credit
			20253	Acc. Depreciation - Crane	BS	Credit
			20254	Acc. Depreciation - Dumpers	BS	Credit
		20260	Vehicles		BS	Debit
			20261	Car	BS	Debit
			20262	Van	BS	Debit
			20263	Bus	BS	Debit
		20270	Accumulated Depreciation - Vehicles		BS	Credit
			20271	Acc. Depreciation - Car	BS	Credit
			20272	Acc. Depreciation - Van	BS	Credit
			20273	Acc. Depreciation - Bus	BS	Credit
		20280	Office Furniture and Fixtures		BS	Debit
			20281	Tables	BS	Debit
			20282	Chairs	BS	Debit
			20283	Air Conditioners	BS	Debit
			20284	Paintings	BS	Debit
		20290	Acc Depreciation - Office F&F		BS	Credit
			20291	Acc. Depreciation - Tables	BS	Credit
			20292	Acc. Depreciation - Chairs	BS	Credit
			20293	Acc. Depreciation - Air Conditioners	BS	Credit
			20294	Acc. Depreciation - Paintings	BS	Credit
		20300	Office Equipment		BS	Debit
			20301	Computers	BS	Debit
			20302	Printers	BS	Debit
			20303	Photo Copiers	BS	Debit
		20310	Accumulated Depreciation - Office Equipment		BS	Credit
			20311	Acc. Depreciation - Computers	BS	Credit
			20312	Acc. Depreciation - Printers	BS	Credit
			20313	Acc. Depreciation - Photo Copiers	BS	Credit
		20320	Tools and Plants		BS	Debit
			20321	Tools & Plants Civil Works	BS	Debit
			20322	Tools & Plants Plumbing Works	BS	Debit
			20323	Tools & Plants Electrical Works	BS	Debit
			20324	Tools & Plants HVAC Works	BS	Debit
			20325	Tools & Plants Misc Works	BS	Debit
		20330	Accumulated Depreciation - Tools and Plants		BS	Credit
			20331	Acc. Dep - Tools & Plants Civil Works	BS	Credit
			20332	Acc. Dep - Tools & Plants Plumbing Works	BS	Credit
			20333	Acc. Dep - Tools & Plants Electrical Works	BS	Credit
			20334	Acc. Dep - Tools & Plants HVAC Works	BS	Credit
			20335	Acc. Dep - Tools & Plants Misc Works	BS	Credit
		20600	Intellectual Property		BS	Debit
			20610	Intellectual Property - A	BS	Debit
		20650	Acc Amortization - Intellectual Property		BS	Credit
			20651	Acc Amortization - Intellectual Property - A	BS	Credit
		20700	Goodwill		BS	Debit
			20710	Goodwill	BS	Debit

Current Liabilities

Current Liabilities: Obligations due within one year or the company’s operating cycle, whichever is longer.

					Financial Statement	Normally
30000	Current Liabilities				BS	Credit
	30100	Notes Payable			BS	Credit
		30110	Notes Payable		BS	Credit
	30200	Accounts Payable			BS	Credit
		30210	Accounts Payable - Retention		BS	Credit
			30211	Project - A	BS	Credit
			30212	Project - B	BS	Credit
		30220	Accounts Payable - Trade		BS	Credit
			30221	Bill Card - Payable	BS	Credit
			30222	Credit Card - Payable	BS	Credit
	30400	Other Current Liabilities			BS	Credit
		30410	Interest Payable		BS	Credit
			30411	Interest Payable to Bank - A	BS	Credit
		30420	Accrued Expenses		BS	Credit
			30421	Utility Bills Payable	BS	Credit
			30422	Salaries and Wages Payable	BS	Credit
			30423	Expensify Card - Payable	BS	Credit
		30450	Unearned Revenue		BS	Credit
			30451	Project - X	BS	Credit
		30460	Taxes Payable		BS	Credit
			30461	Sales Tax Payable	BS	Credit
			30462	Purchase Tax Payable	BS	Credit
			30463	Payroll Tax Payable	BS	Credit
			30464	Income Tax Payable	BS	Credit

Non-Current Liabilities

Non-Current Liabilities: Long-term obligations due after one year.

				Financial Statement	Normally
40000	Long Term Liabilities			BS	Credit
	40100	Bonds		BS	Credit
		40110	Bonds Payable - XXX	BS	Credit
		40120	Bonds Payable - YYY	BS	Credit

Equity

Equity reflects the owners’ or shareholders’ claim on the company’s net assets and is often referred to as owners’ equity or shareholders’ equity in corporations.

Key Components of Equity

Capital (or Share Capital): The money invested by owners or shareholders in the business.
Retained Earnings: Profits earned and retained in the business after paying dividends.

				Financial Statement	Normally
50000	Equity			BS	Credit
	50100	Capital		BS	Credit
		50110	Equity - Opening Balance	BS	Credit
		50120	Equity - Addition	BS	Credit
		50130	Equity - Drawings	BS	Debit
	50200	Retained Earnings		BS	Credit
		50210	Retained Earnings - Opening Balance	BS	Credit
		50220	Retained Earnings - Current Period	BS	Credit
		50230	Retained Earnings - Distributed	BS	Debit

Revenue

Revenue in the income statement refers to the total income generated from a company’s core business operations during a specific accounting period. It represents the value of goods sold or services rendered before deducting any expenses. Revenue is also known as sales, turnover, or top-line income because it appears at the top of the income statement.

Types of Revenue

Operating Revenue
- Generated from primary business activities.
- Example: Sales of products or services.
Non-Operating Revenue
- Earned from secondary or non-core business activities shown under the head of Other Income/(Loss) in the chart of accounts
- Examples:
  - Interest Income
  - Dividend Income
  - Gains on Asset Sales
  - Foreign Exchange Gains

					Financial Statement	Normally
60000	Income				P&L	Credit
	60100	Revenue from Construction Operations			P&L	Credit
		60110	Revenue from Civil Works		P&L	Credit
			60111	Project - A	P&L	Credit
			60112	Project - B	P&L	Credit
		60120	Revenue from Plumbing Works		P&L	Credit
			60121	Project - A	P&L	Credit
			60122	Project - B	P&L	Credit
		60130	Revenue from Electricity Works		P&L	Credit
			60131	Project - A	P&L	Credit
			60132	Project - B	P&L	Credit
		60140	Revenue from HVAC Works		P&L	Credit
			60141	Project - A	P&L	Credit
			60142	Project - B	P&L	Credit
		60150	Revenue from Other Works		P&L	Credit
			60151	Project - A	P&L	Credit
			60152	Project - B	P&L	Credit
		60210	Revenue from Sale of Villas		P&L	Credit
			60211	Project - AA	P&L	Credit
		60230	Revenue from Sales of Buildings		P&L	Credit
			60231	Project - BB	P&L	Credit

Expenses

Expenses in the income statement represent the costs incurred by a company to generate revenue and operate its business during a specific accounting period. They are deducted from revenue to determine the company’s net profit or loss.

Types of Expenses

Operating Expenses:
- Directly related to core business activities.
- Examples:
  - Cost of Goods Sold (COGS) - direct costs associated with producing or purchasing goods sold by a company during a specific accounting period. It includes all expenses directly tied to the production of products or services, excluding indirect costs like marketing and administrative expenses.
  - Components of COGS:
    - Direct Materials: Raw materials used in production.
    - Direct Labor: Wages of employees involved in manufacturing.
    - Manufacturing Overhead: Costs like utilities, factory rent, and equipment depreciation.

					Financial Statement	Normally
70000	Costs of Sales				P&L	Debit
	70100	Costs of Construction			P&L	Debit
		70110	Direct Materials		P&L	Debit
			70111	Materials for Civil Works	P&L	Debit
			70112	Materials for Plumbing Works	P&L	Debit
			70113	Materials for Electricity Works	P&L	Debit
			70114	Materials for HVAC Works	P&L	Debit
			70115	Materials for Other Works	P&L	Debit
		70170	Direct Laboor		P&L	Debit
			70171	Productive Labor - Civil	P&L	Debit
			70172	Productive Labor - Plumbing	P&L	Debit
			70173	Productive Labor - Electical	P&L	Debit
			70174	Productive Labor - HVAC	P&L	Debit
			70175	Productive Labor - Others	P&L	Debit
		70180	Construction Over Heads		P&L	Debit
			70181	Insurances	P&L	Debit
			70182	Rent and Leases	P&L	Debit
			70183	Repair and Maintenance	P&L	Debit
			70184	Fuel and Lubricants	P&L	Debit
			70185	Taxes and Licenses	P&L	Debit
			70186	Depreciation	P&L	Debit

Non-Operating Expenses:
- Not related to core operations shown under the head Other Income/(Loss) in the chart of accounts.
- Examples:
  - Sales and Marketing
  - General and Administrative
  - Research and Development
  - Depreciation
  - Finance Cost
  - Losses from asset sales
  - Unusual or one-time charges
  - Foreign Exchange Losses
Taxes:
- Corporate income taxes paid to the government.

					Financial Statement	Normally
80000	Expense				P&L	Debit
	80200	Sales and Marketing			P&L	Debit
		80210	Salaries and Wages		P&L	Debit
			80211	Salaries	P&L	Debit
			80212	Wages	P&L	Debit
			80213	Benefits	P&L	Debit
			80214	Pay Roll Taxes	P&L	Debit
		80220	Advertisments and Publicity		P&L	Debit
			80221	Google Ads	P&L	Debit
			80222	Other Ads	P&L	Debit
			80223	Sales Promotions	P&L	Debit
			80224	Sales Commissions	P&L	Debit
			80225	Gifts and Samples	P&L	Debit
		80230	Travelling and Conveyance - Marekting		P&L	Debit
			80231	Vehicle Running	P&L	Debit
			80232	Traveling	P&L	Debit
			80233	Conveyance	P&L	Debit
			80234	Hotel Expenses	P&L	Debit
		80250	Un-Categorized Marketing Expenses		P&L	Debit
	80300	General and Administrative			P&L	Debit
		80310	Salaries and Benefits		P&L	Debit
			80311	Payroll Expenses	P&L	Debit
			80312	Payroll Benefits	P&L	Debit
			80313	Payroll Taxes - FICA, FUTA, SUTA	P&L	Debit
			80314	Employees Insurance	P&L	Debit
			80315	Retirement Benefits	P&L	Debit
			80316	Recruitment Expenses	P&L	Debit
		80330	Utilities		P&L	Debit
			80331	Electriciy	P&L	Debit
			80332	Sewerage	P&L	Debit
			80333	Water	P&L	Debit
			80334	Gas	P&L	Debit
		80340	Office Rent, Lease and Taxes		P&L	Debit
			80341	Office Rent	P&L	Debit
			80342	Office Lease	P&L	Debit
			80343	Property Tax	P&L	Debit
		80350	Travelling and Conveyance - Admin		P&L	Debit
			80351	Vehicle Running	P&L	Debit
			80352	Traveling	P&L	Debit
			80353	Conveyance	P&L	Debit
			80354	Hotel Expenses	P&L	Debit
			80355	Vehicle Registrations	P&L	Debit
			80356	Vehicle Licenses	P&L	Debit
		80360	Repairs and Maintenance		P&L	Debit
			80361	Vehicles	P&L	Debit
			80362	Office Premises	P&L	Debit
			80363	Office Equipment	P&L	Debit
		80370	Insurance		P&L	Debit
			80371	Office Building	P&L	Debit
			80372	Vehicles	P&L	Debit
		80380	Postage and Telecommunication		P&L	Debit
			80381	Telephone and Internet	P&L	Debit
			80382	Postage	P&L	Debit
		80390	Printing and Stationery		P&L	Debit
			80391	Office Supplies	P&L	Debit
			80392	Stationery	P&L	Debit
		80400	Entertainment		P&L	Debit
		80410	Legal and Professional		P&L	Debit
			80411	Audit and Accountancy Fees	P&L	Debit
			80412	Consultancy Fees	P&L	Debit
			80413	Legal Charges	P&L	Debit
			80414	Managment Soft Wares	P&L	Debit
			80415	Trainings Costs	P&L	Debit
		80430	Fee and Subscriptions		P&L	Debit
		80440	Charity		P&L	Debit
			80441	Donations	P&L	Debit
			80442	Sponsership	P&L	Debit
		80450	Un-categorized Expenses		P&L	Debit
		80460	Suspense Account		P&L	Debit
		80470	Research and Development		P&L	Debit

	80500	Depreciation			P&L	Debit
		80510	Depreciation		P&L	Debit
			80511	Depreciation - Property	P&L	Debit
			80512	Depreciation - Vehicles	P&L	Debit
			80513	Depreciation - Equipment	P&L	Debit
		80550	Amortization		P&L	Debit
			80551	Amortization - Intellectual Property	P&L	Debit
	80600	Finance Costs			P&L	Debit
		80610	Interest Expense		P&L	Debit
			80611	Interest on Loans	P&L	Debit
			80612	Interest on Credit Cards	P&L	Debit
		80620	Bank Charges and Fee		P&L	Debit
			80621	Bank - 1	P&L	Debit
		80630	Currency Charges		P&L	Debit
			80631	Bank - 1	P&L	Debit
			80632	Bank - 2	P&L	Debit


90000	Other Income/(Loss)				P&L	Credit
	90100	Other Income /(Loss)			P&L	Credit
		90110	Gain on Sale of Assets		P&L	Credit
		90920	Interest Income		P&L	Credit
		90930	Dividend Income		P&L	Credit
		90940	Foreign Exchange Gains		P&L	Credit
		90950	Loss on Sale of Assets		P&L	Debit
		90960	Unusual or one-time charges		P&L	Debit
		90970	Foreign Exchange Losses		P&L	Debit
100000	Income Tax				P&L	Debit
	100100	Income Tax			P&L	Debit

Sample Chart of Account of a Construction Company