Category

1.1. Chart of Accounts

Theory

00:00 What is a chart of accounts;
00:37 Introduction to the chart of accounts (COA);
01:14 The building blocks of an account;
01:54 Why the CEO important;
02:24 Main account categories;
03:19 UAE - Specific: input & output VAT accounts;
04:03 UAE - Chart of accounts overview.

Key Terms & Definitions

Chart of Accounts (COA) — A structured list of all accounts used to record financial transactions, forming the foundation of the accounting system. In the UAE, it must support VAT and corporate tax compliance.

Account Name — A clear description of the account’s purpose (e.g., Cash on Hand, VAT Payable), essential for transparent reporting and audits in the UAE.

Account Code — A unique numeric identifier assigned to each account for organization, sorting, and system integration.

Account Type / Category — The classification of an account as Asset, Liability, Equity, Income, or Expense, determining how it appears in financial statements.

Five Fundamental Account Categories:

  • Assets — Resources owned or controlled by a business that bring future economic benefit. Examples: Cash, Bank, Inventory, Equipment.
  • Liabilities — Amounts the business owes to third parties. Examples: Loans, Payables, Taxes Payable.
  • Equity — The owner’s interest in the business after liabilities are deducted from assets. Examples: Share Capital, Retained Earnings.
  • Income – Revenue earned from business activities, including sales and services. Examples: Sales Revenue, Service Income.
  • Expenses – Costs incurred to operate the business and generate income. Examples: Salaries, Rent, Utilities, Marketing.

VAT (Value Added Tax) — A mandatory consumption tax in the UAE applied to most goods and services.

Input VAT — VAT paid on business purchases from suppliers, generally recoverable from the Federal Tax Authority (FTA).

Output VAT — VAT collected from customers on taxable sales and payable to the FTA.

VAT Payable / VAT Receivable — Net VAT position showing whether the business owes VAT to the FTA or can claim a refund.

Federal Tax Authority (FTA) — The UAE government body responsible for VAT administration and enforcement.

VAT Return — A periodic report submitted to the FTA summarizing taxable sales, purchases, and VAT due or refundable.

Audit Trail — A clear and traceable record of transactions required for VAT reviews and audits in the UAE.

Corporate Tax Compliance — Ensuring financial records and COA structure support UAE corporate tax filing requirements.