İSTANBUL SERBEST MUHASEBECİ
GENERAL OVERVIEW OF THE CHART OF ACCOUNTS
The Chart of Accounts (CoA) is a systematic and standardized list of accounts used to record, classify, and report financial transactions of an entity. It forms the backbone of the accounting system and ensures consistency, transparency, and comparability of financial information.
MAIN ACCOUNT GROUPS
Assets
Assets represent economic resources controlled by the company. They usually carry debit balances. Examples include cash, bank accounts, trade receivables, inventories, property, plant, and equipment.
Liabilities
Liabilities represent obligations of the company and normally carry credit balances. Examples include trade payables, taxes payable, and loans.
Equity
Equity reflects the residual interest of owners after deducting liabilities from assets. Equity accounts normally have credit balances.
Income (Revenue)
Income accounts record inflows from business activities and increase on the credit side.
Expenses
Expense accounts record costs incurred to generate income and increase on the debit side.
DEBIT AND CREDIT PRINCIPLES
Debit entries generally increase assets and expenses, while credit entries increase liabilities, equity, and income. This double-entry system ensures balance and accuracy in accounting records.
INTERNATIONAL COMPARISON OF CHARTS OF ACCOUNTS
Continental European / Turkish System
The Turkish Chart of Accounts follows a highly structured and rule-based framework. Account numbers are standardized, and the system is closely linked to tax legislation. Financial accounting and tax accounting are largely integrated.
IFRS-Based International Practice
In many countries applying IFRS (such as the UK, EU-listed companies, and multinational groups), there is no mandatory national chart of accounts. Companies design their own CoA based on reporting needs. The focus is on fair presentation rather than tax compliance.
US GAAP Practice
Under US GAAP, charts of accounts are entirely company-specific. There is a strong emphasis on management reporting, segment reporting, and internal controls rather than statutory account numbering.
Key Differences Summary
- Turkish / Continental systems prioritize legal compliance and tax control.
- IFRS systems prioritize economic substance and financial reporting transparency.
- US GAAP systems emphasize management reporting and internal decision-making.
- Standardized numbering is common in Turkey and Europe, rare in IFRS and US systems.
- Tax alignment is strong in Turkey, while deferred tax mechanisms are used internationally.
Understanding these differences is critical for cross-border reporting, group consolidations, and communication with foreign investors and auditors.
