A typical structure for a five-digit chart of accounts is as follows: Digits 1-2: Identifies the department, such as the accounting department or engineering department. Digits 3-5: Identifies the account, such as accounts receivable, inventory, or accounts payable.

The department code is then added to the current three digit account code to create a 5 digit chart of accounts numbering system. The general format of the 5 digit chart of accounts numbering system is therefore XX-XXX where the first 2 digits are the department code and the last three digits as before represent the account code.

This numbering system looks like this: Assets: 1-001 Liabilities: 2-001 Equity: 3-001 Revenues: 4-001 Expenses: 5-001 Other: 6-001

For example, if the first digit is a “1” it is an asset. If the first digit is a “5” it is an operating expense.