The University of Tennessee, Knoxville

Tennessee County Municipal Advisory Service

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Chart of Accounts

Reference Number: MTAS-1819
Tennessee Code Annotated
Reviewed Date: June 10, 2016
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The following comments apply to revenues, as well as to expenditures, but we have chosen to use expenditures to stress the benefits of a chart of accounts. Expenditure accounts are far more numerous than revenues in the typical city budget. Each city must determine the optimum number of line items required for financial management. Too few or too many accounts will decrease the ability of financial managers to properly analyze cost centers. For example, it is difficult to know if water, sewer or electrical rates are the cause for exceeding a line item if they are all included in a single line item.

A standardized chart of accounts should be used in the city’s budget, accounting records, and annual audit. This applies to any other finance-related activity. The benefits are uniformity in the city’s total financial picture, reduced audit costs, and simplicity if a city has or is going to have an automated accounting system. Furthermore, it is important that the same level of detail is used throughout financial documents. If utilities are listed separately in the budget and accounting records, but the auditor groups all utilities together, then obtaining the specific data you need to begin your budget next year is very difficult. A recommended chart of accounts can be found in the MTAS Knowledgebase.