Defined: The chart of accounts (COA) defines the financial structure of an organisation. It is a record of the account codes that provide structure for the nominal or general ledger.
The Chart of Accounts or COA is a list of all the accounts, or nominal codes as they are called in the nominal or general ledger, summarized in a systematic manner to represent the sequence on financial statements.
These accounts or nominal codes are normally divided into five groups: assets, liabilities, owners/shareholders equity, revenue and expenses. This is so that when reported they can be grouped together and are easily identifiable. For example, all asset nominal codes prefixed with the number 1, all liabilities prefixed with the number 2, etc.
Organization - debits and credits
Each transaction that is entered into an accounting system must have a nominal code attached to it in order for that transaction to be traceable and, for every transaction which is debited to a nominal code, a corresponding credit will also be posted to another nominal code. Therefore, this creates the double entry system whereby each entry is stored twice - once as a debit and once as a credit.
When you run your trial balance, a report which shows you the balance against all nominal codes with your chart of accounts, you will see that the debits equal the credits.