Chart of Accounts: Retail Business

What's Included

A retail-specific Chart of Accounts that extends the standard service COA with inventory and cost of goods sold (COGS) structure:

Asset accounts added for retail:

• Merchandise inventory (beginning, purchases, ending)
• Goods in transit
• Prepaid purchases

Cost of Sales accounts:

• Merchandise purchases
• Freight-in
• Purchase returns and allowances
• Purchase discounts
• Cost of goods sold (auto-computed via periodic inventory)

Revenue accounts:

• Gross sales
• Sales returns and allowances
• Sales discounts
• Net sales (computed)

Inventory Method

This COA is structured for the periodic inventory method, which is appropriate for most Philippine retail SMEs. Under this method:

• You count inventory physically at period end
• COGS = Beginning Inventory + Purchases − Ending Inventory
• No running inventory balance is maintained between counts

For businesses using a point-of-sale (POS) system with real-time inventory tracking, you can adapt this to the perpetual method by moving COGS entries to occur with each sale.

BIR Schedule of Cost of Goods Sold

The BIR requires a Schedule of Cost of Goods Sold as an attachment to the Annual Income Tax Return (BIR Form 1701/1702). This COA maps directly to that schedule, making year-end tax preparation straightforward.

Who Should Use This

• Sari-sari stores and convenience stores
• Boutiques and clothing retailers
• Hardware stores and building supply dealers
• Pharmacies and health product retailers
• Online sellers and e-commerce businesses

How to Customize

1. Add product category sub-accounts under Sales and Purchases if you sell multiple product lines.
2. Separate inventory locations if you have multiple branches or warehouses.
3. Add consignment accounts if you carry goods on consignment.
4. Link this COA to your POS or inventory management system's chart of accounts.