Retail accounting lives and dies on inventory — so a retail chart of accounts is mostly a machine for tracking what stock cost, where it went, and how much of it vanished. Here’s a ready-to-adapt template with the retail-specific accounts marked.
The numbering backbone
1000s Assets · 2000s Liabilities · 3000s Equity · 4000s Revenue · 5000s Direct costs / COGS · 6000s Operating expenses
Leave gaps between codes (1000, 1010, 1020…) so new accounts slot in without renumbering — the classic rookie regret is a packed sequence in year one.
Sample chart of accounts — retail
| Code | Account | Type / note |
| 1000 | Cash / operating account | Asset |
| 1050 | Card-processor clearing account | Asset — sales awaiting settlement |
| 1100 | Merchandise inventory | Asset — the heart of the retail COA |
| 1200 | Store fixtures & equipment | Fixed asset |
| 2000 | Accounts payable — suppliers | Liability |
| 2100 | Sales tax payable | Liability — collected, not yours |
| 2200 | Gift cards / store credit outstanding | Liability until redeemed |
| 3000 | Equity / retained earnings | Equity |
| 4000 | Sales revenue | Revenue |
| 4100 | Sales returns & allowances | Contra revenue — track, don’t net |
| 4200 | Discounts given | Contra revenue |
| 5000 | Cost of goods sold | COGS |
| 5100 | Freight-in | COGS — part of inventory cost |
| 5200 | Inventory shrinkage | COGS — theft, damage, count errors |
| 6000 | Rent, wages, utilities, marketing… | Operating expenses |
The accounts that earn their keep
Shrinkage gets its own line because averaging it into COGS hides a controllable cost — the difference between book and counted inventory is a management number, not a rounding error. Returns stay gross for the same reason: a store with 12% returns and one with 2% can show identical net sales while running completely different businesses. And the clearing account keeps card settlements honest — sales recognized today, cash arriving in two days, reconciled instead of guessed.
The retail COA feeds two numbers this site covers in depth: margin per category (see the profit margin calculator) and the stock-to-cash cycle your break-even silently depends on.
FAQ
What accounts are specific to retail? Merchandise inventory, shrinkage, sales returns and allowances, gift-card liability, sales tax payable, and a card-processor clearing account.
Should shrinkage really be its own account? Yes — it’s one of retail’s few controllable COGS lines, and burying it in cost of goods sold removes the management signal.
How detailed should revenue accounts be? By department or major category — enough to see margin by line, few enough that staff code sales correctly.
Is freight-in an expense or inventory cost? Inventory cost (COGS when sold) — freight to get goods ready for sale is part of what the goods cost.