True or False: A chart of accounts contains the definitions of all G/L accounts.

A chart of accounts is indeed a comprehensive listing of all General Ledger (G/L) accounts that an organization uses in its accounting system. This means that it encompasses all types of accounts—including assets, liabilities, equity, revenues, and expenses—which are necessary for a company to accurately capture its financial transactions and report on its financial position.

Having a defined chart of accounts facilitates consistent recording of financial transactions and aids in the preparation of financial statements, as it ensures that accounts are categorized and defined systematically. Each G/L account within the chart has an associated account number, name, and description, providing clarity for accounting practices and reporting.

The other options do not accurately represent the function of a chart of accounts. For example, stating that a chart of accounts only includes active accounts, or only includes liabilities, would be misleading; it must contain all types of accounts irrespective of their current active status to provide a comprehensive view of the organization’s financial structure.