Step 2, Categorize to the chart of accounts (AI proposes → you decide)

Layer: AI drafts the coding; you make every judgment call. This is the step that proves the "AI proposes, you decide" principle, the AI must flag the hard ones, never decide them.

Goal: assign each transaction a chart-of-accounts account, with judgment calls surfaced for you.

Inputs: the footed transaction table (Step 1) + the chart of accounts.

Prompt (paste into Claude)

Here are extracted transactions and our chart of accounts. Propose an account (number + name)
for each transaction.
Rules:
- Use ONLY accounts that exist in the chart of accounts.
- Do NOT guess on judgment calls. Label [REVIEW] with a one-line reason for any of:
   • capitalize vs. expense (e.g., equipment over a threshold)
   • loan payments that may split into principal (balance sheet) vs. interest (expense)
   • payments that may be an owner distribution vs. a business expense (e.g., an IRS payment)
   • ambiguous vendors (Amazon, Walmart, Costco, etc.) where the account depends on what was bought
   • refunds (contra-revenue, not an expense)
- Never change amounts or descriptions.
Output columns: DATE | DESCRIPTION | AMOUNT | PROPOSED ACCOUNT | [REVIEW?] + note

CHART OF ACCOUNTS:
[paste]

TRANSACTIONS:
[paste]

Your decisions ✅ (the AI cannot make these)

Work the [REVIEW] list and decide:

• Exmark/Deere $4,285 → expense (6300) or capitalize (1500)? (Over your cap threshold → asset.)
• Truck loan $612.45 → split principal (2000) vs. interest (6400) from the amortization schedule.

• IRS payment $1,800 → owner distribution (3900) for an S-corp owner's estimate, not a business expense.

• Ambiguous vendors → assign from the receipt, or leave in 6700 Office/Other with a note.

• Refund $275 → 4900 contra-revenue.

Confirm the routine ones too, the AI proposed; the coding becomes yours when you accept it.

You move on with: every transaction coded, judgment calls decided by you.