If you want to make the budget by keeping a particular item, you need an account for that budget amount. If you want to report some financial data on tax return then also you need to collect the specific data. It is the backbone of the accounting system and this is the main reason you should know how it works.
Types of Chart of Accounts in QuickBooks
Below are the types of chart of accounts in QuickBooks
- Liability accounts – These accounts contain things like mortgages, payroll tax, bank loans, credit card balances, personal loans, etc. While adding the loan you need to make certain to include the same
- Asset Accounts – It includes everything which has some value such as land, equipment, building, valuable, and vehicles. This not only tracks the amount that you have paid for the property but also includes things like depreciation.
- Income accounts – These accounts having expenses, revenues, cost of sales, and additional income or expenses. With this, some income is simple and economical to generate other need time, expenses and efforts.
- Expense accounts – these accounts inform you about the money that you have spent. Mostly, expense account allows you to keep track of the track of cash which is not with you. So its better to break up the cash into small accounts.
Read More: Do you want to export the chart of accounts in QuickBooks Desktop?
Now when we know account types we should move towards how to set up a chart of accounts in QuickBooks.
Easy Set Up – QuickBooks Desktop Chart of Accounts
- Click the Gear icon & select Chart of Accounts.
- Select New in the upper right corner.
- Click on the Account Type drop down to get the account type.
- Select the Detail Type to describe the type of account that you want to add.
- Enter the name of the account in the Name field.
Setup QuickBooks Chart of Accounts List
- Select the list>>Chart of account command(to start with QuickBooks show the accounts window on your computer
- Click on accounts – QuickBooks shows the accounts menu on the screen.
- Add the new account through New – QuickBooks shows the newly added accounts on the window screen
- Use the account types buttons – QuickBooks allows accounts types such as income, loan, credit card, fixed asset, expense, Bank and equity, along with these, accounts payable, accounts receivable, other income, cost of goods sold, other assets, long term, liability, etc
- Click continue – QuickBooks shows the second adds a new account on the screen
- Check Subaccount – after selecting the subaccount its time to name the parent account
- Bank account – If you work in many currencies then QuickBooks asks you to find those customers, bank accounts, and vendors who use currency unlike from home currency
- Description of a new account( this is optional)
- Account info- Here the credit card account type version of the add new account allow storing credit card number
- Recognize the tax line – Cash account balance is recorded on corporation’s the tax return
- Save the account – this is the last step, click on Next options to save the account
These are the steps that help you in tracking the financial activity of your business.
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