Back to Basics - Chart of Accounts
Good afternoon everyone! I hope you're doing well on this lovely day. Today I'd like to take a minute to get back to basics. Your books rely largely on the chart of accounts and I found a great article on the QuickBooks Blog that goes over all the details you need to get your chart set up correctly.
To start, the chart of accounts, or COA, is a list of the account numbers and names relevant to your company, typically made up of four categories. These include:
- Asset accounts
- Liability accounts
- Income accounts
- Expense accounts
The article compares the chart of accounts to a game of Jenga. If one block is moved away from one section, it has to be added back somewhere else.
Now that we know what the chart of accounts is, you're ready to set yours up. Here's how:
- Create business account names
The account name is a recognizable label for the account you're reporting on. (i.e., bank fees, cash, taxes, etc.)
2. Assign account numbers to business accounts
In addition to account names, the accounts can also be assigned identifying numbers.
In addition to account names, the accounts can also be assigned identifying numbers.
3. Organize account names into one of the four account category types
Each of your accounts should be assigned to one of the four account types we mentioned above for further organization.
Each of your accounts should be assigned to one of the four account types we mentioned above for further organization.
This is a great outline to help you get started. The full article linked above offers even more info to perfect your chart of accounts. It's always a great idea to speak with your accountant about accounting questions, and you're welcome to post your questions here in the Community as well. Take care!