How to Set Up the Chart of Accounts in QuickBooks.
How to Set Up the Chart of Accounts in QuickBooks.
It is widely acknowledged that QuickBooks is among the top accounting programs currently on the market.
All that you needed to know about setting up Charts of Accounts in QuickBooks
It is widely acknowledged that QuickBooks is among the top accounting programs currently on the market. Small and medium-sized businesses are thought to benefit greatly from this software because it simplifies the management of their accounting and financial tasks. Each time Intuit releases a new version of QuickBooks, it adds new and improved features to the application's already extensive feature set. Strong QuickBooks Chart of Accounts and Its Uses will be the topic of discussion in this blog.
Type of Chart of Accounts
There are four different types of charts of accounts that make accounting for businesses hassle-free and error-free:
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1. Accounts of Assets
In essence, asset accounts include everything that has a value, including real estate, stock, vehicles, land, and valuables. As a result, this kind of chart of accounts makes it easier to keep track of expenses like depreciation as well as the price you paid for a property. This chart of accounts also includes items that are liquid, such as checks and other bank accounts. The Liability Accounts consists of things like mortgages,, promissory notes, credit card balances, bank loans, personal loans and income tax payables. To make it easier to track different components, the charts of accounts streamline different asset accounts by grouping them into line items.
2. Liability Accounts
Make sure to include the loan's amount when you add a loan to this account.
You will have to omit the accrued interest and only record the principal amount. You will split the payment into an amount deducted from what is owed and an amount for interest paid, which will go into an expense account, when you reach each monthly payment deadline and enter the payment in the accounting system.
3. Income Accounts
Cost of sales, expenses, additional incomes or expenses, and revenues make up the majority of income accounts. Some of the accounts are the same for all businesses, while others are unique to a specific type of business. Some sources of income are straightforward and inexpensive to produce, while others demand time, money, and effort.
It is advised to separate line items for various types of income in the chart of accounts. Instead of lumping all of your income into one account, it is advised that you think about what different profitable activities there might be and arrange them according to income type. It will be easier to manage things once you can pinpoint the locations or activities that generate the most cash flow.
4. Expense Accounts
You can keep track of all the money you have spent in this account. In fact, it enables you to keep track of the money you've lost. It is always advised to divide expenses into separate accounts, and you even have the option to divide your expenses into smaller categories.
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