The word “account” can mean more than one thing in QuickBooks
Before you started doing accounting tasks for your small business, the word “account” simply referred to your accounts at a financial institution – checking, savings, credit cards, etc. QuickBooks lets you access these same kinds of accounts via the internet and download their transactions.
But “account” has an additional meaning in accounting. Your Chart of Accounts is a list of accounts that will be used in transactions to categorize them and create accurate reports. It is a critical element of your bookkeeping and needs to reflect your company’s business structure correctly.
Where does the Chart of Accounts come from?
QuickBooks has a basic sample Chart of Accounts. If configured by a professional at a start of your system, it can very well save cost that might otherwise be avoided from happening. For most part if chart of accounts are set correctly at the start of a business using and maintaining them will be an easier task for you. This is an important step in your company file. Let us know and we will be glad to configure it for you.
How is the Chart of Accounts organized?
The Chart of Accounts is typically divided into several account types (each of which contains an individual account), including:
- Assets. What you own
- Liabilities. What you owe
- Income. What you earn
- Cost of Goods Sold. What it costs to create products
- Expenses. Additional costs required to operate your business
Do I need to assign transactions to accounts manually?
The answer is: No, to some and Yes to others. QuickBooks knows, for example, that an invoice will go to the Accounts Receivable account, so there’s no field for Account on invoice forms. The same goes for purchase orders; they’re assigned to Accounts Payable. On the other hand, you must select an account or item when entering expenses or writing checks. As this an important step in the process, let us know and we can help you in set up and training as well.
Do I need to number my accounts in the Chart of Accounts?
No. QuickBooks allows this, but you shouldn’t try it on your own. Let us assist you.
How do I set up QuickBooks Online to download transactions from my bank?
Click Transactions in the left vertical pane and then click Banking. You may want to follow the menu at the Banking and add accounts desired. If you’ve never done that, we can walk you through it.
Thank you and we look forward to hearing from you,
Ben Derebie, MBA, CMA
Certified Management Accountant
Advanced Certified QuickBooks &
Enterprise Solutions ProAdvisor
