How to Set Up Chart of Accounts in QuickBooks?

Posted by Linda on November 26th, 2019

It’s easy to categorize expenses, income, liabilities, owner’s amounts, and assets in QuickBooks Chart of Accounts. It is a list of financial categories in QuickBooks. The different categories in Charts of Accounts help you in recording the company’s transactions and these categories become useful at the time of classifying them. QuickBooks Chart of Accounts provides a brilliant way to record your transactions. In case you earn money it will be recorded in an income account section. Further, if you purchase supplies, the transactions go in an expense account.

It is quite essential to maintain your Chart of Accounts so that business accounting tasks can be managed timely. Let’s discuss the essential items which you need to include in a Chart of Accounts.

Items to Include in QuickBooks Chart of Accounts

If you are preparing a Chart of Accounts, you need to make sure it includes data from the following categories:

• Assets

The assets comprise inventory, cash, and property. The particular category shows a specific value of the company. Also, gives you the detail of the remaining value.

• Expenses

The Expense category contains the money which you have paid to operate your business.

• Income

It will show you the revenue of your business.

• Liabilities

The particular category shows the amount that you have owned for good and services.

After knowing the information about the essential items required for the preparation of the Chart of Accounts, let’s discover the steps of creating it. 

Steps to Create a Chart of Accounts in QuickBooks

Here, read the steps to create chart of accounts by implementing these steps:

• Select the Lists→Chart of Accounts command

In the beginning, QuickBooks displays the Chart of Accounts window.

• Click on the Account button

Just after clicking QuickBooks shows the Account menu. You will see one of the Account menu options is New.

• Add a new account via selecting Account → New

QuickBooks shows the first Add New Account window.

• Use the account-type buttons

Next, you need to use the account-type buttons for identifying the type of account that you are adding.

• Click on Continue and use the Account Name box

You will see the second Add New Account window on your PC screen.

• Recognize the parent account

After selecting the Subaccount Of checkbox, you need to name the parent account via using the Subaccount.

• Select the bank account currency (Optional)

It is mandatory to turn on the multiple-currency feature. You need to select the Edit →references command. After this, you need to choose the Multiple Currencies preferences settings. Then after clicking the Company Preferences tab, select the “Yes I Use More Than One Currency radio button. 

• Give a description for the new account (Optional)

You have to use the Description box for describing the new account.

• Give other account information

The credit card account type version of the Add New Account window gives you permission to store the card number.

• Identify the tax line

You need to identify the tax line on which you need to report the account information via selecting a tax form and tax line.

• Click either Save & Close or Save & New

You need to click the Next button and then you will see the option to Add New Account window on your PC screen to add another account. Maintaining the Chart of Accounts via these steps ensure the proper company's record-keeping system. Furthermore, in case your Chart of Accounts QuickBooks is not appropriately constructed or if you classify transactions wrongly, the reports come inaccurate.

Conclusion

The topic has covered the definition of QuickBooks chart of accounts. Along with this, the benefits and steps of creating a Chart of Accounts. Moreover, creating Charts of Account tells where the money is being spent, where the money is saved or if you are getting any return on investment.

If you have any questions related to QuickBooks chart of accounts or unable to follow the steps, then you can dial the QuickBooks Support Phone Number 1-877-263-2742.

Reference Source: https://medium.com/@johntrump524/how-to-set-up-chart-of-accounts-in-quickbooks-255eb42d0dfb