Chart of Accounts

Chart of Accounts is used to view and edit all existing accounts that you have entered. Accounts are the grouping of assets, liabilities, equity, income and expenses that drive your financial statements.

Only accounts marked Active can be used for the entry of new transactions or entities. If you decide that you no longer need an account you may mark it inactive by un-checking Active.

Bank Accounts require additional setup. The Banking tab is used to setup and define bank account information that must be printed on the MICR line of a check. MICR (Magnetic Ink Character Recognition) is characters used to print information on documents that allows the character to be processed by machines. An address should also be added for Bank Accounts.

The MICR line is generated by concatenating the check number, Routing # and On US Field. Check Number is initialized in the Last Check # field for the bank account.

The Use Account IDs option allows you to setup the system to use a combination of Account ID and Name or Account Names when selecting in Account during transaction entry or entity setup.

While it is not required, financial statements or reports are organized by account type and then account name or account number, if being used. Using account number will give you more flexibility in developing your financial reports.

A suggested account numbering scheme is as follows:

  1. 1000s: Assets

  2. 2000s: Liabilities

  3. 3000s: Equity

  4. 4000s: Income

  5. 5000s: Cost of Sales

  6. 6000s, 7000s: Other operating expenses

  7. 8000s: Other income

  8. 9000s: Other expenses

Account Types are assigned to accounts as the primary grouping for presentation on your company's financial statements.

Account Type

Balance Sheet /

Income Statement

Grouping

Current or

Long-Term

Shown as Positive

if the Balance is:

Bank

Asset

Current

Debit

Accounts Receivable

Asset

Current

Debit

Inventory

Asset

Current

Debit

Other Current Asset

Asset

Current

Debit

Fixed Asset

Asset

Long-Term

Debit

Other Asset

Asset

Long-Term

Debit

Accounts Payable

Liability

Current

Credit

Credit Card

Liability

Current

Credit

Other Current

Liability

Current

Credit

Long Term

Liability

Long-Term

Credit

Equity

Equity

Credit

Income

Gross Profit

Credit

Cost of Goods Sold

Gross Profit

Debit

Expense

Expense

Debit

Other Income

Other Income/Expense

Credit

Other Expense

Other Income/Expense

Debit

Interest Paid

Other Income/Expense

Debit

Income Tax

Taxes

Debit