QuickBooks 2006: The Missing Manual

Chapter 2. Setting Up a Chart of Accounts

If you’ve just begun to run a business or keep books, all this talk of credits, debits, and accounts could have you flummoxed. Accounting is the cross between mathematics and black arts that records and reports the performance of an organization. The end result of bookkeeping and accounting is a set of financial statements (Section 14.1), but the starting point is the Chart of Accounts.

In accounting, an account is like a bucket of money. When you earn money, you document those earnings in an income account, just as you might toss the day’s take at the lemonade stand into the jar on your desk. When you buy supplies for your business, that expense shows up in an expense account. If you buy a building, its value ends up in an asset account. And if you borrow money to buy a building, the mortgage owed shows up in a liability account. Accounts come in a variety of types to reflect whether you’ve earned or spent money, whether you own something or owe money to someone else, as well as a few other financial situations. The Chart of Accounts isn’t actually a chart; it’s a list of all the accounts you use to track money in your business.

Neophytes and experienced business folks alike should be relieved to know that no one has to build a Chart of Accounts from scratch in QuickBooks. This chapter explains how to acquire a ready-made Chart of Accounts for your business and what to do with it once you’ve got it. If you want to add or modify accounts in ...