Chart of Accounts

What is a Chart of Accounts?

A chart of accounts is a list of all accounts available for recording transactions in your general ledger. It is organized by account type and forms the foundation of your accounting system.

Account Types

• Assets: Resources owned by your business (bank accounts, inventory, equipment)
• Liabilities: Amounts owed by your business (loans, accounts payable)
• Equity: Owner's investment and retained earnings
• Income: Revenue from sales and services
• Expenses: Costs incurred in running the business

Accessing Chart of Accounts

1. Click on "Accounting" in the main menu
2. Select "Chart of Accounts"
3. You will see a list of all your accounts organized by type

Creating a New Account

Step 1: Access Account Creation

1. Go to "Accounting" > "Chart of Accounts"
2. Click "Create New Account"
3. You will see the account creation form

Step 2: Enter Account Details

• Account Code: A unique identifier for the account (e.g., 1000, 2000)
• Account Name: A descriptive name for the account
• Account Type: Select from Asset, Liability, Equity, Income, or Expense
• Sub-Type: Select a more specific category
• Description: Optional description of the account's purpose
• Currency: Select the currency for this account

Step 3: Configure Account Settings

• Active: Check to make the account available for transactions
• Allow Reconciliation: Check if this is a bank or credit card account
• Tax Category: Select if this account is used for tax reporting

Step 4: Save Account

• Review all entered information
• Click "Create Account"
• The account will be added to your chart of accounts

Editing Accounts

Modifying Account Details

1. Go to "Accounting" > "Chart of Accounts"
2. Click on the account you want to edit
3. Modify the account details
4. Click "Save Changes"

Important Notes

• You cannot change the account code after creation
• You cannot change the account type if transactions exist
• Deactivating an account prevents new transactions but keeps historical data

Account Hierarchy

Organize your accounts using a hierarchical structure:

Parent and Sub-Accounts

• Create parent accounts for main categories
• Create sub-accounts for detailed tracking
• Example: Sales (parent) > Product Sales (sub) > Service Sales (sub)

Benefits of Hierarchy

• Better organization and clarity
• Easier reporting and analysis
• Simplified financial statements

Account Numbering

Use a consistent numbering system for your accounts:

Standard Numbering Convention

• 1000-1999: Assets
• 2000-2999: Liabilities
• 3000-3999: Equity
• 4000-4999: Income
• 5000-5999: Expenses

Sub-Account Numbering

• Use increments within each range
• Example: 1000 (Cash), 1100 (Bank Account), 1200 (Petty Cash)
• Leave gaps for future accounts

Using Account Templates

Industry Templates

Quick Accounting provides pre-built templates for common industries:

• Retail
• Service
• Manufacturing
• Professional Services
• Non-Profit

Applying a Template

1. Go to "Accounting" > "Chart of Accounts"
2. Click "Use Template"
3. Select your industry
4. Review and customize the template
5. Click "Apply Template"

Deactivating Accounts

When to Deactivate

• When an account is no longer used
• To clean up your chart of accounts
• To prevent accidental use of old accounts

How to Deactivate

1. Go to "Accounting" > "Chart of Accounts"
2. Click on the account
3. Uncheck the "Active" checkbox
4. Click "Save Changes"
5. The account will no longer appear in transaction forms

Reactivating Accounts

1. Go to "Accounting" > "Chart of Accounts"
2. Show inactive accounts (if not visible)
3. Click on the account
4. Check the "Active" checkbox
5. Click "Save Changes"

Best Practices

• Set up your chart of accounts before recording transactions
• Use a consistent numbering system
• Create accounts for detailed tracking and reporting
• Use descriptive account names
• Organize accounts hierarchically
• Review and update your chart of accounts annually
• Don't delete accounts with historical transactions

Common Account Examples

Assets

• Cash in Bank
• Petty Cash
• Accounts Receivable
• Inventory
• Equipment
• Accumulated Depreciation

Liabilities

• Accounts Payable
• Short-term Loans
• Long-term Loans
• Sales Tax Payable
• Income Tax Payable

Income

• Product Sales
• Service Revenue
• Interest Income
• Other Income

Expenses

• Cost of Goods Sold
• Salaries and Wages
• Rent
• Utilities
• Office Supplies
• Marketing and Advertising

Next Steps

After setting up your chart of accounts:

1. Configure tax settings
2. Set up bank accounts
3. Create your first invoice