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Understand QuickBooks Chart of Accounts

Chart of Accounts is the complete list of all the company’s accounts and balances. In QuickBooks, it represents and organizes the company's assets, liabilities, income, and expense. You can tell how much money your company has, how much money it owes, and how much money is coming in and out by simply looking at your Chart of Accounts.

QuickBooks automatically creates your Chart of Accounts based on the industry and type of company you choose when creating your company file. If you just created your file, make sure to record the accounts' opening balances.


Types of accounts

There are 2 main account types in QuickBooks Desktop: Balance Sheet accounts, and Income and Expense Accounts.

Accounts that QuickBooks sets up for you

When creating a new company file, QuickBooks Desktop requires you to select a type of company, which determines the Chart of Accounts your company file will begin with. However, there are accounts that QuickBooks Desktop automatically creates, regardless of the type of company you choose.

QuickBooks Desktop accounts and account numbers

The account numbers in QuickBooks Desktop can be turned on through company preferences. Go to Edit>Preferences>Accounting>Company Preferences>Use account numbers.

  • Asset (10000 – 19999)
    • Current Asset (1000 – 1499)Assets that you can easily turn into cash such as checking accounts, savings accounts, money market and CD accounts, accounts receivable and inventory.
    • Fixed Asset (1500 – 1999)Items with a minimum cost that you have to sell in order to generate cash. Example of this are automobile, equipment and land. Consult your accountant or tax prepare to determine the actual minimum cost that you should use to determine fixed asset.
  • Liabilities (20000 – 29999)Funds the company owe.
  • Equity (30000 – 39999)The account that represents the health of your business.
  • Income/ Revenue (40000 – 49999)Money that you get from your normal day to day business task such as sales revenue, professional fees, reimbursable expense or income for services rendered.
  • Cost of Good Sold/ Job Costs (50000 – 59999)These are the cost associated with your line of business. If you are a home builder, the job cost is whatever costs you to build a home. Job costs may include materials, subcontractors, equipment rental, and/or direct labor. If you sell products, this includes cost of inventory, raw materials, freight charges and any labor cost that you incurred to finish the product.
  • Expense/ Overhead Costs (60000 – 69999)Fixed costs your business have even if you run out of work. Examples include rent, telephone, insurance, and utilities.
  • Other Income (70000 – 79999)This is income you earned outside of the normal business process, like rent for a building that you own, inventory sale, insurance settlement and interest income.
  • Other Expense (80000 – 89999)Expenses that's outside of your normal business, such as a loss on the sale of an asset or stockbroker fees.

Common tasks involving Chart of Accounts