Find out how to use account types and detail types in your chart of accounts.
The chart of accounts is the backbone of QuickBooks and the foundation of your company’s accounting processes. It’s important to set it up correctly, and understanding account types and detail types is a key part of that.
We’ll explain what account types and detail types are and how to use them to keep your finances organized and accurate.
Understand the importance and purpose of account types
When you’re setting up your chart of accounts, choosing the right account type is crucial because your business’s accounting is built around account types. The account type determines which financial report QuickBooks adds each account’s data to. Choosing the right account type sets you up with accurate reports, such as the balance sheet and profit and loss reports, so you can analyze the financial health of your business.
Accounts that have an opening balance feed into the Balance Sheet report. These include accounts payable and receivable, asset accounts, liability accounts, equity accounts, and credit card and bank accounts. The Profit & Loss report is fed by your business income and expense accounts, including cost of goods sold accounts as well as other income accounts like interest earned or other expense accounts like depreciation expenses.
Understand the purpose of detail types
Every account listed in your chart of accounts has both an account type and a detail type. Unlike account types, detail types don’t impact the actual accounting portion of your books. Detail types are there to help you choose the right account type, especially if you’re new to accounting. They also help you break down your account types into “categories” so it’s easier to see a breakdown of what your money is doing.
When you add a new account in the chart of accounts, the account type you select will determine the options you have available in the detail type field. If you’re not familiar with accounting practices, looking at the different detail types can help you understand what types of transactions are tracked by each account type. Each detail type includes a description of how you would use that account in the field below it (or you might see an info button with the description).
Choose the account type and detail type
When you create a new account in the chart of accounts, select the account type first from the list that QuickBooks populates for you. Remember, this is the part that affects your accounting so you want to make sure you get this right. Contact your accountant if you’re not sure what to choose.
After you select your account type, select a detail type from the list that fits the transactions you want to track. Check the description of the detail type to make sure it’s what you need. If you don’t find one that fits, select the closest match.
Learn why your account type options might look different in business view
All QuickBooks Online accounts use both account types and detail types in the chart of accounts. However, for some accounts in business view, you’ll have a different way of selecting account types and detail types when you’re creating a new account. Instead of an account type and detail type field, you’ll see an option to name the category (name the account), and then you’ll be asked to select a category to create the account under (this selects the account type). Finally, you’ll see a second list of options for where to put the new category (this selects the detail type).
Also, for these accounts in business view, you can only create new subaccounts under existing parent accounts. If, for some reason, you need to create a new parent account, you can by switching to accountant view.