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Learn about the chart of accounts in QuickBooks Online

by Intuit•1216• Updated 1 week ago

Learn what the chart of accounts is and why it’s important to set up correctly in QuickBooks Online.

The chart of accounts is a list of all the accounts that QuickBooks uses to track your financial data. Each account keeps track of your transactions and shows your balances. This helps you categorize transactions and set up the chart of accounts correctly to make sure your books are accurate.

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Get familiar with the chart of accounts

To view your chart of accounts: Follow this link to complete the steps in product

The accounts are organized in columns by name, account type, detail type, balance in QuickBooks, and bank balance. Account types and detail types determine the data that shows up in reports like the Balance Sheet and Profit & Loss.

Accounts with registers let you review transaction history and current balances. To view the register or report in the chart of accounts, select View register or Run report.

You can batch edit multiple accounts, print your chart of accounts, or edit the columns you see with the buttons above the chart of accounts.

Note: If an account doesn't have a register, you can run a report to see transactions on that account.

Learn about account types in the chart of accounts

The account type column categorizes transactions into a few main account types, including:

Assets: Money spent on vehicles, equipment, buildings, or other assets used for business.
Liabilities: Money you owe but haven't yet paid, like loans, mortgages, or lines of credit.
Income: Money related to your normal day-to-day business, like sales revenue or income from services rendered.
Expenses: Money you spend on things you do every day, like advertising, office supplies, or rent.

Customize your chart of accounts

QuickBooks automatically sets up your chart of accounts, but you can customize it to meet your business needs. You can add or remove accounts, edit them, or reactivate them. You don't have to use account numbers, but your accountant may recommend it.

You can make an account inactive to delete it from your current chart of accounts. This prevents further transactions within it, but doesn't remove it from your records.

Learn about accounts that QuickBooks sets up for you

QuickBooks Online automatically sets up a few of the same standard accounts in the chart of accounts and then gives you additional accounts automatically based on your business entity. There are also accounts that are only created when you take certain actions in QuickBooks.

Here are a few of the most common accounts QuickBooks creates for you:

Accounts Payable (A/P): This is a record of the outstanding bills that your business owes. If your business uses multiple A/P accounts, QuickBooks will let you choose the account you want to use when you enter and pay bills.
Accounts Receivable (A/R): This is a list of transactions related to customers who owe you money. If you need to use more than one A/R account, QuickBooks will let you choose the A/R account that you want to use when you create an invoice or receive a payment.
Opening Balance Equity: This account ensures that you get a correct balance sheet for your company, even before you've entered all your company's assets and liabilities.
Payroll Expense: This account tracks payroll items (expenses) for the company, including salaries, wages, bonuses, commissions, company contributions such as company paid health plans, and company paid portion of taxes such as Social Security and Medicare.
Payroll Liabilities: This tracks taxes you take from your employees' pay until you give them to the government. These taxes include federal and state income taxes, local taxes, and the taxes paid by the employee like Medicare and Social Security.
Retained Earnings: This account tracks all profits from earlier periods that haven't yet been distributed to owners. At the beginning of the fiscal year, QuickBooks automatically transfers net income into your retained earnings account.
Sales Tax Payable: This account tracks all sales tax you collect and pay. You might not see this account if you haven’t turned on sales tax in QuickBooks.
Uncategorized Expense: This account holds money your business spends that needs to be categorized.
Uncategorized Income: This account holds money your business earned that needs to be categorized.
Undeposited Funds (also called Payments to Deposit): This account holds cash or checks that your business is ready to deposit at the bank.
Inventory Asset: This account tracks the current value of your inventory. You might not see this if you haven’t turned on inventory tracking.
Reconciliation Discrepancy: This account tracks reconciliation adjustments. This account is automatically created if you have a discrepancy in a reconciliation.