The main groups
QuickBooks defines the chart of accounts as a complete list of your company’s accounts and their balances, and explains that account types decide which reports, such as the Balance Sheet and Profit and Loss, show the data (QuickBooks).
Group | Example accounts | Report |
|---|---|---|
Assets | Cash in bank, stock, equipment | Balance Sheet |
Liabilities | Loans, supplier balances, sales tax payable | Balance Sheet |
Equity | Owner’s capital, retained earnings | Balance Sheet |
Income | Product sales, service fees | Profit and Loss |
Expenses | Rent, salaries, advertising, courier charges | Profit and Loss |
Setting one up well
- Start from your software’s default list and remove what you will never use.
- Add accounts for how your business really works, such as COD receivables per courier.
- Keep sales tax payable separate so returns are easy to prepare.
- Do not create a new account for every small variation.
A tidy chart of accounts makes every later job easier, from bank reconciliation to year-end accounts.