How to Set Up Your QuickBooks 2010 Chart of Accounts List
In QuickBooks 2010, the Chart of Accounts List is a list of accounts that you use to categorize your income, expense, assets, liabilities, and owner’s equity amounts. Fortunately, you can create new accounts for your Chart of Accounts List easily.
1
Choose Lists→Chart of Accounts.
QuickBooks displays the Chart of Accounts window.
2
Click the Account button at the bottom of the window.
QuickBooks displays the Account menu.
3
Select New from the Account menu.
QuickBooks displays the first Add New Account window.
4
Select the appropriate Type radio button to identify the type of account that you’re adding.
QuickBooks supplies the following account types: Income, Expense, Fixed Assets, Bank, Loan, Credit Card, and Equity. Also, if you mark the Other Accounts radio button and open the Other Accounts Type drop-down list, you can select Accounts Receivable, Other Current Asset, Other Asset, Accounts Payable, Other Current Liability, Long Term Liability, Cost of Goods Sold, Other Income, and Other Expense.
QuickBooks displays the second Add New Account window.
6
Enter a name in the Name text box.
The name that you give the account will appear on your financial statements.
7
If the account you’re adding is a subaccount underneath a parent account, identify the parent account by selecting the Subaccount Of check box.
After you select the Subaccount Of check box, select the parent account from the Subaccount Of drop-down list.
8
(Optional) If you’re setting a bank account that uses a currency other than your home country currency, select the bank account currency from the Currency drop-down list.
If you told QuickBooks that you work in multiple currencies during the EasyStep Interview setup process, QuickBooks wants you to identify those bank accounts, customers, and vendors that use a currency different from your home currency. (Note: The Currency drop-down list doesn’t appear in the figure in this list because within the example QuickBooks file, the multiple currency tracking feature isn’t turned on.)
9
(Optional) Provide a description for the new account in the Description text box.
Without a description, QuickBooks can still use the account name on financial statements. If you want a more descriptive label placed on accounting reports, use the Description text box.
10
Provide the other account information QuickBooks requests.
The Add New Account window shown in the figure in this list includes a Bank Acct. No. text box. Other account types may have similar boxes for storing related account information. For example, the credit card account type version of the Add New Account window lets you store the card number.
11
Select a tax form and tax line from the Tax-Line Mapping drop-down list.
This selection identifies the tax line on which the account information is to be reported. You may not need to assign a particular account to a tax line if that account data isn’t reported on the business’s tax return.
12
(Optional but dangerous) Record an opening balance for the account.
Typically, you shouldn’t supply an opening account balance for an account. For example, when you click the Enter Opening Balance button, QuickBooks displays a dialog box that you can use to set a starting account balance.
13
After you describe the new account that you want to set up, click OK to save the new account to the Chart of Accounts List.
Alternatively, you can also click the Next button to save the account information and then redisplay the Add New Account window so that you can add another account.
Accounting Glossary
accounting equation
The equation Assets = Liabilities + Equity, which demonstrates the two-sided nature of accounting and is useful for explaining the concept of double-entry accounting (or double-entry bookkeeping).
Accounting Glossary
accounting period
The time period for which financial information is being tracked in a business, such as monthly, quarterly, or annually.
Accounting Glossary
accounts receivable
An account that records the amounts that customers owe to a business.
Accounting Glossary
adjusting entry
A correction made to a bookkeeping account that adjusts for accounting errors or other necessary changes at the end of the accounting period.
Accounting Glossary
cash flows
Used to describe the source or sources of cash or how cash is used.
Accounting Glossary
Chart of Accounts
A list of all the accounts used by a business, including what types of transactions go into each account.
Accounting Glossary
debit
An accounting entry that increases an asset or expense account, and decreases a liability or income account.
Accounting Glossary
dividends
A portion of a company’s profits paid by share of common stock on a quarterly or annual basis.
Accounting Glossary
FASB
Financial Accounting Standards Board. FASB is the highest-ranking authority in the private (non-government) sector of the U.S. for making pronouncements on GAAP and for keeping accounting standards up-to-date.
Accounting Glossary
Federal Unemployment Tax
In the U.S., the fund that used to be known simply as Unemployment. Employers contribute to the fund, and states also collect taxes to fill their unemployment fund reserves. (The acronym FUTA means Federal Unemployment Tax Act.)
Accounting Glossary
fidelity bonds
A type of insurance — typically carried by employers for their employees — that helps guard against theft and reduce the risk of loss.
Accounting Glossary
FIFO
First-in, first-out. A method for costs of goods sold in which a business charges out product costs to cost of goods sold expense in the chronological order in which the goods were acquired.
Accounting Glossary
fungible
Describes a product that is interchangeable and virtually indistinguishable from another product.
Accounting Glossary
General Ledger
A summary of all of a business’s accounts and transactions.
Accounting Glossary
IASB
International Accounting Standards Board. The IASB (based in London) is the main authoritative accounting standards setter outside the U.S.
Accounting Glossary
Journals
The location in which bookkeepers keep records (in chronological order) of daily company transactions.
Accounting Glossary
LIFO
Last-in, first-out. A method for costs of goods sold that selects the last item you purchased first, and then works backward until you have the total cost for the total number of units sold during the period.
Accounting Glossary
LLP
Limited liability partnership. A legal structure that state laws offer to qualified professionals in which all the partners have limited liability.
Accounting Glossary
PC
Professional corporation. A legal structure that state laws offer to qualified professionals who otherwise would have to operate as an unlimited partnership liability.
Accounting Glossary
petty cash
A cash account that businesses keep on hand for unexpected expenses.
Accounting Glossary
revenue
Monies that are collected in the process of selling a company’s goods and services.
Accounting Glossary
salvage value
The amount that an asset is worth after it has been fully depreciated.
Accounting Glossary
statement of cash flows
A financial statement that summarizes a business’s cash inflows and outflows during an accounting period.
Accounting Glossary
transactions
Economic exchanges between a business or other entity and the parties with which the entity interacts and makes deals.
Accounting Glossary
worker’s compensation insurance
A type of insurance carried by employers that covers its employees in case they are injured on the job.
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