How to Set Up the Chart of Accounts List in QuickBooks 2011 - dummies

How to Set Up the Chart of Accounts List in QuickBooks 2011

By Stephen L. Nelson

QuickBooks’ Chart of Accounts List is a list of accounts that you use to categorize your income, expense, assets, liabilities, and owner’s equity amounts. If you want to see a particular line item of financial data on a report, you need an account for that line item. If you want to budget by a particular line item, you need an account for that budget amount. If you want to report some bit of financial information on your tax returns, you need an account to collect that specific data.

Fortunately, the steps for creating new accounts are quite straightforward. To set up a new account within your Chart of Accounts List, follow these steps:

1Choose Lists→Chart of Accounts.

QuickBooks displays the Chart of Accounts window.

2Choose Account→New at the bottom of the window.

QuickBooks displays the first Add New Account window.

3Use the Type buttons to identify the type of account that you're adding.

QuickBooks supplies a number of account types. These account groups essentially tell QuickBooks in which area of a financial statement account data gets reported. Note that the first Add New Account window shows examples of the selected account type in the box above the Continue and Cancel command buttons.

4Click Continue.

QuickBooks displays the second Add New Account window.

5Use the Name box to give your new account a unique name.

The name that you give the account will appear on your financial statements.

6If the account you're adding is a subaccount of a parent account, indicate the parent account.

Select the Subaccount Of check box and choose the parent account from the drop-down list.

7(Optional) If you're setting a bank account that uses another currency other than your home country currency, select the bank account currency from the Currency drop-down list box.

If you told QuickBooks that you work in multiple currencies — you would have done this 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.

8Provide other account information.

You can provide a description, but QuickBooks can still use the account name on financial statements if you don’t. The Add New Account window also includes a Bank Acct. No. box that lets you record the bank account number. Other account types may have similar boxes for storing related account information.

9Identify the tax line on which the account information is to be reported by selecting a tax form and tax line from the Tax-Line Mapping drop-down list.

You might not need to assign a particular account to a tax line if that account data isn’t reported on the business’s tax return. A bank account for a sole proprietor doesn’t have any required tax line data, for example, but cash account balances are recorded on a tax return of a corporation.

10(Optional but dangerous) Consider recording an opening balance for the account.

Typically, you should set starting balances for accounts using a journal entry, not here. But the second Add New Account window does let you set the starting balance for the account as of some date.