Understanding how the chart of accounts works in QuickBooks Online

The Chart of Accounts is the hub of your accounting. It’s the central place where you decide how you organize your transactions. Every account or category you use in QuickBooks for every transaction comes from the Chart of Accounts. Let's go over the Chart of Accounts, how it helps you organize your business, and how it affects your financial statements.

Understanding how the chart of accounts works in QuickBooks Online

The Chart of accounts is the hub of your accounting It's the central place where you decide how you organize your transaction Every account or category you use in QuickBooks for every transaction comes from the Chart of Accounts. Let's go over the Chart of Accounts how it helps you organize your business and how it affects your financial statements. To get to the Chart of Accounts, Select Bookkeeping Chart of Accounts. Every transaction you record in QuickBooks affects at least two of these accounts Usually, it's the bank or credit card account you spent or received money to, and then an account that describes why.

Let's look at an example.

Open the transaction screen you see a purchase of some staplers for the office The transaction is already assigned to the correct bank account You just need to enter the correct category for why you spent the money Office supplies, and expense account Back on the Chart of accounts, the balance for the bank account decreases by what you spent on the staplers, but down in the office supplies expense account, you don't see a balance like you do with the accounts at the top Let's look closer at the type of accounts to see why Each account uses a specific type The type tells QuickBooks what the account should track either the balance of the account or a total of the transactions for specific time periods.

Accounts at the top of the list show you how much you own or owe right now They include accounts you're already familiar with, like bank accounts or credit cards They have balances that tell you how much money you have in those accounts or how much you owe other accounts, like fixed assets, tell you the value of things you own, like a truck or a warehouse And liabilities tell you how much you owe, like on a mortgage Equity accounts show you how much the business is worth to the owner You use equity accounts when the owner deposits money into the business or when they withdraw money for their personal expenses Income accounts help you track why you receive money from customers or donors.

Cost of goods sold, and expense accounts help you track your spending these accounts don't have balances because they help you track the profit of your business for a specific time period You don't usually want to see how much you spent on office supplies since you opened your business, so instead you run a report to see how

much you spent for a month or year Quickbooks comes with many accounts already set up for you However, you'll probably want to add some more When you do, you can add them here This other video here will show you how Your accounts don't have account numbers by default, but you can check to learn how to turn on account numbers Note that it's best to work with your accountant to decide which accounts will give you the best insight into your business Now let's look at a report. Select Business Overview, Reports.

As you categorize transactions, QuickBooks builds your financial statements behind the scenes these are powerful tools that let you and your accountant know how your business is doing Let's take a look at the Profit and Loss statement The profit and loss shows all your income, cost of goods sold and expenses for a specific period of time These are the same accounts you see in your chart of accounts.

The total for sales is a sum of all the transactions you categorize as sales income during this period the total for expenses is the sum of all the transactions you categorize as expenses during this period and the office supplies total includes the stapler expense we recorded earlier The final line subtracts all your cost of goods sold and expenses from your income to show you the net income If you want to learn more about how to read reports in QuickBooks online, there's a video at the end of this one with more details Now you have a basic understanding of what the chart of accounts is and how it affects your transactions and financial statements.

quickbooks online , quickbooks online login,quickbooks online pricing,quickbooks online accountant,quickbooks online sign in,quickbooks online payroll,quickbooks online accounting login,quickbooks online accountant login,intuit quickbooks online,intuit quickbooks online login,quickbooks online customer service,www quickbooks online com,quickbooks online support,quickbooks online vs desktop,quickbooks online plus,quickbooks online training,quickbooks online log in,

www quickbooks online,quickbooks online help,quickbooks online certification,quickbooks online advanced,quickbooks online login page,quickbooks online com,quickbooks online essentials,quickbooks online payroll login,quickbooks online tutorial,quickbooks online cost,is quickbooks online down,quickbooks online payroll pricing,quickbooks online simple start,quickbooks online for dummies,quickbooks online app,quickbooks online for accountants,quickbooks online test drive,quickbooks online version,how to undo reconciliation in quickbooks online,quickbooks online plans,how much is quickbooks online,quickbooks online phone number,log into quickbooks online,versions of quickbooks online,undo reconciliation in quickbooks online,quickbooks online versions,login to quickbooks online,quickbooks online support phone number,quickbooks online classes,how to use quickbooks online,quickbooks online ,quickbooks online bill payment,quickbooks online pay bills,how to reconcile in quickbooks online,login quickbooks online,learn quickbooks online,quickbooks online payroll core,quickbooks online price,quickbooks online training free,quickbooks online with inventory,quickbooks online for inventory,inventory quickbooks online,inventory on quickbooks online,inventory in quickbooks online,quickbooks online subscriptions,how to print checks in quickbooks online,cancel quickbooks online,quickbooks online download,quickbooks online for free,learn quickbooks online free,free quickbooks online,quickbooks online subscription,quickbooks online free,quickbooks online bill pay,quickbooks online checks printing,quickbooks online down,quickbooks online vs desktop 2021,