Working with the Chart of Accounts

Topic: Accounting

The Chart of Accounts (COA) is a formal index of your accounts that track the financial activity and financial position of your business. There are two major categories of accounts (a record of financial transactions).The Profit and Loss (P&L) records the financial activity and the Balance Sheet records the financial position.

To learn more about how the Chart of Accounts is used click here.

If you are working without an accountant studying the video tutorials will provide you with guidelines to build your own. For more information see Setting the Chart of Accounts.

When you have designed and crested your Chart of Accounts you can add, edit and remove accounts as and when required.

Five major types of Account

Assets, Liabilities, Equity, Income and Expense. The table below gives a brief description of each available account type.

Balance Sheet Accounts	Balance sheet accounts summarise the financial condition of your business
Assets	What your business owns
Petty Cash	Tracks money not deposited in a bank, typically petty cash.
Bank	Tracks amounts held at financial institutions, typically current, savings or investments accounts.
Inventory Asset	Tracks products purchased and held as stock.
Other Current Asset	Tracks tangible Assets that have a life span of less than one year and can easily be turned into cash, such as Pre-Paid expenses or shares owned by the business.
Fixed Asset	Tracks depreciable Assets purchased and used by your business, typically equipment such as computers, furniture and buildings.
Other Asset	Tracks non current Assets that are not Fixed Assets, have a life span of more than one year and can be turned into cash in less than one year, typically long-term deposits, patents, copyrights and goodwill.

Liabilities	What your business owes
Credit Card	Tracks the balance of Credit Cards.
Payroll Liability	Tracks the amounts you accrue for Payroll.
Current Liability	Tracks debts or obligations that are due within one year such as accrued or deferred expenses and salaries, customer prepayments and short-term loans.
Long Term Liability	Tracks debts or obligations that are due in more than one year such as mortgages and loans.

Equity	Capital invested or profit retained in your business
Equity	Tracks capital invested by shareholders and retained earnings, the net balance of profit retained in your business through the end of a financial period typically a financial quarter or year.

Profit and Loss Accounts	Profit and Loss Accounts summarise the financial activities in your business to help you determine if you are making a profit or a loss.
Income	The revenue generated by your business
Income	Tracks revenue from sales of products or services.
Other Income	Tracks amounts from sources other than sales such as interest from bank accounts, sales of fixed assets, foreign exchange gains and losses.

Expenses	The costs incurred by your business
Expense	Tracks fixed and variable amounts spent on the operation of your business.
Cost Of Goods Sold	Tracks the base cost of creating or obtaining a product that you stock and then sell.
Other Expense	Tracks amounts spent on activities not directly related to your day to day business, typically bank charges and interest.
Mileage Expense	Tracks mileage expenses, typically used on Employee Expense claims.

The relationship between Items and the Chart of Accounts

In salesorder.com Items are the products and/or services that your business buys and sells. When you enter an Item Document you also specify the Accounts, within the Chart of Accounts, that the Item affects when it is placed on a Transactional Document, such as a Sales Invoice or Bill for example. In this way Items represent the boundary between your every day activities of buying/selling, and the underlying accounting system. For more information see Working with Items.

Related tasks and information

Configuring Accounts

Setting the Chart of Accounts

Working with Accounts

Working with General Journals

Working with Items

Viewing Document Account Entries