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Accounts can be set up in the list item menu under chart
of accounts. Accounts will classify and summarize where
money came from and where you are spending or saving it.
An account can be an asset account, liability account,
equity account, income account, expense account. An
asset account is an account such as a bank account,
accounts receivable, inventory or equipment purchases. A
liability account can be an accounts payable or any loan
payable or any amount due. In addition, accounts are set
up to identify the different types of income and
expenses the business deals with. There is no difference
between the term accounts & categories, although
categories is not a term used by QuickBooks (used in
Quicken). Labels (names); assigned to accounts should be
memorable by you. Do yourself a favor and edit your
account labels. Use a label (name) that can help you
identify what it is used for within your business and
what sort of entry would be posted there. This will help
you consistently posted to the correct account. Learn
more about account types and how to
Classes are identifiers that
add another way to group the dollar amounts in your
transactions, which is independent of the groupings
provided by using Accounts. Class tracking allows you to
track segments of a business ( profit centers or cost
centers) that are independent of customers, jobs, and
vendors without adding subaccounts to the chart of
accounts. Classes segment the income statement, but are
not designed to segment the balance sheet.
During new company set-up,
plan out how many accounts and classes you will use.
While some of the best management information comes from
detailed accounting records, remember that gathering and
recording all that information has a cost. Good managers
strike a balance between detailed records and the effort
required to have them. |
