QuickBooks and Your Chart of Accounts

What is it? What do I do with it? And why do I care? These are good questions. Let us begin by defining what the Chart of Accounts (COA) is.

According to Wikipedia, the COA is a list of all accounts tracked by a single accounting system and should be designed to capture financial information to make good financial decisions. Each account in the chart is assigned a unique identifier, typically an account number. Each account in the chart is classified into one of the five categories: assets, liabilities, equity, income and expenses. I would add one additional category to this list; Cost of Goods Sold. Though I am confident the Wikipedia definition included COGS within the expense category, I like to break it out on its own.

Allow me to simplify the above as it relates to QuickBooks. Suppose you are writing a check. When you bring up the check writing screen, a default bank account will appear, meaning this is the bank account in which you plan to write this check from. The primary place you need to be aware of the COA is when you go to record the “what is this purchase for?” In other words, is this purchase for Office Supplies, Rent, Auto Maintenance & Repairs, Expensed Computer H/W, etc.?

QuickTrainer uses a standardized COA for each and every client for which we (a) setup, (b) cleanup or (c) perform Bookkeeping Services. When I say “standardized”, you should interpret this as meaning 99% of all accounts you will ever need. There will always be some customizing done to the COA depending on the business type and the subjectivity of the business owner(s). This typically includes the manner in which income and cost of goods sold accounts are configured. Using the QuickTrainer COA, you will quickly see our structure uses both account numbers and account names and is laid out in a very logical manner.

If you want to save money with your CPA and put a smile on his or her face at the same time, click here to download a PDF file of the Chart of Accounts used by QuickTrainer.

Happy Accounting!!!


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