A: The Chart of Accounts is the backbone of your accounting system. That is why it is so important to set up the Chart of Accounts correctly. QuickBooks categorizes accounts as:
- Assets: things your company owns
- Liabilities: money your company owes
- Equity/Capital: depends on entity type but it is used to track money invested into the company and drawn out of the company
- Income: money earned from day-to-day business tasks
- Cost of Goods Sold: Tracks the direct costs of your business’s goods or services
- Expenses: fixed costs or overhead costs
If you are creating a new Company file, select Property Management or Home Owner Association or Rental as your industry. It will customize your income and expense accounts for you.
Open the Chart of Accounts list (Ctrl + A) and add a new account. Select the Account Type and enter the account name and information.