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Naming and numbering accounts

From: QuickBooks Pro 2010 Essential Training

Video: Naming and numbering accounts

In accounting and bookkeeping, everything you do with money gets tracked with things called accounts. Money you earn goes into income accounts and money you spent goes into expense accounts, but there are several other types of accounts that you're likely to use. Before you create any accounts, it's a good idea to get to know the different types because you can't always switch types if you pick the wrong one. In QuickBooks, accounts can go by both names and numbers. The good news is you don't have to develop your own naming and numbering schemes.

Naming and numbering accounts

In accounting and bookkeeping, everything you do with money gets tracked with things called accounts. Money you earn goes into income accounts and money you spent goes into expense accounts, but there are several other types of accounts that you're likely to use. Before you create any accounts, it's a good idea to get to know the different types because you can't always switch types if you pick the wrong one. In QuickBooks, accounts can go by both names and numbers. The good news is you don't have to develop your own naming and numbering schemes.

The accounting world already has some standards for both account names and numbers. The key is to pick a standard and use it consistently. Income is the money you make from your business, selling services, products or both. For nonprofits, income can come from donations, grants and other sources. Expense accounts are for money you spend running your business. Purchasing products to sell, paying subcontractors, rent and telephone bills, and so on. Fixed asset accounts track your major purchases.

Things like equipment or buildings, and typically you depreciate these items to show how their value decreases over time. Bank accounts are easy. They are the real-world bank accounts you have, like checking, savings and money market. If you borrow money, called a Current Liability Account, you create a loan account in QuickBooks for that. Credit card accounts cover your real- world credit card accounts that you have. Equity represent the owner's equity you have in the company and that includes capital that invested at the beginning and earnings that you've retained over the years.

Accounts receivable represents money that customers owe to you. Accounts payable on the other hand is the money that you owe to vendors. And finally, cost of goods sold represents the cost of the products that you sell. The main rule for naming accounts is to be consistent. Besides using unique names, also identify the account purpose in the name. For example, telephone expense represents your monthly phone bills, but telephone equipment could be an asset account for your office telephone system.

Most companies use ranges of numbers for different types of accounts. For example, a balance sheet shows assets, liabilities and equity. So the first three ranges are reserved for those. 1000 to 1999 for assets and that includes bank accounts and accounts receivable. 2000 to 2999 for liabilities including credit cards, loans, and accounts payable. 3000 to 3999 for your equity accounts.

4000 to 4999 is for income, which is the first thing that you see on an income statement or profit and loss report, but from 5000 on, the ranges vary. From 5000 to 5999, you can use those accounts for income, cost of goods sold or expenses. Then from 6000 to 7999, you can use those for expenses or income, depending on which you have more of.

And then finally, from 8000 to 9999, you can use those accounts for different types of other expenses. If you use the Easy Step Interview to create your company file, QuickBooks created a chart of accounts for you and numbered accounts following a standard similar to this. So the new accounts you create in future will fit right in.

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QuickBooks Pro 2010 Essential Training

69 video lessons · 22293 viewers

Bonnie Biafore
Author

 
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  1. 8m 19s
    1. Welcome
      52s
    2. Editions of QuickBooks
      3m 24s
    3. QuickBooks bookkeeping basics
      2m 46s
    4. Using the exercise files
      41s
    5. Disclaimer
      36s
  2. 9m 12s
    1. Opening a company file
      2m 4s
    2. Using the QuickBooks menus and home page
      2m 49s
    3. Touring the Customer, Vendor, and Employee Centers
      2m 32s
    4. Navigating between QuickBooks windows
      1m 47s
  3. 10m 50s
    1. Gathering the information you need
      2m 4s
    2. Creating a company file
      5m 33s
    3. Converting from another program
      3m 13s
  4. 8m 19s
    1. Naming and numbering accounts
      3m 36s
    2. Creating an account
      2m 26s
    3. Making an account inactive
      2m 17s
  5. 14m 50s
    1. Creating a customer profile
      3m 40s
    2. Adding customer information
      4m 33s
    3. Creating a job
      2m 18s
    4. Making customers inactive
      1m 39s
    5. Creating a vendor
      2m 40s
  6. 43m 35s
    1. Why use QuickBooks items?
      2m 59s
    2. Creating a service item
      4m 26s
    3. Setting up time tracking
      2m 53s
    4. Entering time
      4m 19s
    5. Tracking mileage
      4m 34s
    6. Creating an inventory item
      6m 7s
    7. Creating a non-inventory item
      3m 34s
    8. Setting up sales tax
      6m 59s
    9. Setting up discounts and charges
      3m 46s
    10. Creating a group of items
      2m 16s
    11. Making items inactive
      1m 42s
  7. 30m 46s
    1. Creating a purchase order
      3m 8s
    2. Entering a bill
      4m 37s
    3. Recording inventory you receive
      3m 47s
    4. Paying bills
      4m 5s
    5. Handling a credit from a vendor
      5m 2s
    6. Writing a check for expenses
      3m 17s
    7. Paying with a credit card
      1m 40s
    8. Paying with cash
      2m 53s
    9. Paying sales tax
      2m 17s
  8. 35m 5s
    1. Understanding invoices, statements, and sales receipts
      2m 23s
    2. Creating an invoice and filling in header fields
      2m 55s
    3. Adding items to an invoice
      5m 7s
    4. Adding billable time and cost to an invoice
      5m 57s
    5. Using subtotals, discounts, and other charges
      3m 6s
    6. Creating an estimate
      2m 49s
    7. Handling a customer credit
      4m 57s
    8. Creating a statement charge
      3m 7s
    9. Producing a statement
      4m 44s
  9. 14m 44s
    1. Setting up print options
      4m 13s
    2. Aligning forms with printer paper
      3m 0s
    3. Printing one or more forms
      4m 29s
    4. Emailing a sales form
      3m 2s
  10. 14m 8s
    1. Receiving a payment
      3m 49s
    2. Assessing finance charges
      4m 9s
    3. Creating a sales receipt for a cash sale
      2m 39s
    4. Depositing payments
      3m 31s
  11. 10m 37s
    1. Preparing to reconcile a bank account
      1m 50s
    2. Reconciling transactions to your bank statement
      3m 14s
    3. Correcting discrepancies
      5m 33s
  12. 9m 51s
    1. Using the Report Center to find reports
      3m 0s
    2. Running a report
      3m 45s
    3. Printing or saving a report
      3m 6s
  13. 6m 8s
    1. Why use journal entries?
      3m 3s
    2. Creating a general journal entry
      3m 5s
  14. 13m 39s
    1. Creating a new user
      4m 58s
    2. Backing up your company file
      6m 10s
    3. Restoring a company file
      2m 31s
  15. 27s
    1. Goodbye
      27s

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