Sometimes it can be confusing as to where an item should be recording in your lists of accounts. This is especially true if it is a transaction that you have never recorded before. Understanding how your chart of accounts is organized can make it easier to determine which accounts you should use for each new transaction.
This is a basic organizational layout of any chart of accounts, and the types of items entered under each category:
Balance Sheet Accounts:
Assets
- Current Assets -Cash accounts, Accounts Receivable and Inventory
- Fixed Assets – Items that will depreciated over a period of years. Vehicles, furniture, equipment, buildings and real estate.
Liabilities
- Current Liabilities – Accounts payable and any portions of debt that will be paid within the current year.
- Long term Liabilities – Mortgages and other long term debts.
Owner’s Equity
- Owner’s Contributions – Initial startup costs and other contributions
- Retained Earnings – Accumulated profits and/or losses
Income Statement Accounts:
Operating Revenue – Gross sales
- Cost of Goods Sold – Direct costs of sales: purchases, labor for services, materials, subcontracted labor
Operating Expenses – Administrative salaries, office expense, rent, utilities, insurance etc
Non-operating Revenue – Sales of assets, refunds
Non-operating Expenses – Penalties, fines etc.
This, of course, is still a very broad overview. Be watching for more detailed explanations of these accounts in our future blog posts.
Tags:
Accounts Receivable,
Administrative Salaries,
Balance Sheet,
Cash Accounts,
Chart Of Accounts,
Current Assets,
Current Liabilities,
Detailed Explanations,
Earnings,
Equipment Buildings,
Fixed Assets,
Gross Sales,
Income Statement,
Long Term Liabilities,
Losses,
Office Expense,
Operating Expenses,
Profits,
Startup Costs,
Term Debts 
