Chart Of Accounts

Purpose

The Chart of Accounts is a method for grouping all the various flows of money into and out of your business. Whenever you post a transaction, each of the different parts of it goes into a separate bucket, depending on what sort of transaction it is and what is happening with that transaction. These buckets represent the areas to which you are redirecting your resources. Each addition of resources (cash, equipment, and other assets) goes hand in hand with a subtraction of resources from another bucket. For example, let’s examine what happens when you post a sales transaction like an invoice.

When you post an invoice, the items on the invoice are removed from your inventory, and so the value of your inventory account goes down while the cost of goods sold increases. The Sales and Sales tax accounts are increased by the appropriate amounts while your receivables account is increased for the total of these two amounts. There are many, many such things going on. That is why posting a transaction is not instantaneous. It is dumping information into multiple buckets.

These buckets are tracked in your chart of accounts. Each bucket is an account. The Chart of Accounts is used for printing financial statements.

 

Usage

1. Click Load for a list of default charts of accounts.

If you wish to use one of the predefined Integral Accounting charts of accounts, you can do so by clicking the Load button. Doing so brings up a list of default charts of accounts from which to choose. See Accounting -- Load Chart of Accounts for a description of this form.

2. Insert or delete accounts as needed.

As your business changes, you may need to add or delete different accounts. To add a new account, simply click the edit button. You will then be shown the form for editing accounts, which is described in Accounting -- Editing an Account. To delete an account, simply click on that account to select it and then click the Delete button. You will be asked for verification and then, if there are no outstanding transactions involving that account, it will be deleted.

Account - This is the number of the account, and is used to uniquely identify it in transactions. The first digit of the account number has significance in determining its allowed account types, as described in Accounting -- Editing an Account. Accounts are arranged in numerical order in the chart.

Name - This should be an easily understandable name that defines the purpose for which the account is used.

Account Type - This can be either a Report Title or an accounting category. Report Titles are used to organize accounts into a broadly hierarchical arrangement, so that they are easily discernible on a financial statement.

Balance - This displays how much money is currently in the account. Whether or not this represents a positive amount depends on the Balance Type setting, explained below. Report Title accounts will have a balance of zero.

Balance Type - This column indicates whether the account typically has a debit balance or a credit balance, and is defaulted for you from the type.

Edit individual account information.

To actually change the information for a particular account, click the edit button. Doing so brings up the Chart of Accounts editing card, described in Accounting -- Editing an Account. From this card you can edit everything about an account except its beginning balances. To edit balances, select the account and then click the View Balances button. The use of the resulting form is described in Accounting -- Balances.