One industry that experiences the ebb and flow of market forces is the consulting field. Like any other business, a consulting company must be able to keep track of it's expenses and revenues. And like many companies, consulting companies often use QuickBooks accounting software to keep track of that data. The QuickBooks Chart of Accounts is very customizable. You can start with a standard Chart of Accounts that the QuickBooks wizard will help you set up. However, this does not mean you have to leave the chart of accounts as is. The chart of accounts should be modified to meet the needs of your business. This will give you the ability to produce reports that will help you make good management decisions. This article will cover the following categories: • • • • • The chart of accounts should be modified (add or delete accounts) to help produce very useful reports. If you feel you could use some help in reviewing and modifying your current chart of accounts or with the setup of a new chart of accounts, give us a call @. What is a Chart of Accounts? In customizing your chart of accounts, you can rename accounts to make their names more meaningful. Or, add new additional accounts that are more applicable. It may be that an account already set up is too broad. Create one or more sublevel accounts to help categorize further down that broad main account. And, there may be a need to delete accounts that are not important. The Chart of Accounts is a list of all the accounts with each their associated balance that make up your business. The funds that go into these accounts are based on the transactions created while running your business. Accounts are the backbones of your QuickBooks transactions: Every transaction your business creates will point to two or more accounts within your Chart of Accounts. Here are the transactions that can be created in QuickBooks: • Estimate – also known as: bid, proposal, or quote, this document gives the items, descriptions, quantity, and price of the products or services your prospective customer is interested in. Best mac app for orchestral composing. Accounts example: Estimate, Material Income, Subcontractor Labor Income, Sales Tax Payable. • Sales Order – this document would be set up once the approval to move forward with the estimate is received and you need to track that order within your business before it is shipped. Accounts example: Sales Orders, Materials Income, Sales Tax Payable. • Invoice – this document is created when you turn the estimate or sales order into an invoice for requesting payment of products and services to be sent to the customer. This is usually set up with payment terms so that the customer knows the payment due date. Accounts example: Accounts Receivable, Materials Income, Inventory Asset, Cost of Goods Sold, Sales Tax Payable. • Receive Payment – use this feature when your customer is ready to pay you on an invoice you sent them for products and services they purchase from you. Accounts example: Checking – bank account, Accounts Receivable. • Sales Receipt – this document is created when a customer pays immediately for products or services purchased. Accounts example: Checking, Labor Income, Sales Tax Payable. • Purchase Order – this document is created to tell your vendor (the company you are purchasing from) the items you wish to purchase. Keep up with what is ordered, when it is received and the expense you will owe that vendor. Accounts example: Purchase Orders, Job Expenses: Job Materials (COGS). • Bill – is not a document but a way to keep track of your expenses in QuickBooks. A bill is set up usually based on a vendors invoice to you on the items for services or products that you purchased from them. Bills are what you owe a vendor to be paid at a later date (usually by the due date). Office for mac 365 student. Accounts example: Accounts Payable, Utilities: Telephone expense. • Bill Payment – use a bill payment feature in QuickBooks when you are ready to make a payment on a vendor’s invoice(s). Accounts example: Checking, Accounts Payable. • • Deposits – Customer payments can be recorded either directly into a bank account or more likely placed in a temporary holding account called Undeposited Funds to be grouped at a later point for depositing to a bank account. Account example: Checking, Undeposited Funds. How is a Chart of Accounts grouped for reporting purposes? There are six broad account categories in the Chart of Accounts. Three of these categories make up the Balance Sheet report: • Assets – what is owned by the business • Liabilities – what the business owes • Equity – what is the net worth of the business The Balance Sheet shows a quick snapshot of how the business is doing at a point in time. The other three categories make up the Income Statement report: • I ncome – the sales of products and services a business sells. • Cost of Goods Sold – this category many times is abbreviated as COGS – used for inventory tracking.
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