The chart of accounts

The chart of accounts is the list of every account the company uses to record money. Each account has a number and a name, and each one belongs to a group. The groups are assets, liabilities, equity, income and expenses. Every transaction in the books goes into one or more of these accounts.

Why the numbers matter

The account number tells the software where an amount belongs. Reports add up the accounts by group. A sales invoice, for example, adds to an income account and to a receivable account. Later the same accounts appear in the profit and loss report and in the balance sheet.

Changing names

The names you see follow the chart. Changing an account's name changes how it is shown, but it does not change the entries already posted to it. Report lines keep their identity even when their names change, so a report line is always the same line.

Where you will use it

You choose an account for each line of a sales invoice, each purchase and each bank payment. If you are unsure which account fits, read the account name and the help text on the screen. Keep the chart small at the start, and add accounts when a real need appears. The reports read the same accounts, so an account you add later shows up in the reports too.