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Standard Chart of Accounts & Account Types
- Hector Garcia
- August vi, 2021
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Many clients ask me about how to "standardize" a chart of accounts or make the chart if account comply with generally accustomed principles… Well here are standard Nautical chart of Accounts number ranges:
1000 – 1999 Assets
2000 – 2999 Liabilities
3000 – 3999 Disinterestedness
4000 – 4999 Income or Revenue
5000 – 5999 Job Costs/Toll of Goods Sold
6000 – 6999 Overhead Costs or Expenses
7000 – 7999 Other Income
8000 – 8999 Other Expense
What is the Chart of accounts?
The chart of accounts is a listing of all accounts used in the general ledger of an organization. The nautical chart is used by the accounting software to amass information into an entity'southward financial statements. The chart is normally sorted in guild past business relationship number, to ease the task of locating specific accounts. The accounts are usually numeric, only can also be alphabetic or alphanumeric.
The Chart of Accounts is the backbone of your accounting system. That'due south why it is so important to understand how information technology works. Call back of a chart of accounts every bit a file cabinet, with a file for each type of accounting data you want to rails. For example, if y'all need to know how much money you spend on postage, you can ready a file (an business relationship in the Chart of Accounts) for Postage Expense
Accounts are usually listed in order of their appearance in the financial statements, starting with the balance sheet and standing with the income statement. Thus, the chart of accounts begins with greenbacks, proceeds through liabilities and shareholders' disinterestedness, and then continues with accounts for revenues so expenses. Many organizations structure their chart of accounts and so that expense information is separately compiled by department; thus, the sales section, engineering department, and accounting section all have the same prepare of expense accounts.
Account Types
Assets
Assets are things your company owns. They are usually divided into two groups: electric current avails and fixed assets. Current Assets are assets that y'all can easily turn into cash, such equally checking accounts, savings accounts, money market and CD accounts, accounts receivable, and inventory. Electric current assets are commonly numbered from k to 1499. Then, y'all might want to use account number 1100 for your company checking account considering a checking business relationship is a current asset.
Fixed assets are usually numbered from 1500 to 1999. These are items with a minimum cost (for example, $500) that y'all would have to sell to generate greenbacks. Automobiles, equipment, and land are examples of fixed assets. For example, suppose concluding year your company bought a new reckoner system for $ane,100. Since the cost of the system was more than $500, the purchase was entered to an asset account rather than to an expense business relationship. Consult your accountant or tax preparer to determine the actual minimum cost you should utilise to make up one's mind stock-still assets.
Liabilities
Liabilities are funds your company owes. For case, say your company borrowed $20,000 from the depository financial institution. When the $20,000 loan was deposited to the checking business relationship, the eolith was entered in the liability account Banking concern Loans, not an income account.
Example, Payroll Liabilities:
The Payroll Liability business relationship is a current liability account that QuickBooks automatically adds to your chart of account when you plow on payroll. The Payroll Liabilities account tracks taxes that y'all deduct from employee'due south paychecks and hold temporarily until yous turn them over to the government. These include federal and state income withholding taxes, local taxes, and the employee-paid portion of taxes such equally Social Security and Medicare.
Capital letter/Disinterestedness
Your capital business relationship structure depends on whether your company is organized as a sole proprietorship, partnership, or corporation.
If your company is a sole proprietorship, you demand a Capital account and an Possessor's Cartoon business relationship. Use the Capital letter account to keep track of the total amount of money you have invested since starting the business, plus or minus the net profit or loss each year since y'all started the business. Use the Owner's Drawing account for coin you take out of the business organisation for personal use, such as checks to the grocery store or dry cleaners, ATM transactions, your salary, and any money that gets deposited into your personal accounts.
Information technology is important to keep in heed that the owner of a sole proprietorship doesn't get a regular employee paycheck with money deducted for payroll taxes. Instead you lot pay quarterly estimated taxes, which yous should always allocate to the Owner's Drawing account.
If your company is a partnership or LLP (Limited Liability Partnership), you need to prepare Capital and Drawing accounts for each partner. If your company is an S or C corporation or an LLC corporation, it should have a Common Stock business relationship and sometimes a Preferred Stock account. Common stock and preferred stock correspond the total sum of stock the visitor has issued. An LLC might have Fellow member stock if there is more than than ane person who owns stock.
Income or Revenue
Income or revenue is the income you go from your normal twenty-four hours-to-day business tasks, such as professional fees, income for services rendered, reimbursable expenses, or products you sell.
Cost of Goods Sold
Cost of Goods Sold includes the toll of raw materials, freight charges for getting raw material to a warehouse, labor for edifice the finished goods, and freight charges for getting the appurtenances to the customer. For manufacturing businesses, the Toll of Goods Sold includes the costs incurred in producing or building a product. For a wholesale business, Price of Goods Sold are the costs of the goods you buy for resale. For a benefactor business, Price of Goods Sold are the costs to purchase and distribute goods to the customer.
Expenses or Overhead Costs
Overhead Costs, or Expenses, are fixed costs you take even if you lot run out of work. Examples include hire, phone, insurance, and utilities.
For example. Payroll Expense:
The Payroll Expenses business relationship tracks payroll items that are an expense to your company. These include salaries, wages, bonuses, commissions, visitor contributions such equally a visitor-paid health programme, and the company-paid portion of taxes such every bit Social Security and Medicare.
Other Income
Other Income is income you earn outside the normal style you practice business, including interest income, gain on the auction of an asset, insurance settlement, a stock auction, or rents from buildings you own.
Other Expense
Other Expense is an expense that is exterior of your normal concern, such as a loss on the sale of an nugget or stockbroker fees.
Here is a SAMPLE chart of accounts for the P&L accounts:
| Income | ||
| 4000 | Product Sales Income | |
| 4100 | Service Sales Income | |
| 4700 | Shipping Income | |
| 4800 | Other Income | |
| 4990 | Sales Returns | |
| 4980 | Sales Discounts | |
| Price of Appurtenances Sold | ||
| 5000 | Price of Goods Sold | |
| 5010 | Purchases of Product | |
| 5210 | Freight In Costs | |
| 5220 | Freight Out / Shipping to Clients | |
| 5500 | Subcontracted Direct Labor | |
| 5600 | Commisions & Refferral Fees | |
| 5990 | Buy Discounts | |
| Expenses | ||
| 6000 | Officeholder Bacon | |
| 6001 | Regular Pay | |
| 6002 | Taxes | |
| 6009 | Other / Bonus | |
| 6010 | Employee Salary | |
| 6011 | Regular Pay | |
| 6012 | Taxes | |
| 6019 | Other/ Bonus | |
| 6040 | Rent/Lease Part | |
| 6050 | Rent/Charter Equipment (NonVehicle) | |
| 6060 | Repairs & Maintenance (NonVehicle) | |
| 6070 | Vehicle Expenses | |
| 6071 | Gas | |
| 6072 | Car Payment / Lease | |
| 6073 | Vehicle Maintenace | |
| 6074 | Parking & Tools | |
| 6075 | Vehicle Insurance | |
| 6100 | Advertizing, Promotion, and Marketing | |
| 6101 | Printed Materials | |
| 6102 | Web Related | |
| 6103 | News, Mag, Radio, Television | |
| 6104 | Business Gifts | |
| 6105 | Other Marketing & CRM Expenses | |
| 6110 | Postage, Shipping, & Printing | |
| 6120 | Office Supplies | |
| 6201 | Bad Debt Expense | |
| 6220 | Charitable Contributions | |
| 6230 | Software & Small Equipment | |
| 6250 | Banking company Service Charges | |
| 6260 | Merchant Processing Fees | |
| 6270 | Janitorial & Cleaning Expense | |
| 6280 | Training & Connected Education | |
| 6300 | Insurance for Business | |
| 6301 | Full general Liability Insurance | |
| 6302 | Workmen'south Comp | |
| 6303 | Malpractice / Erros & Ommission | |
| 6304 | Other Insurance | |
| 6500 | Communications | |
| 6501 | Telephone – Lan | |
| 6502 | Telephone – Cel | |
| 6503 | Internet Admission | |
| 6504 | Other Telecomunication Services | |
| 6505 | Television set / Satellite | |
| 6510 | Utilitties | |
| 6511 | Water | |
| 6512 | Electricity | |
| 6513 | Other Utilities | |
| 6601 | Licences, Permits, and Local Taxes | |
| 6602 | Fines & Penalties | |
| 6603 | Dues & Subscriptions | |
| 6700 | Travel | |
| 6701 | Airfare | |
| 6702 | Hotel & Lodging | |
| 6703 | Vehicle Rental & Transportation | |
| 6704 | Meals while Traveling | |
| 6705 | Misc Travel Entertaiment | |
| 6720 | Meals & Entertainment | |
| 6721 | M&E With Clients | |
| 6722 | M&E Officers Only | |
| 6723 | K&E for Employees & Meetings | |
| 6800 | Professional person Fees | |
| 6801 | Bookkeeping & Admin | |
| 6802 | CPA & Tax Planning | |
| 6803 | Attorneys & Legal Fees | |
| 6804 | Business concern & Management Consultant | |
| 6811 | Subcontracted Services (Other) | |
| 6901 | Interest Expense | |
| 6902 | Depreciation & Acquittal | |
| 6911 | Misc & Other Expenses | |
| 6990 | Ask My Accountant / To Review | |
| Other Income and Expenses | ||
| 8010 | Interest Income | |
| 8020 | Other Non-Operating Income | |
| 8030 | Capital Gains | |
| 9020 | Other Expenses | |
| 9030 | Capital Losses | |
Hector Garcia
- Hector Garcia
- 8:00 am
- 3 Comments
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Source: https://qbkaccounting.com/standard-chart-accounts-account-types/
three Responses
You forgot the Net INCOME Account
I sell at farmers markets. What account would I file their fees?
Rent or transaction fees