Types of General Ledger Accounts

Sometimes I find that people need the basics. Often in small businesses, employees earn their roles in the company by default. Maybe an experienced bookkeeper left the company so the accounting clerk gets promoted to bookkeeper. Sometimes a couple takes on the role of running a company and choose to take on the accounting, management, marketing and running of the business. This is a big role, too much sometimes for just a couple and can be draining on a relationship as well.

When I work with companies, I usually find an employee who is hungry for all the knowledge I can share and they appreciate the basics. One of the accounting basics I share that seems to be appreciated is a very basic description of the types of accounts in the general ledger. If you number your accounts, or use the standard numbering for your chart of accounts, this theorey will be correct. If your numbering system is a bit different, the numbers may vary but the structure is the same. See what you think:

Basic description of the general ledger acccount types:

• 100 accounts are Assets. Things that you own or people owe you.
• 200 accounts are Liabilities. Liabilities are what you owe to others.
• 300 accounts are Equity. Equity is the worth of your business.
• 400 accounts are Income Accounts. Income or Revenue for the current year only.
• 500 accounts are Cost of Goods Sold Expense Accounts. This is the cost for what you buy to make the money listed as Income on your Profit and Loss. This is the cost for the current year only.
• 600 accounts are Overhead expense accounts. This could include shop and warehouse expenses or equipment expenses for the current year.
• 700 accounts are General Administrative expense accounts. This is the cost of keeping your office open, rent, office supplies, utilities, office salaries and wages, etc. for the current year.
• 800 and 900 accounts may include other accounts not listed above, such as Other Income, Interest Expense, Federal and State Taxes, only for the current year.

Items in QuickBooks

Sometimes I just have to take a step back and realize how many companies are using QuickBooks and don't realize how to use Items. Recently I was browsing a contractor blog that I visit occasionally to read postings and comments. Of all companies, contractors benefit the most from using Items. Click the check box when creating an item that says if you are a contractor click here. When you do, another area of the item opens up so you can indicate your cost of goods sold general ledger account to post to if you purchase items for a job, or your income account to post to when you bill for a job. If you use the "items" tab in the "vendor bill" you can post your costs to the items. When you do your invoicing, of course you have to use an item to bill to. When you do both, you can see profitability of item reports.

Seminar options

This last week, we completed another QuickBooks seminar in Tampa. This seminar is held in computer lab and lasted 2 1/2 days. Several of the attendees suggested holding the seminar for a full week, teaching in the morning and allowing the students to set up their companies in the afternoon as we help them and float around the room. Personally I don't think that people would take an entire week away from their office. I think it's hard as it is to get them away for 2 1/2 days. All the students loved the seminar but now see that they need to go back and do the work to setup their company on their own. They would prefer to pay for me to assist them, yet in a group setting where the price might be more affordable to them. any thoughts out there?

The difference in our seminar vs other QuickBooks seminars the students said was that we offered extensive accounting education which they hadn't understood when explained to them in the past.