QuickBooks for Mac 2014 User’s Guide 44
CHAPTER 3
Accounts
If you were using pen and paper to run your business, you might use the old shoebox method of tracking your
transactions, sorting all your transactions by keeping them in labeled boxes. In QuickBooks, accounts work kind of
the same way. Your QuickBooks transactions are associated with an account, and your accounts are listed in your
Chart of Accounts. So your accounts are like the shoeboxes, and the Chart of Accounts is like the closet you keep
them in.
Important: One mistake new QuickBooks users sometimes make is thinking that their Chart of Accounts lists only
bank accounts. It’s true that your bank accounts are listed in your Chart of Accounts, but so are your expense
accounts, income accounts, and others.
We’ve got a great video on Little Square that gives you an overview of accounts and why they are
important to your business:
http://www.qblittlesquare.com/2011/01/video-bookkeeping-101/
Types of accounts
There are two main types of accounts: balance sheet accounts and income/expense accounts.
Balance sheet accounts
A balance sheet account is an account that appears on a balance sheet report. This report summarizes the
financial position of a business. A balance sheet shows the value of your company's assets, liabilities, and equity as
of a particular day. It is called a balance sheet because the value of the assets is always exactly equal to the
combined value of the liabilities and equity.
• Bank account—Checking, savings, and money market accounts. Add one bank account for every account your
company has at a bank or other financial institution. (You can also use this type for petty cash.)
• Accounts receivable (A/R)—Transactions related to the customers that owe you money, including invoices,
payments, deposits of payments, refunds, credit memos, and statements. Most companies have only one A/R
account.
• Other current asset—Assets that are likely to be converted to cash or used up within one year, such as petty
cash, notes receivable due within a year, prepaid expenses, and security deposits.
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