did you know that the main area of data in quickbooks online
is the chart of accounts in this episode of quickbooks online crash course
you will learn how to prepare your chart of accounts in quickbooks online
if you have any questions about this topic you can leave them in the comments section below and i'll
do my best to help you and of course if you feel the video helped you i hope you will click like
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an account is simply a record of transactions in the days before the computer it was simply
a separate piece of paper in the computer it's a separate file as part of the quickbooks software
you need a separate account or let's say a separate record for each expense category you have
general income source that you have and each financial type of account that you have
and of course you have to have an account for the cash on hand that you use here are
the example accounts we will use in the course we will have one record just for video income
and a separate record for editing income it might be helpful to know the difference between how much
money came in for doing a video service compared to how much money came in doing an editing service
these are the four example expenses that we will use they basically represent any example expense
and each category of expense should have its own record or its own account in the chart of accounts
and of course we have to have one example bank account
one example company credit card account and a separate account or let's say a separate record
for the cash on hand that we might receive from customers or pay out to vendors
now the accounts that we're going to add to quickbooks online are in this list with the
extra data that you see here you have account name account type and account detail type
and before you can add an account to the chart of accounts and quickbooks online you
have to tell quickbooks online all three pieces of information the account name can be anything you
want as long as you know what it means when you look at the reports that the account appears on
exactly what you type in as the name is exactly how it will be shown in the reports
account type determines what type of transaction can be recorded into that account it also
determines which financial statements and reports it will show up on and it determines the position
of the account in the reports for example if the account is an expense type of account it will show
up on the profit and loss and it will show up in the expense section of the profit and loss
and you can only record expenses into that account as you use quickbooks online the detail
type is usually not relevant it sometimes adds functionality to an account but that's very rare
and we will not need this in our crash course so let's just use what's on the list here and one
by one we'll record them in the list of accounts in the chart of accounts for quickbooks online we
remember from the navigation video that the cog wheel in the top right has the long-term permanent
information so if you're looking for the chart of accounts you click the cog wheel go all the way to
the left where it says your company and go down to where it says chart of accounts and click now
if it's the very first time that you're opening up this window you will see this little picture
with this little green button so you click the little green button and from this moment
forward this is the window you will see when you click the cog wheel and click chart of accounts
you may notice quickbooks online has already given you a huge number or maybe not huge but
a large number of accounts already in the chart of accounts quickbooks online
is trying to help you by putting in what it believes is the most commonly needed accounts
so these would be the names of the most commonly used expenses this might be a general income
category and these other things are for later as you get more advanced into doing the books
or doing accounting for other people notice it already has an account for uncategorized assets
but we need to put just like any other company we need to put our own chart of accounts or
add the specific accounts that we need remember its name type and detail type so how do we add
well it's very simple we go to the top right and click new now the type of the first one is income
and the detail type i believe is uh service fee income so we just click here and we
choose service fee income and i like to put the name in capital because that will
help you distinguish between the ones that you added and the ones that quickbooks online gave you
so we have one account video income and then we click save and new and believe me
behind this window it added that account leave these two choices and then add the next one
now just for a moment i want to click save and close so that you can see it added the editing
income and the video income and it put it in the income section of the chart of accounts
so now let's do the four expenses delivery repair utilities and transportation exactly the same way
and the detail type is other business expense so step by step new this is an expense
this is other business expense
and first it will be i believe it'll be delivery yes delivery expense
when we click save and new it'll keep the window open and remember the two choices on the left
so the next name is repair expense
save and new the next one would be
utilities expense and then the last one will be transportation expense
now after the expenses i'll click save and close just to confirm that the ones in capital letters
are the ones that we added ourselves and we have the correct type and the correct detail type
now there's only three left chase bank american express and cash on hand we do bank checking
for chase bank so click new it's a bank the type is checking cash in chase bank and save and new
and then the next one is a credit american express credit card which is a credit card type of account
so that's easy when you choose credit card there is no detail type just type american express
and then save a new and then of course
even though the cash on hand is not really a bank account and it's not really checking it
behaves the way a checking account would because you put money into it and you pay money from it
and now if you choose to click save and close you can see that the ones in capital letters
are the ones that we made and you can see they're the correct type and detail type
now i congratulate you for finishing the setup of your chart of accounts however you may well
ask are there other areas of data that we have to manage in order to be able to do the minimum
amount of bookkeeping required by the irs and the answer is no if your goal
is to do the minimum amount of bookkeeping just to satisfy the tax agencies or anyone who just wants
to know what your condition or or profit is then all you have to do is set up the chart of accounts
and for those people who studied accounting this is what the chart of accounts looks like
in a textbook it's called the general ledger so if you're only interested in satisfying
the irs and just getting your minimum books done then this is all you need to set up and prepare
however your company or the company that you're doing the bookkeeping for might also
need what's called peripheral area of data for example in addition to the chart of accounts
you might need customers and receivables as a separate area of customer information
in order to keep track of the different amounts of money that different customers may owe you at any
given moment and compare that to how much they paid or how much you might owe them in a refund
and that is a separate set of records that is separate from the chart of accounts you might
also owe money to the vendors whom you pay for services that you incur the expenses with like
repair or maintenance or delivery and if you owe different vendors different amounts of money you
might need a separate area of data with a separate set of records and reports to keep track of that
you also might even have a company that sells merchandise inventory and needs to count the items
and keep track of the changes in the quantities and the names and the prices and purchase costs
of each item if the company you're doing the bookkeeping for requires that then quickbooks
online would have a separate area of data with a separate set of reports just to manage the
inventory but any of these additional peripheral areas of data would match and be in sync with
the main area of data the general ledger and in order to know these things you would have
to take a separate little course on each but the good news is after this very fast crash course
the additional separate courses for each additional area of data that you may or
may not need will be a very easy course because you will already have a foundation in quickbooks
online you