Working with QuickBooks Pro 2013 Chart of Accounts – Part 2 – Creating Subaccounts
Let’s set-up an equity account and name it “Owner.” There will be no opening balance at the beginning of the fiscal year. Then Click Save & New.
Under the Owner account, we have to create two subaccounts – the Owner Contributions and the Owner Draws. Owner Contributions pertains to the money the owner puts in the business. Type in Contributions on the Account Name, and then click the “Subaccount of” checkbox. In the drop-down list, choose the account that you want to act as the parent, and select Owner (subaccounts are indented below their parent account to make the hierarchy easy to see).
Then click Save & New.
Then create an account for Owner Draws by typing “Draws” on the Account Name. Click Subaccount of, choose Owner from the drop-down list, and then hit Save & Close.
The Chart of Accounts now has the Owner as the main account, while Contributions and Draws are the subaccounts.
Navigating a Complete Set of Chart of Accounts
Close the Abc Plumbing company that we created by clicking File then Close Company.
Let’s open a sample company file and choose a Sample product-based business.
The company is called Sample Rock Castle Construction. A pop-up window will ask if the date is to be set at December 15, 2012. Just click yes. Maximize the Home Screen and click Chart of Accounts.
Viewing the Chart of Accounts, you will notice that they have several bank accounts that are categorized separately. There is also an Accounts Receivable account. These are the invoices that have been created but still have not been paid. The total pertains to the amount owed to you. Notice also that accounts are already set-up for other asset accounts.
Under Liability account, you will see the Accounts Payable account. These are the bills that you have entered but for which you have not been paid. For the credit card accounts, it is advisable to set-up an individual account for each card the company uses to purchase items for the business. They also have several other liability accounts including loans and taxes from payroll.
We have discussed the Equity Account. Capital Stock is the same as Owner Contributions while Shareholder Distributions refers to Owner Draws.
Income refers to the invoices that you have created. Notice that they have two main streams of income, and each one of them has subaccounts. You may add subaccounts as long as needed. This is useful for tracking each income account.
If you buy a product or materials to make a product to sell in your particular business, then that is called Cost of Goods Sold. Some direct services such as subcontractors or shipments that are used to make that particular product belong to this cost.
Below is the expense section which is the largest section of the Chart of Accounts. If we take a look at the Automobile Account, you will notice there are three subaccounts. Let’s take Fuel as an example. Without classifying this into a subaccount, we will not be able to get the Fuel cost for a particular period if we put it all in Automobile. Notice also that there is a category for Insurance, Payroll Expense, Office Supplies, and so on. So you may add as many accounts as you need to get the information when you run reports.
When initially building your Chart of Accounts, you may not be able to set-up all the accounts you need. So when you are already working, and you happen to need to add an account, you can add it on that screen. You don’t need to go back in this set-up stage.
Cindy McGuckin
Cindy McGuckin is an IT trainer with over 20 years of experience. Cindy currently manages the IT Training Department at Trident Technical College, she's a Member of the Association of IT Professionals, Charleston, SC chapter and the Treasurer of the South Carolina Association of Continuing Higher Education.Cindy is a Microsoft Office and QuickBooks expert and her online courses have received hundreds of 5-star reviews. Her no-nonsense approach to teaching complicated topics makes her classes engaging and interesting.
