Account Classification including Cash Flow, Reconcile, and 1099 format settings

CLASSIFICATION

ACCOUNT TYPE

REQUIRED

Accounts Payable

Liability

Yes

This classification is used to record the entire list of outstanding bills owed to vendors. This classification is used in Expenses > Vendors > Advanced tab.

Accounts Receivable

Asset

Yes

This classification is used to record the entire list of all customer's outstanding invoices. This classification is used in Sales > Customers > Advanced tab .

Accumulated Depreciation

Asset

With depreciation

This account records the year to date accumulated depreciation and is a contra account to the Depreciable Asset account. See Depreciation Module.

Bank Account

Asset

Yes

Any bank account such as Savings, Checking or Payroll accounts should be set with this classification. All accounts with this classification will be listed in the Expenses > Bank Account window. To be able to use an account to pay expense invoices or to generate checks, it must be classified as a bank account or a Cash account (see next classification). See Expenses > Vendor Payments.

Cash

Asset

Yes

Cash accounts are used similarly to bank accounts except that the monies are not in a bank but are kept in the office or a safe. All payments received from customers are placed into a cash account set in Sales > Customer Payments. You must process a deposit to transfer the monies from the cash account and place into a bank account. In summary, the cash account reflects the monies (cash, checks, or credit card payments) that have been received, but have not yet been deposited into a bank account. It is best to reconcile these accounts on a regular weekly or daily basis. Use Sales > Deposits and Sales > Reconcile Cash Accounts windows to reconcile cash accounts.

Depreciable Asset

Asset

With depreciation

This account records the total value of assets that are being depreciated and is used within the depreciation process.

Depreciation Expense

Expenses

Depreciation expense is posted from the depreciation process or is posted manually on a monthly or annual basis. As depreciation is accumulated in the depreciation asset contra account, the expense amount is posted to an account with this classification.

Credit Card Account

Liability

Yes

This classification is processed similarly to the Bank Account classification but is attached to a liability account rather than an asset account. See Bank Account Classification list above.

General Overhead Expense

Expenses

This classification is widely used for overhead costs such as utility costs, supplies, maintenance, etc. This classification should not be used for overhead labor such as clerical labor or general maintenance labor (See Overhead Labor classification) or for payroll overhead expenses such as payroll benefits or company taxes (See Payroll Overhead classification).

Inventory

Asset

Yes

This classification should be used to record the value of items whose count is tracked within the inventory item entry window. This class is used within Inventory > Product Catalog > Advanced tab. All inventory values that are not listed within the inventory system should be classed as Other Inventory rather than Inventory.

Inventory Variance

Expenses

The variance classification is used within the inventory system when the system is tracking the count and value of specific inventory items. This classification is not used if inventory counts are not being tracked. See Inventory > Product Catalog > Advanced tab.

Investments

Asset

No

This classification includes any company investments purchased such as stocks, metals, futures, etc.

Loans Payable

Liability

No

This classification Identifies any monies owed to a financial institution or individual.

Loans Receivable

Asset

No

Any private monies loaned to someone should be classified as Loans Receivable.

Miscellaneous Income

Revenue

Misc. income is revenue gained that is not generated during the regular course of business such as interest income etc.

Other Inventory 

Asset

Yes

See Inventory classification for details.

Overhead Labor

Expenses

This classification identifies overhead labor such as clerical labor or general overhead labor. This classification should not be used for other payroll costs such as payroll taxes, company payroll deductions, insurance etc. See also Payroll Overhead Expense classification.

Payroll Overhead Costs

Expenses

Use this classification for payroll overhead expenses such as payroll taxes, company payroll deductions, insurance, and employee benefits (such as vacation or holiday pay).

Payroll Payable

Liability

With labor module

An account with this classification must be set for every employee within payroll. See Labor > Workers > Advanced tab.

Payroll Tax / Deduction

Liability

With labor module

This classification identifies an accrued tax or deduction account. This account reflects the amount of tax or other deductions that has been deducted from an employee's paycheck but has not been paid to the proper vendor. The Payroll Tax / Deduction classification should not be used for company tax expense accounts since they are not accrued accounts. See Labor > Taxes / Deductions > General tab.

Prepaid Expenses

Asset

No

This classification identifies any down payments made to vendors for products not yet delivered or any payment made toward a purchase order that has not been invoiced. This classification is used in Expenses > Vendors > Advanced tab.

Purchases

Expenses

The Purchase classification should be used for accounts recording purchased items or services that are resold. The purchase accounts are often in the cost of sales folder.

Retained Earnings

Capital

Yes

Sales

Revenue

This classification should identify all sales or revenue gained during the regular course of business and should not be confused with miscellaneous income.

Sales Tax

Liability

Yes

This classification identifies the accrued sales tax account and is similar to the Payroll Tax / Deduction Classification listed above. See Sales > Sales Tax Rates > General tab.

Sale of Assets

Revenue

When a depreciable asset is sold, the total sale price should be posted to this class of account.

Subcontract Service Labor

Expenses

This classification should be used in payroll for labor that is being rendered for a fee and should not include general maintenance labor costs. The accounts associated with this classification are normally part of the cost of sales folder since this service labor is being "sold" to customers.

Capital Investments

Capital

No

This classification should be used to record owner's or stockholders' equity. Capital investment accounts may include various corporate stock or paid-in capital.

Capital Withdrawals

Capital

No

This classification should be used to record capital withdrawals by ownership.