Bookkeeping For Dummies, 2nd Edition

Chapter 3

Outlining Your Financial Road Map with a Chart of Accounts

In This Chapter

Introducing the Chart of Accounts

Reviewing the types of accounts that make up the chart

Creating your own Chart of Accounts

Can you imagine the mess your checkbook would be if you didn’t record each check you wrote? Like me, you’ve probably forgotten to record a check or two on occasion, but you certainly learn your lesson when you realize that an important payment bounces as a result. Yikes!

Keeping the books of a business can be a lot more difficult than maintaining a personal checkbook. Each business transaction must be carefully recorded to make sure it goes into the right account. This careful bookkeeping gives you an effective tool for figuring out how well the business is doing financially.

As a bookkeeper, you need a road map to help you determine where to record all those transactions. This road map is called the Chart of Accounts. In this chapter, I tell you how to set up the Chart of Accounts, which includes many different accounts. I also review the types of transactions you enter into each type of account in order to track the key parts of any business — assets, liabilities, equity, ...