Select Account Type dialog box: options and information

Account types are different categories that describe the various accounts in your Chart of Accounts. Select an account type that you want to create to indicate on what type of report the information appears and where.

Account types comprise two basic categories: Income and Expense accounts or Balance Sheet accounts. Income and Expense accounts are used to determine the profitability of a company. The information appears on Profit and Loss reports, Cash Flow Statement reports, job profitability reports, and various sales reports. Balance Sheet account information is reflected on Balance Sheet reports, Cash Flow Statement reports, inventory reports, and various banking reports.

Open the dialog box

  • On the Company menu, click New Account.

Dialog box options

The dialog box contains the following options.

Option Description
Income Revenue from sales of goods and services to your company's customers.
Other income Revenues coming into your company that do not relate directly to the main purpose of your company (for example, interest income).
Expense Expenses that your company is using to operate the business. For example, operating expenses include wages, rent, supplies, advertising, or utilities.
Other expense Expenses that do not relate to the normal course of your company's business (for example, interest payments on long-term debt).
Cost of goods sold Cost of goods, materials, or services that are directly related to the generation of your company's sales revenues.
Cash Cash items, such as petty cash or undeposited funds.
Bank Accounts that are considered liquid or easily convertible to cash (for example, bank accounts, short-term investments, and some securities).
Other current asset

Assets other than liquid assets that have a life of less than one year (for example, accounts receivables and inventory).

 Note   Even though accounts receivable is a current asset, you do not have to set up accounts receivable in Other current assets. When you create a company, Microsoft Office Accounting 2008 creates a system account named Accounts Receivable, which is categorized as an Accounts Receivable account type.

Inventory asset Value of goods on hand at a specific time. Inventory assets are purchased or manufactured to sell to your customers.
Other asset Assets of a minor type that are classified outside of the current or fixed asset categories. They can include investments or intangible assets, such as goodwill or patents.
Fixed asset Equipment, property, or plant assets that are purchased to use in your company rather than for resale. Fixed assets can be depreciated over various lengths of time depending on their type. Your company can absorb the expense over a period of time.
Credit Card/Line of Credit Current obligations to a financial institution that are created by using your credit card or line of credit for purchases or expenses.
Payroll liability Tax obligations that the company owes to federal and state tax agencies as a result of running payroll.
Current liability

Obligations due within one year or the normal operating cycle of your business. Accounts payable, short-term notes, accrued liabilities, and tax accruals are examples of this type of account.

 Note   Even though accounts payable is a current liability, you do not have to set up accounts payable in Current liabilities. When you create a company, Office Accounting 2008 creates a system account named Accounts Payable, which is categorized as an Accounts Payable account type.

Long-term liability Obligations of greater than one year or the normal operating cycle of your business. Mortgages, long-term notes, or non-current portions of customer warranties are examples of this type of account.
Equity An account to record the difference between assets and liabilities. This category is also known as net worth, shareholders' equity, or net assets on company balance sheets. Another account of this type is Retained Earnings, which records the cumulative amount of net income left in the company.

Related topics

Find company accounts in a list
Merge accounts
About system accounts
About payroll accounts
 
 
Applies to:
Accounting 2008