Asset and liability accounts are collectively referred to as Balance Sheet Chart of Accounts. This is because the information collected on them is used to prepare your business Balance Sheets. You will set up current and fixed asset accounts and current and long-term liability accounts. Types of current asset accounts are cash, short-term notes receivable, accounts receivable, inventory, and prepaid expenses. Fixed assets may include equipment, vehicles, buildings, land, long-term notes receivable, and long-term loans receivable.
Types of current liability accounts are short-term notes payable (money due within one year), short-term loans payable (money due on a loan within one year), unpaid taxes, and unpaid wages. Long-term liability accounts may be long-term notes payable (money due more than one year in the future) or long-term loans payable (money due on a loan more than one year in the future). Finally, you will need an owner’s equity account to tally the ownership value of your business. Choose the asset and liability accounts that best suit your business and assign appropriate numbers to each account.
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