What is the Chart of Accounts?

The Chart of Accounts (CoA) is a unique list of all the accounts in FreshBooks in which transactions are recorded. The accounts that appear in the CoA will also appear in the General Ledger Report. Where the CoA provides a great overview of your business’ accounts, the General Ledger shows you the details of every transaction going in and out of those accounts.

• Access Chart of Accounts
• Accounts
  • Parent Accounts
  • Accounts
  • Add or Edit Custom Accounts
• Default Chart of Accounts
• FAQs

Access Chart of Accounts

The Chart of Accounts can be accessed using these steps:

1. Click on the Accounting section
2. Then click on the Chart of Accounts sub-tab underneath Accounting.
   
   

To adjust your view of the CoA, click on the filter icon next to All Accounts. From there, you can change:

• Date Range - Choose from This Year, This Quarter, Last Quarter, or Custom to enter a date range instead (Jan 1, 2018 is the earliest date we can retrieve data from currently) - if you’ve changed your Fiscal Year End date, you can also choose from the extra options
• Currency - Choose between individual currencies

If you need to look at transactions more closely, in the top right corner, click on More Actions, and then click on General Ledger to be taken to the General Ledger Report.
 

Accounts

The CoA is organized by the industry standard, Generally Accepted Accounting Principles (GAAP), and contains the below account types:

Balance Sheet Accounts

• Assets - what your business owns
• Liabilities - what your business owes to others
• Equity - ownership, including investments into and withdrawals from your business

Income Statement Accounts

• Revenue - income your business earns
• Expenses - purchases made for your business

All accounts are organized into these two types - Parent Accounts and Accounts:

Parent Accounts

• Each Parent Account has an icon and has accompanying Accounts underneath, and cannot be edited or deleted
• A default unique multi-digit Account Number is automatically assigned based on the account type
• All the balances listed in each Account underneath makes up the grand total of the Parent Account’s FreshBooks Balance
• Transactions can only be posted to Accounts underneath a Parent Account, not directly to the Parent Account
   

Accounts

• Also known as Default Accounts, these appear underneath each Parent Account and cannot be edited or deleted
• A default unique multi-digit Account Number is automatically assigned based on the account type
• Transactions are recorded in every Account where applicable - common actions like creating an Invoice and applying a Payment will automatically post transactions to Accounts in your CoA
• Expenses can be assigned directly to Accounts in the Expenses section (where Accounts are referred to as Expense Categories)
• When connecting a Bank or Credit Card account in Bank Connections or Bank Reconciliation, a default Account will automatically be created
  • A Bank Account is created under the Cash Parent Account
  • A Credit Card Account is created under the Credit Cards Parent Account
     

Add or Edit Custom Accounts 

• Only Accountants invited to your account can create Custom Accounts, including a multi-digit Account Number for each
• Custom Accounts can be created under any Parent Account
• Once created, Custom Accounts can be edited (Name and Account Number suffix only) but cannot be deleted
• If creating a Custom Account for a particular type of Expense, create it as a Custom Expense Subcategory instead - the Business Owner can then assign Expenses to that Subcategory easily (Accountants cannot write a JE to a Custom Subcategory directly)
• To post transactions to a Custom Account, your Accountant can create Journal Entries instead

To create a Custom Account, have your Accountant follow these steps:

1. As an Accountant, click on the Accounting section
2. Then click on the Chart of Accounts sub-tab underneath Accounting
3. Click on More Actions
4. Then select Add New Account
5. Enter in a Name for the Custom Account
   
   
6. Choose the Parent Account to sort this new account under
7. Enter in the Account Number
8. Click on Save to finish.

To edit a Custom Account: 

1. As an Accountant, in the Chart of Accounts, click on the Custom Account you created
2. Click on More Actions (this only appears on custom accounts)
3. Click on Edit Account
4. Make the changes as needed and click Save to finish.
    

Default Chart of Accounts 

Below is the list of default Parent Accounts and Accounts that make up your Chart of Accounts. Note that:

• Bank Accounts & Credit Card Accounts are automatically added when you set an Opening Balance in your Bank Rec
• Expense Categories will appear as Expense Accounts on your CoA as Expenses are assigned; any Expenses assigned to Subcategories will appear under the Expense Category/Account in the CoA instead
• Expenses Marked as Billable are automatically Marked as Costs of Goods Sold (COGS) - a new COGS Account for that Expense Category will be created in the CoA if one does not exist
• Any Sales Tax rates created are automatically added to Liabilities - Taxes Payable as the tax rate is applied to a billed Service or Item sale and to Expenses - Tax Paid Accounts as the tax rate is applied to an Expense

FAQs

Why are my Expense Subcategories not appearing in the Chart of Accounts?

Expense Subcategories do not appear as unique accounts in the Chart of Accounts. Instead, these Expenses will be included in the default Account they belong to (also known as an Expense Category). The complete list of Expense Categories and Subcategories can be found here.

Can I change the Account that is affected when I enter an Expense or apply a Payment in FreshBooks?

When you enter common transactions like Expenses or Payments, FreshBooks automatically posts accounting entries to specific default Accounts in your CoA.

The process of completing Bank Reconciliation (Bank Rec) will assign transactions to the correct Account in the CoA. Your Accountant can also reassign any transaction entered to other Accounts in the CoA with Journal Entries.

Why is there a large balance in my Petty Cash Account?

FreshBooks uses Petty Cash as a clearing account, with many transactions flowing through it before they are reconciled in Bank Reconciliation (Bank Rec). If not using Bank Rec, the Petty Cash account is used as a catch-all for transactions instead of a Bank Account or Credit Card Account.

Can I import an existing Chart of Accounts?

While you cannot import an existing Chart of Accounts from another source, your invited Accountant can add Custom Accounts under any Parent Account.

Where do I enter the beginning balances in my Chart of Accounts if I’m moving my finances from a different accounting system?

Account Balances can be added to your CoA by having your Accountant create Journal Entries to the specific default Accounts. In the notes of the Journal Entries, include the cut-off date of when you made the transition from the old system to FreshBooks.