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      What is the Chart of Accounts?

      The Chart of Accounts (CoA) is a unique list of a business’ accounts, organized by assets (what your business owns), liabilities (what your business owes to others), income (the business’ revenue) and expenses (purchases made for your business).

      CoAs are useful for organizing your accounts so you can work smarter with your accountant, making it easy to see the business’ financial situation at the present time.

      Accounting reports like the Chart of Accounts are available on the Plus and Premium plans only.


      The Chart of Accounts is only accurate with data from January 1, 2018 onwards.



      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.

      Chart of accounts with sample data.
      There are a few things you're able to change when viewing the Chart of Accounts. Click on the drop down next to All Accounts, and you'll see some filters:
      Filters for chart of accounts.

      • Date Range - Within the dropdown, choose one of the preset ranges (This Year, This Quarter or Last Quarter) or choose a Custom date range instead (Jan 1, 2018 is the earliest date we can retrieve data from currently)
      • Currency - Choose between individual currencies

      Clicking More Actions in the top right will give you easy access to another useful report, the General Ledger.


      Parent Accounts

      FreshBooks uses Generally Accepted Accounting Principles (GAAP) friendly Parent Accounts right from the start. These are set up as defaults and cannot be edited or deleted. Each Parent Account in the list is assigned a multi-digit number to help identify the account type.

      These Parent Accounts are affected by certain events in your FreshBooks account:

      • Cash - Other Income, Payments Collected, Bank Accounts
      • Accounts Receivable - Your unpaid invoices (except Drafts)
      • Revenue - Sales - Paid invoices
      • Revenue - Billed Expenses - Expenses that have been rebilled
      • Operating Expenses - Categories of Expenses you’ve tracked

      Note: Only Accountants invited to your account can create custom accounts under Parent Accounts to help organize your financials.


      Accountant Access

      If you invite an Accountant to your account, they also have extra features to add and edit custom accounts under Parent Accounts, as well as create Journal Entries:

      Add or Edit Custom Accounts

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

      If you need to edit a custom account: 

      1. 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.

      Note: Once a custom account is created, it can't be deleted.

      Create Journal Entries

      If there are certain entries that need to be recorded or corrected in your FreshBooks account, the Accountant can create entries manually on your behalf (like Owner's Draw for example). Creating a Journal Entry can be done with the below steps:

      1. Click on the Accounting section
      2. Then click on the Chart of Accounts sub-tab
      3. Click on New Journal EntryNew journal entry box with fields.
      4. Fill out the Entry Name, Date and Currency
      5. Enter in a Description for easy reference
      6. Choose the Accounts and enter in the amount in either the Debit or Credit field (one Account should be debited and one Account should be credited)
      7. Use the Add a line button if you need to add more entries
      8. Click Save to finish and the Journal Entry will be recorded.


      How do I add more detail or fix an error to one of my Journal Entries?

      Journal Entries are historical and permanent records of transactions occurring inside the account. This ensures your books remain accurate. So to add more detail or correct an error, you would use this workflow:

      1. Create a Journal Entry to reverse the error/incomplete entry (as in, the opposite of what’s been inputted in for debits and credits)
      2. Then create your new Journal Entry where you re-enter in the correct entry (to fix the error or add more detail).

      If you corrected one entry, this results in three Journal Entries, with the final one being the updated and corrected version. The ending balance will reflect the correct amount as usual.


      How can I record disbursements (e.g., Owner’s Draws)?

      Whenever you pay out funds to run a business (like Owner’s Draw), or pay dividend payments, these are often called disbursements. These can be logged by an Accountant invited to your account.

      Using the steps above to create Accounts, create a new Account (like Owner’s Draw under the Owner’s Equity Parent Account), then log the disbursement as Journal Entries. In this example, the Accountant would log it as a credit to Cash and a debit to the Owner’s Draw account.


      How do I record assets purchased that are not operating expenses (e.g. depreciation)?

      Currently depreciation is not calculated automatically. You can record depreciation in one of two ways:

      Accountant: If you have an Accountant invited, they can create a new Account called Depreciation and log any assets as Journal Entries instead.


      Can I change where the account is credited when I enter the expense in FreshBooks? 

      For example, if you pay for your Expenses with a credit card sometimes and with a chequing account other times, they all show up under Cash in your Chart of Accounts.

      These Expenses will only be moved from a Cash Asset to a Liability once you complete Bank Reconciliation and match those transactions.

      If you’ve accidentally matched to the wrong Expense (e.g., a chequing transaction was matched to an expense that was imported in from your Credit Card account), you can use the steps here to un-match and free up the expense. Then you can match the expense in your Credit Card account (via Bank Reconciliation) instead.

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