In QuickBooks, there are three very important LISTS that provide the framework for all of your transactions.  When encountering account coding difficulties within the QuickBooks transactions, you should refer to your lists for an understanding of your basic accounting set up.

CHART OF ACCOUNTS is the primary list to which all accounting processes will attach themselves. The reason your trial balance, income statement, and balance sheet look the way they do is because of the account coding details found in the chart of accounts.  Whenever you encounter a new type of transaction to record in QuickBooks, you should check this list to determine what account to tag to your transaction.

ITEM LIST OR SERVICE ITEM LIST is the source of all the services and items sold to customers used by the invoicing process.  Each item is tagged to an account in the chart of accounts, so when you use these items, the transactions will end up in the account that you tagged.  You can control to which accounts your sales/revenue, cost of sales and inventory transactions are posted.

PAYROLL ITEM LIST is the framework for all components affecting your payroll process. By correctly coding each payroll item with the proper account when your list is established, you can prepare meaningful payroll and labor distribution reports. This affects the relationship between your payroll data and the financial statements.

When we prepare the Client Recommendations upon completion of our periodic review of your financial data, we often refer you to these lists to make changes so that incorrect coding encountered does not repeat in future periods.

Contributed by Susan W.