ACCOUNT TYPES IN PEACHTREE ACCOUNTING

Accounts Payable - This represents balances owed to vendors for goods, supplies, and services purchased on an open account. Accounts payable balances are used in accrual-based accounting, are generally due in 30 or 60 days, and do not bear interest.

Select this account type if you are setting up an account to record open vendor accounts or credit card (purchase) accounts.

Accounts Receivable - This represents amounts owed by customers for items or services sold to them on credit. Typically, accounts receivable balances are recorded on sales invoices that include terms of payment. Accounts receivable are used in accrual-based accounting.

Select this account type if you are setting up an account to record income that you have billed the customer for, but haven't received yet.

Accumulated Depreciation - This is a contra asset account to depreciable (fixed) assets such as buildings, machinery, and equipment. Recording depreciation is a way to indicate that assets have declined in service potential. Accumulated depreciation represents total depreciation taken to date on the assets.

Select this account type if you are setting up depreciation accounts for known fixed assets.

Cash - This represents deposits in banks available for current operations, plus cash on hand consisting of currency, undeposited checks, drafts, and money orders.

Select this account type if you are setting up bank checking accounts, petty cash accounts, money market accounts, and certificates of deposit (CDs).

Cost of Sales - This represents the known cost to your business for items or services when sold to customers. Cost of sales (also known as cost of goods sold) for inventory items is computed based on the inventory costing method (FIFO, LIFO, or Average Cost).

Select this account type if you are setting up cost-of-goods-sold accounts to be used when selling inventory items. (Costing methods not available in pfa, also "items" instead of "inventory items")

Equity-doesn't close - This represents equity that is carried forward from year to year (like common stock). Equity is the owner's claim against the assets or the owner's interest in the entity. These accounts are typically found in corporation-type businesses.

Select this account type if your business is a corporation and you want to record common stock or other equity intended as owner investment.

Equity-gets closed - This represents equity that is zeroed out at the end of the fiscal year, with the amount moved to the retained earnings account. Equity, also known as capital or net worth, is owners' (partners' or stockholders') claims against assets they contributed to the business.

Select this account type if your business is a proprietorship and you want to record dividends paid to partners or if your business is a corporation and you want to record dividends paid to stockholders.

Equity- Retained Earnings - This represents the earned capital of the enterprise. Its balance is the cumulative, lifetime earnings of the company that have not been distributed to owners.

You can have only one retained earnings account in Peachtree.

Expenses - This represents the costs and liabilities incurred to produce revenues. The assets surrendered or consumed when serving customers indicate company expenses.

Select this account type if you are setting up an account to record an expense such as operations expense, supplies expense, salary and wage expense, travel expense, or charity expense.

Fixed Assets - This represents property, plant, or equipment assets that are acquired for use in a business rather than for resale. These assets are called fixed assets because they are to be used for long periods of time.

Select this account type if you are setting up an account to record land, buildings, machinery, office equipment such as computers, printers, fax machines, copiers, vehicles such as delivery vans, company cars, etc.

Income - Income (also known as revenue) represents the inflow of assets resulting from the sale of products and services to customers.

Select this account type if you are setting up sales revenue accounts. It is common practice to create different income accounts for each category of revenue that you want to track (for example, retail income, service income, interest income, and so on).

Inventory - This represents the value of goods on hand and available for sale at any given time. Inventory is considered to be an asset that is purchased, manufactured (or assembled), and sold to customers for revenue.

Select this account type if you are setting up accounts to keep track of assets that are intended for resale. It is common practice to create different accounts for each category of inventory that you want to track (for example, retail inventory, raw materials inventory, work in progress inventory, finished goods inventory, and so on).

Long Term Liabilities - This represents those debts that are not due for a relatively long period of time, usually more than one year. Portions of long-term loans due and notes payable with maturity dates at least one year or more beyond the current balance sheet date are considered to be long-term liabilities.

Select this account type if you are setting up an account to record a long-term liability (for example, a long-term loan or non-current note payable).

Other Assets - This represents those assets that are considered nonworking capital and are not due for a relatively long period of time, usually more than one year. Notes receivable with maturity dates at least one year or more beyond the current balance sheet date are considered to be "non-current" assets.

Select this account type if you are setting up an account to record assets such as deposits, non-current notes receivable, and so on.

Other Current Assets - This represents those assets that are considered nonworking capital and are due within a short period of time, usually less than a year. Prepaid expenses, employee advances, and notes receivable with maturity dates of less than one year of the current balance sheet date are considered to be "current" assets.

Select this account type if you are setting up an account to record assets such as prepaid expenses, employee advances, current notes receivable, and so on.

Other Current Liabilities - This represents those debts that are due within a short period of time, usually less than a year. The payment of these debts usually requires the use of current assets.

Select this account type if you are setting up accrued expenses from a vendor, extended lines of credit, short-term loans, sales tax payables, payroll tax payables, client escrow accounts, suspense (clearing) accounts, and so on. (Payroll tax payables is not in PFA)

Payable Retainage - This represents any retainage that is being withheld on vendor invoices. It will be moved to accounts payable when you are satisfied that the vendor has completed the job and the retainage is released. Any account that has an account type of Payable Retainage may be used on the Purchases and Vendor Credit Memo Withhold Retainage tab.

Select this account type if you are setting up an account to record retainage withheld from a vendor.

Receivable Retainage - This represents any retainage that is being withheld on customer invoices. It will be moved to accounts receivable when the customer is satisfied that you have completed the job and the retainage is released. Any account that has an account type of Receivable Retainage may be used on the Sales Invoicing and Credit Memo Withhold Retainage tab. It's also used for releasing retainage in Progress Billing.

Select this account type if you are setting up an account to record retainage withheld from a customer.

Keep in Mind

Once you set up an account and start using it, you should be very careful about changing the account type. Changing the account type could cause your financial reporting to be incorrect or inconsistent. If you feel like you need to change the account type, you might want to make the account inactive and create a new account with the correct account type.

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