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Why Are Accounts Divided Into Categories

Grouping accounts into Assets, Equity, Expenses, Income, and Liabilities keeps your books organized and lines up with how financial statements are structured.

Steps

  1. Each account is assigned one category when it's created, shown in its Type column.
  2. Categories make it possible to use the tab filters and to view accounts in logical sub-groups (e.g. "Cash and Bank" under Assets) with "Groups" turned on.
  3. This same categorization is what drives your financial reports, like splitting assets from liabilities on a balance sheet.

Related Articles

  • What Is the Difference Between Assets, Liabilities, Income, Expenses, and Equity?
  • What Account Types Are Available in the Chart of Accounts?
  • How Do I See Asset Sub-Categories Like Cash and Bank?

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