Lesson 3 of 6 · 3 min

Your accounts, in plain words

The chart of accounts is the list of headings your money is kept under. Five kinds, and most of it runs itself.

Assets: what you have
Liabilities: what you owe
Equity: the owner's share
Income: what you earn
Expenses: what you spend
The chart of accounts is the list of headings your money is kept under, like the pages of a register book with a name at the top. Every account is one of five kinds: what you have, what you owe, what's yours as the owner, what you earn and what you spend.
Accounts → Chart of accounts
app.ledger.vereon.tech
Your booksItemsReportsAccountsPayrollImportSettings
Chart of accounts
New account
Chart of accountsJournalsOpening balancesTax rates
Assets
1000 · Cash in hand
1100 · Accounts receivable · Ledger's
Liabilities
2000 · Accounts payable · Ledger's
Yours came set up for your market, numbered by kind: cash, bank, stock and what customers owe in the 1000s, suppliers and tax to pay in the 2000s, the owner's capital in the 3000s, sales in the 4000s, cost of goods sold in the 5000s, and rent, salaries, electricity and fuel in the 6000s.
Before
Accounts receivable
Ledger's own name for it
Kept by invoices and payments
Rename it
After
Customers owe us
The same account, the same history
Still kept by invoices and payments
Some accounts are marked Ledger's: what customers owe (accounts receivable), what you owe suppliers (accounts payable), stock, and tax on sales and purchases. Invoices, bills and payments post to them by themselves. Rename any of them, or give one a new code; they can't be deleted or archived, and no account changes its kind once it's made.
New account
Kind of account
Expenses
Code
6045
Name
Generator fuel
Add the account
You rarely pick an account while you work: an invoice knows where it goes. You choose one when you record an expense (rent, fuel, tea), and your accountant reads them in the reports. Need a new heading, say generator fuel? Press New account, pick its kind, and Ledger suggests a code; give it a name. A second bank is a money account, added in Banking.

Try it

Opens Ledger. You'll be asked to sign in first; new businesses get a free week, no card needed.

See your chart of accounts

Quick check

2 quick questions. Pick an answer and Leo will tell you how you did.

1. The rent you pay for the godown goes in which kind of account?

AssetsExpensesIncome

2. Can you rename Accounts receivable to "Customers owe us"?

Yes, and it keeps working the sameNo, Ledger's own accounts can't change at all

Try it in Ledger, free for a week

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