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Oh the first thing that needs to be done when setting up your accounting system is to define your chart of accounts the chart of accounts is a roadmap for all of your financial transactions and the proper set up will help your organization generate more meaningful financial statements both internally and externally to outside funding sources in accounting 101 you learn that when you set up your chart of accounts you should assign a logical numeric order to all of your accounts there are five categories for all of the accounts in your system first there are assets assets are things that you own such as cash fixed assets prepaid expenses accounts receivable and other things that your business owns liabilities are what you owe accounts payable payroll taxes sales tax payable x notes payable and possibly deferred revenue then there are net assets finanash sets are the net worth of your business or in nonprofit parlance your fund balance the assets liabilities and net assets appear on your
