While looking at your chart of accounts, you come across some accounts that are unusual but necessary. What are these accounts, and what are they used for?
- Leaseshold improvements: These are listed in your assets section. Used specifically for when you are leasing a building. Any repairs to fixtures such as carpet, walls lights, etc are reflected in this account.
- Inventory purchases receiving: These are listed in your liabilities section. Used specifically for inventory that you are pre-paying for that you do not yet have in your warehouse.
- Accrued revenue: These are specifically revenue that you do not account for until it has been earned. Usually, it is when the items are shipped out to the customer.
- Customer deposits: These are listed as liabilities. Customer deposits are deposits from customers for goods they have not yet fully paid for.
- Accumulated depreciation: These are listed as a contra-asset, meaning it offsets the assets on the balance sheet. This account is used when depreciation is accounted for on the assets in your company.
- Owners drawing: This is listed in your owner's equtiy section. This account, used for personal draws, investments, personal purchases, utilities, is considered a mulit purpose account.
All of these accounts, only sometimes always required in your accounting, are unique yet easy to understand once you know their purpose.