The five buckets

An account is a labeled bucket you track a running total for - “Checking,” “Rent,” “Sales.” Your Chart of Accounts is the full list of them. Every account is one of five kinds:

• Assets - what you own or are owed. Cash, equipment, money customers still owe you.
• Liabilities - what you owe. A loan, a credit-card balance, an unpaid bill.
• Equity - what’s left for the owner: assets minus liabilities.
• Revenue - money you earn from the work: sales, fees, services.
• Expenses - money you spend to operate: rent, supplies, software.

That’s the whole framework. Assets and liabilities and equity describe where the business stands right now. Revenue and expenses describe what happened over a stretch of time. Those two questions are the two main reports, which is the next lesson.

Parline sets you up with a sensible starter list of accounts during setup. You can rename, add, or hide any of them later.