The chart of accounts and account groups
You will be able to: Name the five account roots and say which statement each appears on; Explain the difference between a ledger and a group, and why you cannot post to a group; Add a ledger in Zeyto and explain why accounts are made inactive rather than deleted.
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The chart of accounts is the list of every account your books use: cash, bank, customers, stock, sales, rent and so on. Every posting lands on one of them, and the Trial Balance, Profit & Loss and Balance Sheet are all built from them. In Zeyto you find it at Accounting, then Chart of Accounts.
The five roots
Every account belongs to one of five roots. The root decides which financial statement the account appears on.
| Root | What it holds | Statement |
|---|---|---|
| Asset | What the business owns or is owed: cash, bank, stock, customer balances | Balance Sheet |
| Liability | What the business owes: suppliers, VAT payable, advances received | Balance Sheet |
| Equity | The owners' stake: capital, drawings, retained earnings | Balance Sheet |
| Income | What the business earns: sales, other income | Profit & Loss |
| Expense | What the business spends: cost of goods sold, rent, salaries | Profit & Loss |
Ledgers and groups
An account is either a ledger or a group. A ledger (Kind: Posting) holds postings. A group is a folder that holds ledgers and other groups, so reports can add them up. You cannot post to a group, and a group does not add up the ledgers below it in the Balance column of the chart. Reports such as Group-wise report do the adding.
Zeyto's standard chart numbers its accounts in blocks. Here are some you will meet in this course:
| Code | Name | Root |
|---|---|---|
| 1000 | Cash in Hand | Asset |
| 1100 | Bank - Current Account | Asset |
| 1200 | Trade Receivables | Asset |
| 1300 | Inventory | Asset |
| 1400 | VAT Input | Asset |
| 2100 | Trade Payables | Liability |
| 2200 | VAT Output | Liability |
| 2300 | Customer Advances | Liability |
| 3000 | Owner's Capital | Equity |
| 3200 | Retained Earnings | Equity |
| 4000 | Sales | Income |
| 4100 | Sales Returns | Income |
| 5000 | Cost of Goods Sold | Expense |
| 6200 | Rent | Expense |
Notice that Sales Returns sits under Income: it is a deduction from sales, so the sales figure on your Profit & Loss is reduced by it.
Account Type: how documents find a ledger
When you submit an invoice, nobody tells Zeyto which ledger is 'the receivables account'. Zeyto looks for the active ledger whose Account Type is Receivable. Types such as Sales, VatOutput, Inventory and COGS work the same way. If two active ledgers carry the same type, Zeyto uses the one with the lowest code. If none exists, posting stops and names the missing type. A journal reaches any ledger by its code, whatever its type.
Adding and retiring accounts
- Press + New Ledger at the top right (or + New Group for a folder).
- Choose the Root. Zeyto suggests the next Code; change it if you wish. A code cannot be changed freely once saved.
- Type the Name, pick a Parent Group (it must be an active group with the same Root) and leave Kind on Posting.
- Press Create.
Accounts Zeyto created itself are marked System. Their posting rules depend on them, so they cannot be renamed, moved or switched off. There is no Delete for any account. To stop using one, set Active to Inactive: it stays in history and reports, but new postings refuse it.
Try it in the demo
- Open https://demo.zeyto.app/demo-app/ and sign in (user admin, password demoAdmin123). This is a public demo with sample data, so nothing you do there affects a real business.
- Open Accounting, then Chart of Accounts. Look at the four tiles at the top (Accounts, Groups, System accounts, Inactive ledgers).
- Type 'receivable' in the search box. Open the ledger and note its Root, Kind and Account Type, then go back without saving.
- Find a row marked System and try to see which fields are locked when you open it.
Public demo company, sign in as admin / demoAdmin123. Data refreshes nightly.
- Five roots: Asset, Liability and Equity appear on the Balance Sheet; Income and Expense on the Profit & Loss.
- You post to ledgers, never to groups. Groups exist so reports can add ledgers up.
- Documents find ledgers by Account Type. Accounts are made Inactive, never deleted.
Check yourself
5 questions on this lesson. Not timed, not the exam, and you can try again. Score 60% or more, and read the lesson, to complete it.
1. Which two roots appear on the Profit & Loss?
2. You cannot post a journal line directly to a group account; only ledgers take postings.
3. A ledger has postings in it and you no longer want to use it. What is the right action?
4. Which statements about System accounts are true? (Select two.)
Select all that apply.