Lesson 1-10: This free QuickBooks tutorial will show you haw to add a subaccount to the Chart of Accounts. Subaccounts allow transactions to be posted more precisely by using subcategories for the main account categories. For example, all payments for water, electric and gas are allocated to the utility account. However, to establish precise reporting, it would be better to create a subaccount for each utility expense. In most real-life cases, there would be a subaccount created for payments made to each individual utility company such as water, gas and electric utilities. In this example, we will create a utilities subaccount which will be called Electricity.
Here is a summary of the steps that were performed in the video tutorial.
1. Select Chart of Accounts from the QuickBooks homepage.
2. Click Account at the lower left corner of the window, then click New.
3. Choose the account type. In this example, we will choose an expense account.
4. This is the most important step and it covers three main parts. First, we must determine what the account number will be. The parent account is Utilities and that account number is 68,600. A subaccount number should be slightly higher than the parent account, so I will choose account number 68,610. Next, we must determine the account name. Electricity is a type of utility, so that will be the name of the subaccount. The next step is the most important when creating subaccounts. Click the box next to the Sub Account Of field to confirm that the new account will be a subaccount. Next, choose the parent account, in this case it will be Utilities. After you have filled all of the required fields, click the Save and Close button at the bottom right.
5. Finally, you can see that the sub account has been created. All sub accounts are indented and listed below their parent account.