Zoho Books uses five primary account types. Assets and Liabilities appear on the Balance Sheet. Income and Expenses appear on the Profit and Loss Statement. Equity appears on both, as Retained Earnings ties the two statements together. When you create a new account, selecting the correct type is critical. Misclassifying a bank account as an expense will distort your P&L rather than showing it on the Balance Sheet.
Within each primary type, Zoho Books offers sub-types. Under Assets: Current Asset (converts to cash within a year), Fixed Asset (long-term physical resources), and Other Asset. Under Liabilities: Current Liability and Long-Term Liability. These sub-types control where line items appear within a report, helping readers assess liquidity and solvency at a glance.
The sub-type “Cost of Goods Sold” under Expense is critical for inventory businesses. Zoho Books uses it to calculate Gross Profit separately from operating expenses on the P&L.
Account type governs whether a debit entry increases or decreases the account balance. For Asset and Expense accounts, debits increase the balance. For Liability, Equity, and Income accounts, credits increase the balance. Zoho Books enforces this automatically when you post transactions.
An account type in Zoho Books is a classification assigned to each account in the Chart of Accounts that determines which financial report it appears on and whether a debit or credit increases its balance.
Zoho Books uses five primary account types: Asset, Liability, Equity, Income, and Expense, each with sub-types such as Current Asset, Fixed Asset, Long-Term Liability, and Cost of Goods Sold.
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