The five natures every account group rolls up to: Assets, Equity, Liabilities, Income and Expenses. It is the shortest list in the product, and the financial statements are built on it.
When to use it
Almost never. Your company starts with the five standard entries, and they are meant to stay as they are. You come here to look, or to add a schedule code for statutory reporting.
Before you start
You need an admin role, because this is a setup list, not day-to-day data. Keep in mind that account groups point at these entries, and ledgers point at account groups. A change here reaches every account in the books.
Where to find it
Setup > Accounts Setup > Accounts Group Type.
The fields on this screen
| Field (on screen) | What to enter | Required |
|---|---|---|
| Account Group | One of Assets, Equity, Liabilities, Income or Expenses. Reports match this exact name, so do not reword. | No |
| Nature | (not explained yet) | No |
| Schedule Code | (not explained yet) | No |
How it works
Nothing happens when you save. The effect shows up later, wherever a report has to decide what kind of account it is looking at.
The reports match the five names exactly, letter for letter:
- The Trial Balance and the financial statements split accounts into a balance sheet side and a profit and loss side. They do it by looking for the words Assets, Equity and Liabilities against Income and Expenses.
- The monthly profit and loss summary selects only the accounts whose nature is Income or Expenses.
- The year-end close carries Assets, Equity and Liabilities forward into the next year, and closes Income and Expenses into equity.
So renaming Income to Revenue, or Expenses to Expense, does not just rename a heading. Those accounts disappear from the profit and loss, the monthly summary and the year-end close, and the close then carries them forward as if they were balance sheet accounts. Existing entries are not changed, but every report over them changes at once.
Adding a sixth entry of your own has no effect either. Nothing looks for a sixth name, so accounts grouped under it are counted by none of the statements above.
Tips and common mistakes
- Do not rename these five. If you need different wording on a printed statement, change the statement layout, not this list.
- Do not delete one, even if it looks unused. Account groups point at it, and the reports look for it by name.
- The Nature and Schedule Code boxes are for your own statutory grouping. Nothing in the standard financial statements reads them today.
Related guides
See also Account Group, Ledger, Trial Balance, Financial Statement and Accounts Ledger Type Setup.