What is a GL account 'Code'?

The 'Code' field gives additional properties to GL accounts so that the software can do more work behind the scenes.  There are two separate times when a user may enter values into the 'Code' field.

The first use of the 'Code' field is to identify three specific GL accounts.  These accounts are: Accounts Payable, Accounts Receivable and bank account.  The 'Code' field is used to select these accounts.  When the Accounts are selected, the software can make the correct account updates at the time a check is printed or an invoice is issued.

Let's look at each of the three GL accounts.

'Accounts Payable'

The 'Account Payable' is a GL account of the type, liability.  Liabilities are money owed.  This account is impacted when a check is printed.

Create the 'Accounts Payable' using the GL accounts window.  The GL account Type, liability, begins with the number, '2'.

When creating an 'Accounts Payable' select 'AP' from the 'Code' field.  This identifies the GL account as an 'Accounts Payable.'

Below is a slide of the GL accounts window.  The 'Accounts Payable' account is highlighted.

It is possible to have more than one 'Accounts Payable' GL account.  The number of AP accounts depend on the level of detail required for money leaving the business for payments.

'Accounts Receivable'

The Accounts Receivable is a GL account of the type, 'Asset'.  It is impacted when money enters the business, such as, receiving payment for an invoice.

The 'Accounts Receivable' is an 'asset' type.  It begins with the number, '1'.  When creating an 'Accounts Receivable' select the code, 'AR' from the field.

In the next slide, an 'Account Receivable' is shown.  It is highlighted.

Similar to the 'Accounts Payable', there may be more than one 'Accounts Receivable' GL account.  Again, this depends on the level of detail required by your team.  

'Bank'

The third GL accounting code is 'Bank'.  Like the name implies, this code is used to identify a bank account.  The bank account is impacted when payments are made or received.  The GL account Type is Asset.

Below is a slide illustrating a GL account of the code, 'Bank.'

There can be many bank accounts in a business and as a result the accounting system can have many GL accounts of the type, 'Bank.'

The 'AP', 'AR' and 'Bank' codes help the software identify the appropriate accounts impacted when entering and printing checks and also issuing invoices and receiving payments.  

When you are setting up your GL accounts, remember to include at least one 'Accounts Payable', one 'Accounts Receivable' and one 'Bank' account.  

Related topics:

Learn more about the other GL accounts fields and how GL accounts impact each other.  Read, 'What are the 'AR accounts' and 'AP accounts' fields?'

For more information about GL accounts, read, 'GL Account Entries explained.'

Return to the main FAQ page.