Company Setup and Settings
What this domain tests
Setup questions ask whether you know which settings are global, which are module-specific, and how an early choice ripples into transactions and reports.
Core concepts
Separate company-level settings (legal name, address, fiscal year start, tax form/entity type, home currency) from preferences under the gear icon: Sales & Customers (invoice numbering, payment terms, default items), Expenses (billable tracking, purchase orders), Accounting (chart of accounts, account numbers, default accounts, closing the books), and Advanced (user permissions, automation, categories).
The chart of accounts is the backbone. Every account carries a type (asset, liability, equity, income, expense) and a detail type that decides where it prints on the balance sheet or P&L. Items are not accounts: a service or non-inventory item posts to an income account plus a COGS or expense account that you designate.
Traps that show up in questions
- Turning on account numbers after setup leaves existing accounts unnumbered until each is edited.
- Assuming entity type is freely changeable; tax-form changes can alter sales tax and 1099 behavior.
- Confusing classes and locations with sub-accounts. Class tracking must be enabled before it can be used on entries.
- Enabling multi-currency later does not convert historical transactions to the new currency.
- Deleting list entries that have transactions attached; make them inactive instead.
Worked example
You create a new company and want utilities to appear inside operating expenses. Set the account type to Expense and the detail type to Utilities. If you instead pick Other Expense, the balance drops below operating income and every margin calculation you run shifts.
Rule of thumb: choose type first, detail type second, and only then name the account.