Root type

Every account inherits one of five root types from the top of its branch: Asset, Liability, Equity, Income or Expense. The root is what the statements read, not the account name. Asset, Liability and Equity accounts flow to the Balance Sheet and carry their balances forward; Income and Expense accounts flow to the Profit and Loss and are reset by the Period Closing Voucher. The root also fixes which side is normal: assets and expenses normally hold a debit balance, the other three a credit balance. You cannot change the root of an existing account; if a ledger sits under the wrong root, make a new one and move the balance by Journal Entry.

1. 01Go to Accounts Setup > Chart of Accounts and open any account.
2. 02Read the Root Type field; it is filled from the parent and cannot be edited.
3. 03To see what a root type controls, open Financial Reports > Profit and Loss Statement: only Income and Expense roots appear.
4. 04Open Financial Reports > Balance Sheet: only Asset, Liability and Equity roots appear.
5. 05If an account sits under the wrong root, create the correct one and transfer the balance by Journal Entry.

Set once when you create an account; everything under a root inherits it.

Office Rent has root type Expense, so it appears on the Profit and Loss Statement, not the Balance Sheet.