Leads, Potentials and accounts...how do they fit together?

Leads, Potentials and accounts...how do they fit together?

I have just started using ZOHO CRM and before I implement it for the whole sales force I want to make sure I set up the process properly.

Mquestion is as follows: what is the relationship between LEADS, POTENTIAL and ACCOUNTS.

When I add a lead, and then send them a price proposal for a new project it becomeas a 'potential', correct?

When I convert the potential project, does it become an account?

Do I register cases/notes/meetings after I have converted the project/client under the 'potential' (closed won). Or do I add it underneath the 'account'.

Lastly, we do a lot of projects with the same clients. So should they be registered as separate accounts, or as separate potentials under 1 account.

Thanks for any help!

Mike