In accountancy, an account is a label used for recording and reporting a quantity of almost anything. Accountancy or accounting is the measurement statement or provision of assurance about financial information primarily used by Lenders managers, Quantity is a kind of property which exists as magnitude or multitude Most often it is a record of an amount of money owned or owed by or to a particular person or entity, or allocated to a particular purpose. Money is anything that is generally accepted as Payment for Goods and services and repayment of Debts. It may represent amounts of money that have actually changed hands, or it may represent an estimate of the values of assets, or it may be a combination of these.
Types of accounts
- Asset accounts: represent the different types of economic resources owned by a business, common examples of Asset accounts are cash, cash in bank, building, inventory, prepaid rent, goodwill, accounts receivable. In Business and Accounting, assets are everything owned by a person or company (all tangible and intangible property that can be converted into cash.
- Liability accounts: represent the different types of economic obligations by a business, such as accounts payable, bank loan, bonds payable, accrued interest.
- Equity accounts: represent the residual equity of a business (after deducting from Assets all the liabilities) including Retained Earnings and Appropriations. In accounting terms after all liabilities are paid ownership equity is the remaining interest in Assets If valuations placed on assets do not exceed liabilities
- Revenue or Income accounts: represent the company's gross earnings and common examples include Sales, Service revenue and Interest Income. In business revenue or revenues is Income that a company receives from its normal business activities usually from the sale of goods and services Income, refers to consumption opportunity gained by an entity within a specified time frame which is generally expressed in monetary terms
- Expense accounts: represent the company's expenditures to enable itself to operate. In common usage an expense or expenditure is an outflow of Money to another person or group to pay for an item or service or for a category of costs Common examples are electricity and water, rentals, depreciation, doubtful accounts, interest, insurance.
- Contra-accounts: from the term contra, meaning to deduct, the value of which are opposite the 5 above mentioned types of accounts. Debit and credit are formal Bookkeeping and Accounting terms They are the most fundamental concepts in accounting representing the two records that one For instance, a contra-asset account is Accumulated depreciation. Depreciation is a term used in Accounting, Economics and Finance to spread the cost of an Asset over the span of several years This label represent deductions to a relatively permanent asset like Building.
Account represents financial and non-financial transactions of a firm, to know the total outcome of the investment made by investors.
See also Bookkeeping (also book-keeping or book keeping) is the recording of all Financial transactions undertaken by an individual or Organization (including A chart of accounts (COA is a list of all Accounts tracked by a single Accounting system and should be designed to capture financial information to make good financial In Accountancy, the double-entry
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