Account Types

• Chart of Account (COA)


  A listing of all accounts used in the general ledger of an organization, used to aggregate information into financial statements, usually sorted by account number
• Account Types

  • Assets
  • Liabilities
  • Equity/Owner’s Equity/Partner’s Equity/Stockholder’s Equity
  • Drawing’s/Owner’s Drawing/Owner’s Withdrawal/Drawing Account
  • Income or Revenue or Sales
  • Expenses
• Assets


  Resources or things of value owned by a company as a result of company transactions, prepaid expenses, costs with future measurable value
• Liabilities


  Obligations of a company or organization, amounts owed to lenders and suppliers, may include amounts received in advance for future sales or services
• Equity/Owner’s Equity/Partner’s Equity/Stockholder’s Equity


  Ownership interest in a business, combination of liabilities and owner's equity
• Drawing’s/Owner’s Drawing/Owner’s Withdrawal/Drawing Account

  Withdrawals of a sole proprietorship's cash or assets made by the owner for personal use, recorded in a contra owner's capital or equity account
• Income or Revenue or Sales


  Fees earned from services, merchandise sold, recorded under accrual basis even if cash is not received immediately
• Expenses


  Costs matched with revenues on the income statement, operating expenses associated with the main business activity
• Nature or Normal Balances of Accounts

  • Two forms of Balance Sheet or Statement of Financial Position: Report Form, Account Form
  • Two forms of Income Statement or Statement of Comprehensive Income: Nature of Expense, Function of Expense
• Report Form of Balance Sheet is presented in a vertical position
• Account Form of Balance Sheet is presented in a horizontal position where assets are on the left side and liabilities and equity are on the right side
• All expenses are presented in compressed position in the Nature of Expense form of Income Statement or Statement of Comprehensive Income
• Forms of Income Statement or Statement of Comprehensive Income


  • General or administrative expenses
  • Selling or distribution expenses
• Assets, Liabilities and Equity (Balance sheet accounts) are also called as PERMANENT ACCOUNTS OR REAL ACCOUNTS.
• Drawings, Income and Expenses (Income statement accounts except drawings) are also called as TEMPORARY ACCOUNTS OR NOMINAL ACCOUNTS. They are part of closing entries every year so for the next accounting period, account titles under these types are in zero balances
• Owner's Equity is viewed as a residual claim on the business assets because liabilities have a higher claim. Owner's equity can also be viewed (along with liabilities) as a source of the business assets
• Owner’s Equity


  Viewed as a residual claim on the business assets because liabilities have a higher claim. Can also be viewed (along with liabilities) as a source of the business assets
• Common Stock


  Title of the general ledger account credited when a corporation issues new shares of common stock
• Preferred Stock


  Type of capital stock issued by some corporations, also known as preference stock
• Retained Earnings


  Cumulative amount of earnings since the corporation was formed minus the cumulative amount of dividends declared
• Owner’s Drawing

  Contra owner's equity account used to record the current year's withdrawals of business assets by the sole proprietor for personal use
• Revenue


  Amount a company receives from selling goods and/or providing services to its customers and clients
• Folio


  Reference number used in accounting to uniquely identify an entry in a journal or ledger
• basic accounting equation

  Assets = Liabilities + Owner's Equity
• Normal balance of Accounts

  Assets Up Debit

  Liabilities Up Credit

  Equity

  -capital Up Credit

  -drawing Up Debit

  Income Up Credit

  Expenses Up Debit
• A debit is an accounting entry that either increases an asset or expense account, or decreases a liability or equity account. It is positioned to the left in an accounting entry.
• A credit is an accounting entry that either increases a liability or equity account, or decreases an asset or expense account. It is positioned to the right in an accounting entry