TYPES OF MAJOR ACCOUNTS

• Account

  • the basic storage of information in accounting
  • a record of the increases and decreases in a specific item of asset, liability, equity, income or expense.
• Five Major Accounts

  1. Assets
  2. Liabilities
  3. Equity
  4. Income
  5. Expenses
• Assets

  • are the resources you control that have resulted from past events and can provide you with economic benefits
• Liabilities

  • are your present obligations that have resulted from past events and can require you to give up economic resources when settling them
• Equity

  • is assets minus liabilities
• Income

  • are increases in economic benefits during the period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to investments by the business owners
• Expenses

  • are decreases in economic benefits during the period in the form of outflows or depletions of assets or increases of liabilities that result in decreases in equity, other than those relating to distributions to the business owners
• Balance Sheet Accounts

  1. Assets
  2. Liabilities
  3. Equity
• Income Statement Accounts

  1. Income
  2. Expenses
• Chart of Accounts

  • a list of all the accounts used by a business
• Common Account Titles (Assets)

  • Cash
  • Accounts receivable
  • Allowance for bad debts
  • Notes receivable
  • Prepaid supplies
  • Prepaid rent
  • Prepaid insurance
  • Land
  • Building
  • Accumulated depreciation - Building
  • Equipment
  • Accumulated depreciation - equipment
• Common Account Titles (Liabilities)

  • Accounts payable
  • Notes payable
  • Interest payable
  • Salaries payable
  • Utilities payable
  • Unearned
• Common Account Titles (Equity)

  • Owner's capital (or Owner's equity)
  • Owner's drawings
• Common Account Titles (Income)

  • Service fees
  • Sales
  • Interest income
  • Gains
• Common Account Titles (Expenses)

  • Cost of sales (or Cost of goods sold)
  • Freight-out
  • Salaries expense
  • Rent expense
  • Utilities expense
  • Supplies expense
  • Bad debt expense
  • Depreciation expense
  • Advertising expense
  • Insurance expense
  • Taxes and licenses
  • Transportation and travel expense
  • Interest expense
  • Miscellaneous expense
  • Losses
• T - Account

  Credit (Cr. or Credere) - right side of an account and the "value parted with"

  Debit (Dr. or Debere) - left side of an account and the "value received"

  Balance - difference between the total debits and credits

  Debit Balance - total debit exceed total credits

  Credit Balance - total credits exceed total debits