Popular types of accounts in accounting

For startup’s and small business owners the major priority is to cut down on expenses as much as possible. So, they decide to take the accounting handle in their hands as basic knowledge about the same is sufficient for small scale businesses. And, if their busy schedule does not permit to take accounting in their hands then they look for hiring an accountant to handle the same. But the basic knowledge is very much important to understand the concept of it and read the financial reports and if you are looking for the same then you have come to the right place. In this article we will be discussing about the types of accounts in accounting field that helps in monitoring the financial records. Check out the list below;

Assets

Assets account features everything that is owned by the company. They are further classified into 2 namely, Tangible Assets and Intangible Assets. Examples for Tangible assets are Computers, Cars, Buildings, Equipment etc. Examples for Intangible assets include non-physical items like trademark, logo and copyrights.

Liabilities

Liability accounts comprises of the debts payable to the outsiders and creditors which is owed by your company. Liabilities include loans, mortgages, unpaid utility bills, bank overdraft and such more.

Equity

Equity account defines the current worth of your business. Basically, it’s the residual interest of your company’s assets after deducting the liabilities that is to be paid. Examples for Equity includes the Retained earnings, Dividends and common stock. Post recordation of the transitions, it provides a report stating what your business owes and owns. Equity account reflects the financial position of your company.

Revenue

Revenue account includes the money your company makes by selling the goods and services to its clients. The term also denotes the dividends and interest resulting from the saleable securities.

Expenses

The products or services purchased by a company in order to generate income or further manufacturing of goods is considered to be your company’s expense. It includes the cost for advertising, rent, salaries, utilities and so on. Some of the expenses are regarded for deduction which helps in reduction of the taxable income. Personal expenses, donations and penalties cannot be deducted whereas direct labour costs and business-related travel cost can be deducted.

The above listed are the 5 major types of accounts that helps in defining the amount of money received and spent by the company. To know more about accounting, stay connected to us. Thank you for your time.

 

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