An account is a record in an accounting system that tracks the financial activities and balances of specific assets, liabilities, equity, revenues, or expenses. Each account has a unique identifier and is used to categorize and summarize transactions for reporting purposes.
5 Must Know Facts For Your Next Test
Accounts are categorized into five main types: assets, liabilities, equity, revenues, and expenses.
The double-entry accounting system requires every transaction to be recorded in at least two accounts.
Each account has a normal balance side which indicates whether transactions typically increase or decrease the balance.
T-accounts are visual aids used to depict how transactions affect individual accounts.
The Chart of Accounts is a complete listing of all accounts used by an organization.
Review Questions
What are the five main categories of accounts?
Why is it important to have a unique identifier for each account?
How does the double-entry accounting system utilize accounts?
Related terms
Double-Entry Accounting: An accounting method where each transaction affects at least two accounts to maintain the accounting equation.
Chart of Accounts: A comprehensive list of all accounts used in an organization's general ledger.
T-Account: A visual representation using a 'T' shape to show increases and decreases in an account.