2018-12-03 (Five types of Accounts in Accounting)

assets, liabilities, equity, revenue and expenses.

Assets Account

The assets account includes everything that your company owns. Assets are divided into tangible and intangible. Examples of tangible assets include desktop computers, laptops, cars, cash, equipment, buildings and more. Your trademark, logo, copyrights and other non-physical items are considered intangible assets.

Expenses Account

Any product or service that your company purchases to generate income or manufacture goods is considered an expense. This may include advertising costs, utilities, rent, salaries and others.

Some expenses are deductible and help reduce your taxable income. For example, you may deduct direct labor costs and business-related travel costs, but you cannot deduct personal expenses, donations, exchange loss and penalties.

Revenue or Income

Includes the money your company earns from selling goods and services. This term is also used to denote dividends and interest resulting from marketable securities.

Liabilities Account

Liabilities include the debts or obligations payable to creditors and other outsiders to which your company owes money. These can be loans, unpaid utility bills, bank overdrafts, car loans, mortgages and more.

Equity Account

The equity account defines how much your business is currently worth. It's the residual interest in your company's assets after deducting liabilities. Common stock, dividends and retained earnings are all examples of equity.