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    1.account (Financial Accounting)

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    Asjad Jamshed
    This document discusses the classification of accounts in financial accounting. It explains that accounts are classified into assets, liabilities, owner's equity, revenue, and expenses accounts under the American approach. Assets accounts represent all items owned by a business, and are divided into current assets, non-current assets, plant assets, and intangible assets. Liabilities accounts represent all claims against a business assets, and are divided into current and long-term liabilities. Owner's equity accounts represent the owner's claim in a business assets. Revenue accounts record all income, and expenses accounts record payments made to operate a business.

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    1.account (Financial Accounting)

    Uploaded by

    Asjad Jamshed
    82 views2 pages
    This document discusses the classification of accounts in financial accounting. It explains that accounts are classified into assets, liabilities, owner's equity, revenue, and expenses accounts under the American approach. Assets accounts represent all items owned by a business, and are divided into current assets, non-current assets, plant assets, and intangible assets. Liabilities accounts represent all claims against a business assets, and are divided into current and long-term liabilities. Owner's equity accounts represent the owner's claim in a business assets. Revenue accounts record all income, and expenses accounts record payments made to operate a business.

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    1.Account(Financial Accounting)

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    This document discusses the classification of accounts in financial accounting. It explains that accounts are classified into assets, liabilities, owner's equity, revenue, and expenses accounts under the American approach. Assets accounts represent all items owned by a business, and are divided into current assets, non-current assets, plant assets, and intangible assets. Liabilities accounts represent all claims against a business assets, and are divided into current and long-term liabilities. Owner's equity accounts represent the owner's claim in a business assets. Revenue accounts record all income, and expenses accounts record payments made to operate a business.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    82 views2 pages

    1.account (Financial Accounting)

    Uploaded by

    Asjad Jamshed
    This document discusses the classification of accounts in financial accounting. It explains that accounts are classified into assets, liabilities, owner's equity, revenue, and expenses accounts under the American approach. Assets accounts represent all items owned by a business, and are divided into current assets, non-current assets, plant assets, and intangible assets. Liabilities accounts represent all claims against a business assets, and are divided into current and long-term liabilities. Owner's equity accounts represent the owner's claim in a business assets. Revenue accounts record all income, and expenses accounts record payments made to operate a business.

    Copyright:

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    Financial accounting notes

    ACCOUNT:-
    A summarized record of a business transaction is called an account.
    Account is concerned with some goods, services, property, person (individual) or
    revenue and expense.

    CLASSES OF ACCOUNTS:
    Accounts are classified into three categories under English (British) approach,
    i.e. real, personal, and nominal. Whereas are divided into five classes under American
    approach.
    The kinds of Accounts under American Approach are:
    1. Assets Accounts
    2. Liabilities Accounts
    3. Owner Equity Accounts (Capital/Proprietorship)
    4. Revenue Accounts (Income Statement Accounts)
    5. Expenses Accounts (Losses Accounts)

    ASSETS ACCOUNTS:
    All the things and properties possessed by the business are called “assets”. Any
    tangible or intangible that has a monetary value is an asset, e.g. Cash, Machinery,
    Building, Account Receivables, Land, and Vehicles etc. Assets are divided into four
    major categories:
    (a) Current Assets (b) Non-Current Assets (c) Plant Assets (d) Intangibles
    CURRENT ASSETS => Cash, Marketable Securities, Receivable (A/R, N/R), Inventories
    Non-Current ASSETS => Investments, Loans Granted, Shares, Equipments
    INTANGIBLE ASSETS => Copy Rights, Trade Mark, Good Will, Preliminary Expenses
    FIXED ASSETS => Furniture, Machinery, Building, Land

    LIABILITIES ACCOUNTS:
    All the claims of the outsiders (suppliers of cash or goods and services on
    credit) against the assets of the business are called liabilities accounts e.g. Account
    Payable, Dills Payable, Bank over draft, Mortgage Loans etc. Liabilities are divided
    into two classes, i.e. Current Liabilities and Long-Term Liabilities. Current Liabilities
    are also known as Short Term Liabilities.
    CURRENT LIABILITIES => Unearned Income, Expenses Payable, Accounts Payable,
    Note Payable, Bank Overdraft
    Long Term LIABILITIES => Bank Loan, Mortgage Loan, Debentures issued, Loans from
    partners

    OWNER’S EQUITY ACCOUNTS:


    The claims of the owner or owners in the assets of the business are called
    “O.E. accounts”. They are also known as “Capital or Proprietorship” accounts. It
    can be divided into two categories, i.e. Capital Stock and Retained Earnings. O.E.
    account can include Capital, Retained earnings, Reserves, and Undivided Profits.

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    Financial accounting notes

    REVENUE ACCOUNTS:
    All types of incomes received or accrued are called revenue accounts, e.g.
    interest, commission, cash sales, income from investments, dividend from
    corporations, and discount earned.

    EXPENSES ACCOUNTS:
    The payments made or obligations created for the benefits being received in
    day to day running of the business are called expenses accounts. The maximum age of
    such benefits is not more than the current year, e.g. rent, freight, carriage, cartage,
    wages, and salaries etc. Expenses can be categorized into: Direct expenses, Operative
    Expenses, General Expenses, and Administrative Expenses etc.

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