Bookkeeping for small & medium businesses:
Understand business accounts
In the world of bookkeeping, an account doesn’t refer to an individual bank account. Instead, an account is a record of all financial transactions of a certain type, like sales or payroll. There are five basic types of accounts:
Assets: which are the cash and resources owned by the business (e.g., accounts receivable, invent
ory)
Liabilities: which are the obligations and debts owed by the business (e.g., accounts payable, loans)
Revenues or income: which is the money earned by the business, usually through sales
Expenses or expenditures: which is the cash that flows out from the business to pay for some item or service (e.g., salaries, utilities)
Equity: which is the value remaining after liabilities are subtracted from assets: representing the owner’s held interest in the business (e.g., stock, retained earnings)
Bookkeeping begins with setting up each necessary account so you can record transactions in the appropriate categories. You likely won’t have the same exact accounts as the business next door, but many accounts are common. The table below shows some frequently used small-business accounts and their types. Do you want to know more about my services? contact me without further hesitation.
