Types of accounts

In accountancy, an account is a label used for recording and reporting a quantity of almost anything. Most often it is a record of an amount of money owned or owed by or to a particular person or entity, or allocated to a particular purpose. It may represent amounts of money that have actually changed hands, or it may represent an estimate of the values of assets, or it may be a combination of these.
Types of accounts:-

• Asset accounts: represent the different types of economic resources owned by a business, common examples of Asset accounts are cash, cash in bank, building, inventory, prepaid rent, goodwill, accounts receivable.
• Liability accounts: represent the different types of economic obligations by a business, such as accounts payable, bank loan, bonds payable, accrued interest.
• Equity accounts: represent the residual equity of a business (after deducting from Assets all the liabilities) including Retained Earnings and Appropriations.
• Revenue or Income accounts: represent the company's gross earnings and common examples include Sales, Service revenue and Interest Income.
• Expense accounts: represent the company's expenditures to enable itself to operate. Common examples are electricity and water, rentals, depreciation, doubtful accounts, interest, insurance.
• Contra-accounts: from the term contra, meaning to deduct, the value of which are opposite the 5 above mentioned types of accounts. For instance, a contra-asset account is Accumulated depreciation. This label represent deductions to a relatively permanent asset like Building.

Chart of accounts:-

A chart of accounts (COA) is a list of all accounts tracked by a single accounting system, and should be designed to capture financial information to make good financial decisions. Each account in the chart is assigned a unique identifier, typically an account number. Each account in the Anglo-Saxon chart is classified into one of the five categories: assets, liabilities, equity, income and expenses.