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A set of items that posses common characteristic is termed as accounts. Asset , Liability , Income , Expense and Equity are the types of accounts. Business uses list of accounts ,is considered as chart of accounts.
- Asset : Current and non – current are the two characterization of assets.
- Liabilities : It has the information like amount , date to be paid etc.
- Equity : Difference between assets value and liabilities cost is termed as Equity. It is also known as net worth.
- Income and Expense : Equity account is divided into two accounts , Income and Expense which offers simple accounting system.
When traction is done by single account then it is termed as single Entry accounting whereas When traction is done by two accounts then it is termed as double Entry accounting. At the time of cash received or paid out , transactions are recorded. This is also considered as account valuation .
Account valuation is of three types :Income Accounts , Expense Accounts and Liability Accounts
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