Types of accounts

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Definitions of accounts commonly used in accounting. Source text Accounting Concepts & Applications Introductory Theory & Practice (Greig, Mackay, Beaumont, Sagner) VCTA 4th ed.

account

is used to record all changes regarding an item in business, for example; furniture, inventory, and sales

revenue

income earned by a business

sales

revenue earned from the selling of goods in a trading enterprise

sales returns

when a customer returns goods to a trading enterprise or an allowance is given for defective goods

fees revenue

revenue earned from the selling of professional services, for example; accountant fees, solicitor fees, doctor fees

service revenue

revenue earned from selling a service, for example; servicing of a motor vehicle, providing a hair cut and blow dry

commission revenue

revenue earned by promoting another business's product or service, for example; sales commission, spotter's commission

interest revenue

revenue earned due to the time value of money, for example; bank interest for term deposits, interest received on investments

rent revenue

revenue earned from the letting out of premises, for example; the business rents out one of its storage sheds to another business

expenses

the costs incurred in running the business to enable revenue to be earned

cost of goods sold

expenses incurred from purchasing goods to sell to customers and includes delivery charges (freight) and customs duty (taxes)

motor vehicle expenses

expenses incurred in operating a motor vehicle such as fuel, repairs and servicing

rent or lease expense

expenses incurred in renting or leasing business premises in which the operations of the business are carried out

salaries and wages

expenses incurred when engaging employees to work for the business

electricity expense

expense incurred for using electricity in the business's operations

interest expense

expenses incurred due to the time value of money and includes interest paid for overdue accounts, interest paid to the bank for borrowing money through loans

assets

items of value that are owned by the business and used to generate income, for example; motor vehicles, land, stock, and cash

bank

cash held by the business in a bank account, also can be called cash at bank

accounts receivable

other people or organisations that owe money to the business because of sales made on credit, also known as debtors or trade debtors

inventories

also known as stock, goods or merchandise, they are items bought and sold by a trading business as its main source of revenue

furniture

furniture owned by the business, for example; desks, chairs, reception desks, filing cabinets, and bookcases

fittings and fixtures

shelves that have been installed in the premises to assist with the display of goods for sale

motor vehicles

vehicles owned by the business

equipment

computers, machinery, or other items owned by the business that are used by the owner or employees in the business

buildings

premises owned by the business

land

land owned by the business

shares

an investment that the business has in another company

loan to another enterprise

money lent to another enterprise as an investment

goodwill

the value of the reputation of a business, which is only valued when the business is purchased and is considered intangible (you can't touch it, but it exists)

liabilities

amounts that a business owes to other people or organisations usually due to purchasing assets

accounts payable

also known as creditors or trade creditors, they are people or organisations to whom the business owes money as a result of credit purchases

loan

money borrowed from a bank, financial institution or other source

mortgage

a loan taken out by a business, which is secured by assets usually a house and if the loan was not paid the business would have to surrender the house to the loan provider

owner's equity

the total value of the investment made by the owner in the business

capital

the investment an owner has made in a business in cash or other forms including motor vehicles and equipment

drawings

the value of cash or goods the owner has withdrawn from the business

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