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The Corporate Finance Institute Accounting
Accounts
There are many different accounts that are used to keep track of
financial transactions. The main general accounts are as follows:
• Asset
• Liabilities
• Shareholder’s Equity
• Revenue
• Expense
Assets, liabilities, and shareholder’s equity are the main accounts in
a financial statement called the balance sheet, or the statement of
financial position. The balance sheet shows a company’s financial
position at a certain point in time. Assets include everything that the
company owns, whether it be cash, inventory, buildings, equipment,
and automobiles. Liabilities include everything that the company owes
to others at a future date, such as bank loans, vendor bills, etc. Finally,
shareholder’s equity includes claims that owners have on the assets
based on their portion of ownership. A common equity account is
common and preferred shares.
Revenue and expense accounts are the main accounts seen in
an income statement. The income statement shows a company’s
performance for a certain duration in time, usually its fiscal year (from
January to December). Whenever bookkeepers record a transaction,
multiple accounts are affected, whether they are different accounts
(assets and liabilities) or within the same general account (changes in
two different asset accounts).
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