Financial account
A financial account (or, simply, account; hereinafter, the Account) is an accounting device used in bookkeeping to record increases and decreases of business transactions related to Assets, Liabilities, Owner's Capital, Owner's Withdrawals, Fiscal Revenue, and/or Expenses. In other words, the Account is the concept that is used to record financial entries of a similar nature such as Cash at Bank increases (is debited) and decreases (is credited) or, vice versa, Accounts Payable increases (is credited) and decreases (is debited).
Contents
Definitions
According to College Accounting: A Practical Approach by Slater (13th edition),
- Account. An accounting device used in bookkeeping to record increases and decreases of business transactions relating to individual assets, liabilities, capital, Owner's Withdrawals, revenue, expenses, and so on.
Journalizing
- Main wikipage: Journalizing
Rules of debit and credit
Rules of debit and credit Category Type Increase * Decrease Asset-origin accounts Assets ** Debit Credit Expenses ** Owner's Withdrawals Equity-origin accounts Liabilities ** Credit Debit Fiscal Revenue ** Owner's Capital * Besides Income Summary, increase represents normal balance
** Adjusting accounts behave oppositely to the Accounts that they adjust
- Main wikipage: Rules of debit and credit
- Asset-origin accounts, which include Assets, Owner's Withdrawals, and Expenses, are debited when they increase and credited when they decrease.
- Equity-origin accounts, which are Liabilities, Owner's Capital, and Fiscal Revenue, are debited when decrease and credited when they increase.
Adjusting accounts
- Main wikipage: Adjusting account
Chart of accounts
- Main wikipage: Chart of accounts
Every organization can establish its own list of account titles, which is called the chart of accounts.
Related concepts
- Bookkeeping. Recording, filing, and retrieving of financial data, as well as producing those financial reports that are required by laws.
