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 relating to assets, liabilities, capital, withdrawals, 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 increases (debits) and decreases (credits) or, vice versa, accounts payable increases (credits) and decreases (debits).
Rules of debit and credit
- Main wikipage: Rules of debit and credit
| Category | Type | Normal balance (Increase) | Decrease |
|---|---|---|---|
| Principal | Assets | Debit | Credit |
| Expenses | Debit | Credit | |
| Withdrawals | Debit | Credit | |
| Auxiliary | Liabilities | Credit | Debit |
| Capital | Credit | Debit | |
| Revenue | Credit | Debit |
- Principal accounts, which are assets, withdrawals, and expenses, are debited when they increase and credited when they decrease.
- Auxiliary accounts, which are liabilities, capital, and revenue, are debited when decrease and credited when they increase.
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.
