Definition and Classification of Accounts in Accounting

classification of accounts in accounting

An account is a place to record financial transactions that affect the balance of assets, debt and capital.

The account is divided into two, namely:

    real account and nominal account. Real accounts are the types of accounts recorded on the balance sheet, such as assets, debt and capital.
    A nominal account is the account recorded in the profit / loss statement, such as income and expenses.

 Treasure account

Assets or assets are economic resources owned by the company to carry out business activities. Assets can be distinguished as follows:

    Current assets are assets that have a high level of liquidity and a service life of less than one year. For example cash, securities, trade receivables, notes receivable, inventories, equipment, and prepaid expenses.
    Fixed assets, are tangible assets and have an economic life of more than one year. For example land, equipment, buildings, machinery and transportation equipment.
    Intangible assets are assets that cannot be seen clearly but have economic value. For example, patents, copyrights, brands, franchises, and goodwill.
    Long-term investment is the company's assets in the form of securities. For example stocks and deposits.

Debt Account

Debt or liability is the cost incurred to finance the company's business activities. And the debt is divided into two, namely:

    Current liabilities,
    Long-term debt

Current debt is an obligation that must be paid by the company in less than one year. For example notes payable, trade payables, accrued expenses, and income received in advance.

Long-term debt, is an obligation that must be paid by the company in a period of more than one year. For example, bank debt, mortgages, and bonds.


Capital account

Capital is the property of the owner of a portion of the company's assets.


Income account

Revenue is the result obtained by the company for its business activities. Revenue is divided into two, namely:

    operating revenues
    non-business income.
Operating income is income derived from business activities. And non-business income is income derived from activities outside of business. For example, interest income, rent and commission.

Load account

Expenses are costs incurred by the company for running business activities. Expenses are also divided into two, namely:

     operating expenses
     expenses outside of business.

Operating expenses are costs incurred as a result of conducting business activities. if the out-of-business costs are costs incurred by the company because of activities outside the business. For example interest expense and rent.