Accounting Examples - Description and Nature of Balance Sheet and Income Statement Accounts

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Accounts

Accounts are set up for each item on the financial statements and are analyzed to provide details for financial reports.  They each fall into one of the following categories:

• Balance Sheet Accounts - classified as assets, liabilities, or owner's equity

• Income Statement Accounts - classified as revenues or expenses.

Each daily transaction of a business has an impact on the at least two accounts.  For example paying $100 on an account in your payables would lower your cash level, but it would also lower your obligation.

Simplest form

Name of the Account
Left side debit		Right side credit

debit balance
Asset Accounts

Nature of the Account

credit balance
Liability Accounts
Owner's Equity

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