Account Types

• Account types are classified into 5 types.

Assets :

• The asset account represents the value of the asset owned by the business.
• Only the items have a resale value those only recorded in this account.
• Every year the assets are adjusted to accommodate depreciation or appreciation of their value. 
• Examples for assets are computer,real estate lands, etc.

Classification of  Assets :

1. Current Assets.
2. Fixed Assets. 

Current Assets :

• A current asset is something that the business owns and will consumed or converted into cash within one year.
• Current Assets means asset which is easily convertible into the cash, money, stock,etc.
• Current Assets are ones that an entity expects to use within one-year time from the reporting date.
• for example, Trade debtors, cash at bank or in hand, etc. 

Fixed Assets :

• Fixed assets are of a fixed nature in the context that they are not readily convertible into cash.
• A fixed asset is something that the business owns and will be used in the business for at least one year.
• For example, Vehicles, Buildings, Land, etc.

Liabilities :

• A liability account represents a type of debt or upcoming cost for the business.
• The type of liability determines the duration of the debt.

Classification of Liabilities :

   1.Current Liabilities :Liabilities which are normally due and payable within one year are grouped as current liabilities. These liabilities are also known as short-term liabilities.

   2.Long-term Liabilities :Liabilities which are not immediately due but become due after a year or more are classified as long-term liabilities. Long term bank loans like term loans, debentures, deferred tax liabilities, mortgage liabilities.
   3.Contingent Liabilities : Certain liabilities are payable on the occurrence of some event or contingency. Contingency signifies something which may or may not take place. If a liability is due on happening of such an event, it is termed as the contingent liability.

Expenses :

• Money spent or cost injured in an organisation efforts to generate revenue, representing the cost of doing business.Expenses may be in the form of actual cash payments.
• An expense is a cost that occurs as part of a companies operating activities during a specified accounting period. 

Income :

• Income is money that an individual or business receives in exchange for providing a goods or services.
• or Income means an amount by which the total assets increase in an accounting period.
• According to a retailer , income means operations in sales minus the cost of goods sold minus operating expenses.

Difference between revenue, income and gain :

• Revenue means the amount earned from a company main activities many activities such as selling merchandise or providing services.
• A gain results from a peripheral activity such as selling the old delivery truck. A gain is the amount received more.
• Income is sometimes used instead the word revenue.Some people refer to the rent they received as rent income.

Capital :

• Capital is the money or wealth needed to produce goods and services.In the most basic terms , it is money.
• All business must have capital in order to purchase assets and maintain their operations.