Accounts

Accounting is a systematic recording, reporting, and analyzer of financial transactions in a business. (Gary A. Potter 2011; Curtis L. Norton 2011). Normally, accountant is known where they are the person in charge of accounting and accountants have to follow a set of rules and regulations which has set such as the Generally Accepted Accounting Principles. Accounting has undergone a drastic changes in the last two decades, from the traditional procedural base, involving record-keeping where all the preparation of budgets and final accounts, towards a role which emphasizes its social importance. Such as, accounting plays a role of communication tool between accountants and managers to be clearer of how did the financial transactions in an organization goes. This allows a company to look at statistics such as net profit by analyzing the financial performance of the business.

There are five account types in accounting. In order to record all the business transactions, double-entry accounting uses five, and only five account types that can possibly record in an accounting system. The five account types do have some sub-types, but however, all the financial transactions can be recorded using these five types of accounts. The five account types are assets, liabilities, income, capital and expenses. All of the transitions can be categorized based on these five account types.

Assets are things of value that were owned and used by the business. Liabilities are the debts that are owned by the business whereas capital is referred to investment of the total resources in a business. These three account types are recorded in balance sheet accounts. The remaining two account types which are income and expenses should be recorded in an income statement account. Income is the amounts earned from the sales of goods and services where expenses are the costs incurred in the course of business.

In addition, there are some general information with the use of accounting....