Bookkeeping Account
An Bookkeeping Account is an event category for financial transaction entries with common attributes.
- AKA: Financial Transaction Category.
- Context:
- It can (typically) be a member of a Chart of Accounts.
- It can (typically) be represented by a Chart of Accounts Record.
- It can (typically) be composed of Bookkeeping Sub-Accounts (with bookkeeping sub-sub-accounts).
- It can range from being a Balance Sheet Account (assets account, liabilities account, equity account) to being Income Statement (Profit and Loss) Account (revenues account, expenditures account).
- It can range from being an Inflow Bookkeeping Account to being an Outflow Bookkeeping Account.
- It can range from being a Real Bookkeeping Account or a Nominal Bookkeeping Account??
- Example(s):
- an Revenues Account, includes accounts that summarize the inflow of money into an organization from sale events.
- an Expenses Account, includes accounts that summarize the outflow of money from an organization or the loss or wastage of the business’s resources.
- an Assets Account, includes accounts that summarize the value of items owned by an organization.
- an Liabilities Account, includes accounts that summarize the amounts owed by the business to external parties.
- an Ownership Equity Account, which be worked out as the difference between the total of assets less the total of liabilities.
- See: Accounting, Bookkeeping, Assets, Liability (Financial Accounting), Income, Expenses, Equity (Finance), Ledger, Debits and Credits, General Ledger, Cash, Accounts Receivable.
References
2015
- (Wikipedia, 2015) ⇒ http://en.wikipedia.org/wiki/account_(accountancy) Retrieved:2015-12-10.
- An account (in bookkeeping) refers to assets, liabilities, income, expenses, and equity, as represented by individual ledger pages, to which changes in value are chronologically recorded with debit and credit entries. These entries, referred to as postings, become part of a book of final entry or ledger. Examples of common financial accounts are cash, accounts receivable, mortgages, loans, PP&E, common stock, sales, services, wages, and payroll.
A chart of accounts provides a listing of all financial accounts used by particular business, organization, or government agency.
The system of recording, verifying, and reporting such information is called accounting. Practitioners of accounting are called accountants. [1]
- An account (in bookkeeping) refers to assets, liabilities, income, expenses, and equity, as represented by individual ledger pages, to which changes in value are chronologically recorded with debit and credit entries. These entries, referred to as postings, become part of a book of final entry or ledger. Examples of common financial accounts are cash, accounts receivable, mortgages, loans, PP&E, common stock, sales, services, wages, and payroll.
- ↑ John Downes, Jordon Elliot Goodman, Dictionary of Finance and Investment Terms 1995 Barron Fourth Edition ISBN 0-8120-9035-7 page 3
- (Wikipedia, 2015) ⇒ http://en.wikipedia.org/wiki/account_(accountancy)#Based_on_nature Retrieved:2015-12-10.
- An account may be classified as real, personal or as a nominal account
Example: A sales account is opened for recording the sales of goods or services and at the end of the financial period the total sales are transferred to the revenue statement account (Profit and Loss Account or Income and Expenditure Account).
Similarly expenses during the financial period are recorded using the respective Expense accounts, which are also transferred to the revenue statement account. The net positive or negative balance (profit or loss) of the revenue statement account is transferred to reserves or capital account as the case may be.
- An account may be classified as real, personal or as a nominal account
- (Wikipedia, 2015) ⇒ http://en.wikipedia.org/wiki/account_(accountancy)#Based_on_periodicity_of_flow Retrieved:2015-12-10.
- The classification of accounts into real, personal and nominal is based on their nature i.e. physical asset, liability, juristic entity or financial transaction.
The further classification of accounts is based on the periodicity of their inflows or outflows in the context of the fiscal year.
Income is immediate inflow during the fiscal year.
Expense is the immediate outflow during the fiscal year.
An asset is a long-term inflow with implications extending beyond the financial period and by the traditional view could represent unclaimed income. Alternatively, an asset could be valued at the present value of its future inflows.
Liability is long term outflow with implications extending beyond the financial period and by the traditional view could represent unamortised expense. Alternatively, a liability could be valued at the present value of future outflows.
Items in accounts are classified into five broad groups, also known as the elements of the accounts: [1] Asset, Liability, Equity, Revenue, Expense.
The classification of Equity as a distinctive element for classification of accounts is disputable on account of the "Entity concept", since for the objective analysis of the financial results of any entity the external liabilities of the entity should not be distinguished from any contribution by the shareholders.
- The classification of accounts into real, personal and nominal is based on their nature i.e. physical asset, liability, juristic entity or financial transaction.
2014
- http://www.leoisaac.com/fin/fin005.htm
- QUOTE: On any day in any business, there will be a great many financial transactions taking place. In order to make sense or understand what is happening in the business it is necessary to categorise and sort similar financial transactions together into groups. In financial accounting however the term “category” is not used and instead the term “account” is used. The word account is often abbreviated to “a/c” and thus you will see “Sales a/c” and “Wages a/c”.
It may help you to think of "Accounts" as pigeon holes such as in the following illustration. Every time a Sales transaction occurs, you must put information about the transaction into the pigeon hole for SALES. Similarly every time the Electricity bill arrives, you must put the cost details into the pigeon hole for ELECTRICITY, and so on. Then when the time comes to prepare the financial statements, it is a matter of adding up all the transactions in the various pigeon holes.
- QUOTE: On any day in any business, there will be a great many financial transactions taking place. In order to make sense or understand what is happening in the business it is necessary to categorise and sort similar financial transactions together into groups. In financial accounting however the term “category” is not used and instead the term “account” is used. The word account is often abbreviated to “a/c” and thus you will see “Sales a/c” and “Wages a/c”.
2013
- http://www.ofm.wa.gov/policy/glossary.asp#f
- QUOTE: ACCOUNT - A fiscal and accounting entity with a self-balancing set of general ledger codes in which cash and other financial resources, together with all related liabilities and residual equities or balances, and changes therein, are recorded and segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations. For reporting purposes, the state identifies certain accounts as major funds, and administratively combines all remaining accounts into roll-up funds. Refer to MAJOR FUND, and ROLL-UP FUND.