full explanation how to manage book-keeping in account

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Account
An account refers to property, liabilities, income, expenditure, and equity, in the account (as in the book-keeping), as indicated by individual account pages, in which changes in price are recorded sequentially with chronological and credit entries. These entries are known as posting, become part of the final entry or account holder's book. Examples of general financial accounts are sales, account receivables, mortgages, loans, PP and E, common stock, sales, services, wages, and payroll.

A chart of accounts provides a list of all financial accounts used by a particular business, organization or government agency.

The system of recording, verifying and reporting such information is called accounting. Practitioners of accounting are called Accountants.

Classification of accounts

An account can be classified as a real, personal or nominal account

Type represents the example
In the real world, real physically tangible things and some abstract things in which there is no physical existence, tangibles - plants and machinery, furniture and fixtures, computer and information processing equipment, cash accounts etc. Intangible-Goodwill, Patent, and Copyright
Local or statutory body including personal trade and legal entities, bank account individuals, partnership firm, corporate institutions, non-profit organizations, country, state or local government
Nominal temporary income and expense accounts for the recognition of the impact of financial transactions during the financial year until the finalization of the accounts at the end of the sale, purchase and electricity duty
Example: A sales account is opened to record the sale of goods or services and at the end of the financial period, total sales revenue details are transferred to the account (profit and loss account or income and expense account).

Similarly, during the financial period, expenditure related entries are recorded using the accounts, which are also transferred in the revenue details account. Revenue details are transferred to a reserve or capital account in the form of a net positive or negative balance (profit or loss) of the account.

Classification of real, personal and nominal accounts is based on their nature i.e. physical property, liability, jurist unit or financial transaction.

Further classification of accounts is based on the period of their flow or outflow in the context of the financial year.

Income is instant flows during the financial year.

Expenditure during the financial year is an immediate outflow.

An asset is a long-term flow, with the effects that go beyond the financial period and unauthorized income can be represented from a traditional perspective. Alternatively, a property can be considered valuable at the present value of the future flow.

Liability is a long-term outflow, which is accompanied by the effects that go beyond the financial period and informal expenditure can be represented from the traditional perspective. Alternatively, the future value of outflow in the future can be valued at liability.

Types of Accounts Long Term Flow Long Term Outflow Short Term Flow Short Term Outflow
Real accounts assets
Personal account property liability
Nominal account income expenditure
Items in the accounts are classified into five broad groups, which are also called elements of accounts: assets, liabilities, equity, revenue, expenditure

As a specific element for classification of accounts, the classification of equity is disputable because of "unit concept", because the objectives of the financial results of any entity should not be separated from any contribution to the entity's external liabilities.


Source - Wikipedia

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