What are the 5 accounting categories?

What are the 5 accounting categories?

📍 All 5 accounting categories

1. Assets are in category 1, increase debit side, reduce credit side.

2. Liabilities are in category 2, increase credit, reduce debit

3. Owner's equity is in category 3, credit increase, debit reduction

4. Income is in category 4, increasing the credit side, reducing the debit side.

5. Expenses are in category 5, increase debit side, reduce credit side

📍 Meaning of each category

1. Assets are things of value. tangible or non-existent in which the owned person or business can benefit from the ownership of real estate movable property, etc.

- Monetary assets or equivalents such as cash, checks

- Claims assets such as debtors

- Tangible assets such as buildings, cars, land

- Intangible assets such as concessions, copyrights

- Expenses already paid, owners will receive benefits in the next accounting period, such as various types of advance expenses.

There are two types of assets:

- Current assets are assets that can be converted into cash, such as cash, bank deposits, checks, etc.

- Non-Current Assets are assets that cannot be converted into cash, such as long-term loans. Long-term investments, including fixed assets or tangible assets and intangible assets

2. Liability is the current liabilities. that the business owner must pay back to outsiders in the future, such as loans, mortgage creditors overdrafts, etc.

There are two types of liabilities:

- Current Liability (Current Liability) is the liability that the business owner must pay back. within a period of not more than 1 year, such as short-term bank loans, etc.

- Non-Current Liability is a liability that the business owner must pay back. Over a period of more than 1 year, such as a long-term loan loan bonds, etc.

3. Owner's equity is the residual interest in assets after deducting liabilities. Ownership that a business owner has in assets is called net assets. There are 3 types as follows:

- The sole business owner

- partnership

- limited company

4. Income (Incomes) There are 2 types, which are returns from the sale of goods or providing services as usual, called sales (sales) and other returns that are not caused by normal operations, called that other incomes

Expenses are costs that are deducted from income. There are 3 types as follows:

- Cost of sales is the cost of goods sold or serviced. in other words in the buy-to-sell business The cost of goods sold includes the cost of the goods purchased and other costs necessary to make the goods available for sale. In the business of production for sale Cost of goods sold is the cost of producing that product, such as labor costs, raw material costs, etc.

- Operating expenses are expenses incurred in connection with the sale of goods or services. and expenses incurred from business administration

- Other expenses (Other expenses) are expenses other than cost of sales and operating expenses such as interest expense, income tax.

It can be seen that all 5 accounting categories are the information used to record in different ledger accounts for systematic accounting. and to facilitate the management of various information

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