You started your business. Now it’s time to categorize. Wait. What! I need to categorize! Yes you do. But luckily accounting has made it easy (or tried to make it easy) and created 5 main account types. Okay, maybe not that lucky, the accounts can be a little confusing. It’s okay, we are going to break them down to help all business owners learn the basics.
The 5 main accounts are:
- Assets
- Liabilities
- Equity
- Revenue (AKA Income)
- Expenses
Remember the 5 main categories as they are the basis to reading financial reports. Each transaction performed by a business must be reported in one of the 5 main categories.