What Is An Account?

| September 2, 2014 | 0 Comments

Here you can learn about Account? What is an Account and what are the specimen of Account in the books and what are the methods for keeping Account?

What Is An Account Picture

In business concerns, numerous transactions take place every day, For example, goods are sold to various customers every day, purchases are made from suppliers, cash is paid to creditors and is received from debtors, expenses are paid etc. All these transaction should be properly analysed and recorded. Again, the concept of double change in a business transactions is important to keep in mind.


To record these changes different accounts are maintained in the Ledger. Now what is an Account? Account is the individual record of an asset, a liability, a liability, a revenue, an expense or capital in a summarized manner. For example, the individual record of cash (an asset) is known as Cash Account, then individual record of purchases is Purchase Account, the individual record of owner is Capital Account, the individual record of sales is Sales Account. In the same way there are so many accounts which are opened in the ledger like Salary Accounts, Machinery Accounts, Furniture Account etc. How many accounts there should be in the Ledger of a Business? It depends upon the nature and size of the business.


Generally one full page is fixed in the Ledger for each account. But it depends, how many times the changes take place in that particular account. Some accounts are very busy accounts like Cash Account, Bank Account and Sales Account. Obviously, for such accounts one page for each will not be enough and so, they need more pages in the ledger to be fixed. In some accounts, changes take place only once or twice in a year, so only one page will be enough, e.g. Machinery Account, Capital Account, Loan Account etc.

What Is An Account Card Picture

There are two types of changes that may takes place in an Account, e.g. either there will be increase or there will be decrease. Take the example of cash (an asset), either there is inflow of each or there is outflow of cash. To record these two types of changes, every account (a page) is divided into sides. Increase is recorded on one side and decrease is recorded on the other side. The specimen of an account (a “T” form of an Account) is shown below:

The Specimen Of An Account Picture

When a change takes place in a account, either it will be recorded on the left side (Debit Side) or on the right side (Credit Side), Amounts recorded on the left side of an accounts, regardless of the account title, are called debits and the account is said to be debited. Amounts recorded on the right side of an account are called Credits, and the account is said to be credited. Now keep in mind the concept of double change in every business transaction, we can say that every business transaction affects a minimum of two account and every change (in particular transaction) is recorded in a separate account. Now question arises, how the changes are recorded in different account? It depends upon the rules of debiting and crediting which have been discussed in the next post shown below;

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