Financial Accounting


Double Entry Accounting

Every transaction effects at least two accounts.

Account types =

Double entry accounting depends on the following equation over a time period where

AL = IE

It is handy to move gains from earlier years at the closing of the books into an equity account - equity accounts are actually Liability accounts.

Other names that specialize account types

Account type What it does
Equity accounts Can be thought of as a Liability account and should make any balance go to zero.
Cost of goods sold A special group of expense accounts
Other revenue A negative expense account for things that should not be counted as income
other expense A sub group of expense account.

Some Accounting Terms

SKU

Stock Keeping Unit, pronounced SKŪ similar to skewer, but without the er. A SKU is identifier unique to the item for tracking in inventory. It identifies a unique item and is most often different from the model and/or part number.

Account Numbering

Account number
Range
Account Type
1000 - 1999 asset accounts
2000 - 2999 liability accounts
3000 - 3999 equity accounts
4000 - 4999 revenue accounts
5000 - 5999 cost of goods sold
6000 - 6999 expense accounts
7000 - 7999 other revenue (for example, interest income)
8000 - 8999 other expense (for example, income taxes)

Disclaimer

This information may have errors; It is not permissible to be read by anyone who has ever met a lawyer.
Use is confined to Engineers with more than 370 course hours of electronic engineering for theoretical studies.
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