account
An account is a named record that tracks increases and decreases in a specific asset, liability, equity, revenue, or expense. It’s the basic classification unit of double-entry bookkeeping — every transaction is recorded by debiting one or more accounts and crediting one or more others.
Accounts are grouped into five types, each with a normal balance (the side — debit or credit — that increases the account):
| Type | Normal balance | Examples |
|---|---|---|
| Asset | Debit | Cash, accounts receivable, equipment, inventory |
| Liability | Credit | Accounts payable, loans payable, wages payable |
| Equity | Credit | Owner’s equity, retained earnings, common stock |
| Revenue | Credit | Sales revenue, service revenue, interest income |
| Expense | Debit | Rent expense, wages expense, supplies expense |
The complete list of accounts an entity uses is its chart of accounts. The structure of that chart — how accounts are numbered, named, and grouped — shapes what the entity can report and how granularly it can analyze its finances.