After any financial transaction occurs or a specific financial or economic activity occurs and is proven in one way or another, this process must then be analyzed to determine exactly which accounts were affected by it. This is what we call accounting accounts, whose work is primarily based on recording and summarizing financial information related to various economic activities.

During this new article on our blog, we will learn about the main types of accounts in financial accounting, and give a comprehensive explanation of each of these types.

Explain the concept of account in financial accounting
An account in financial accounting means the individual record or container in which we record all financial transactions and economic activities for a specific type of expenses, assets, liabilities, revenues, or property rights. Each account, depending on its type, includes a detailed record of the movement of the debit and credit that affects its total balance.

To understand more about the concept of accounting in financial accounting, we must know the components of any accounting account, which we will learn about together!

What are the components of an account in financial accounting?
Address or account name
Reference numbers (account number)
Debit and credit balances
Dates
the description
Balance
The components of an accounting account are those elements that describe it accurately so that we can easily recognize it, and they are as follows:

1. Address or account name:
The account name identifies the type of asset, liability, equity, revenue, or expense. For example: "Cash", "Receivables", "Sales", "Payroll Expenses".

2. Reference numbers (account number):
It is used to distinguish accounts in the accounting system, and is important for organization and classification. Each account has a unique number.

3. Debit and credit balances:
Debit: It is recorded on the left side of the account, and expresses the increase in assets or expenses or the decrease in liabilities, revenues or property rights.

Credit: It is recorded on the right side of the account, and expresses the increase in liabilities, revenues, property rights, or the decrease in assets or expenses.

4. Dates:
Transaction histories are recorded to track changes in the account over time.

5. Description:
A brief description of the transaction that occurred, such as “Purchase Equipment,” “Pay Salary,” or “Receive Payment.”

6. Balance:
It represents the difference between the debit and credit totals in the account, and can be a debit or credit depending on the type of account and the nature of the transactions recorded.

What are the complete types of accounting accounts?
Assets (assets)
Commitments (liabilities)
Property rights
Revenue (sales)
Expenses
Accounts in financial accounting are divided into main types, which are as follows:

1. Assets accounts:
Asset accounts mean any resource or thing that the organization owns, or what we call assets, such as equipment, devices, offices, and other resources available to the facility. Assets are divided into main types, which are as follows:

Current Assets: These include cash, accounts receivable, inventory, and prepaid expenses.

Fixed assets: include land, buildings, equipment, machinery, and furniture.

Intangible assets: such as intellectual property rights, software, patents, and trademarks.

2. Liability accounts:
It represents all obligations and amounts owed by the establishment, and is divided as follows:

Liability accounts refer to all obligations imposed on the organization in terms of amounts payable. It can be divided into several types as follows:

Current Liabilities: such as creditors (accounts payable), short-term loans, accrued expenses, and other obligations that fall due in a short period.

Non-current liabilities (Long-term Liabilities): such as long-term loans, bonds payable, and any other long-term liabilities.

3. Equity accounts:
Equity accounts mean those obligations imposed on the organization towards the founders or owners of the company and partners. Equity accounts are divided into the following types:

Capital: represents the owners' investment in the company.

Retained Earnings: Profits that are reinvested in the company rather than distributed to shareholders.

Stock: If the company is a joint stock company, it includes common shares and preferred shares.

4. Revenue accounts:
Revenue accounts refer to the money that companies earn or obtain from selling their products or services in general, such as selling smartphones or cars, or even providing marketing services, accounting or legal consulting, and so on.

Revenue accounts can be divided into several types, such as sales revenue, service revenue, and rental income.

5. Expense accounts:
Expense accounts represent the money paid by the organization during a certain accounting period in order to obtain certain services from others that are important in the operation and continuity of the business, such as office rental costs, electricity, Internet, and water bills, and the costs of marketing and various advertising campaigns.

In addition to the salaries that the organization pays to employees, and various production costs for operation and continuity of its work.

💡These are the main types of accounts known in financial accounting, which aim to record and analyze financial operations, movements, and economic activities in a way through which financial performance can be analyzed and help decision-makers manage the organization to make sound administrative decisions.