Account meaning , is best descried as a summarized record of transactions , relating to a particular head (expense, income, asset or liability) at one place.
It records the amount of transactions , and their effect on other Accounts .
Account is usually drawn in a ‘T’ form. It is divided into two major parts :
- Debit ; and
Account has Debit part on the left side of the Account , and Credit part on the right side of the account.
An Illustartive format of the T shaped account is as under : –
Name of account
The name of account is written at the top. The name could be purchase account, wages account, creditors account etc.
Date of the transaction
The date of the transaction is recorded in the date column. Transaction are recorded in the account date-wise. Transactions taking place earlier are recorded earlier and those whcih take place afterwards are recorded after them.
Particulars column includes the name of the account, which is debited or credited.
J.F. represents Journal Folio indicates, where the original entry was recorded in the journal books.
The last column is amount column where the amount of the transaction is recorded.
CLASSIFICATION OF ACCOUNTS
There are two types of classification of Accounts : –
- Traditional classification of Accounts
- Modern classification of Accounts
Traditional classification of Accounts :
Modern classification of Accounts