Question

explain the types of accounts under American syste​

Answer 1

Answer:

Under modern/American approach, the accounts are classified into the following five groups:

Asset accounts: Examples are land account, machinery account, accounts receivable account, prepaid rent account, cash account etc.

Liability accounts: ...

Revenue accounts: ...

Expense accounts: ...

Capital/owner's equity accounts:

Explanation:

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Answer 2

ANSWER :

According to American or Modern Approach, accounts are classified into five categories. These as as follows :

• [1] Assets Account : Assets account are the accounts of assets and properties of the business entity. These include land, building, plant, machinery, patents, cash in hand, cash at bank, debtors etc.

• [2] Liabilities Account : Liabilities accounts are the accounts pertaining to the liabilities of the business entity. These include lenders, creditors, outstanding expenses, bank overdraft etc.

• [3] Capital Account : Capital is the amounth with which the business is started. It is the account of the owner who invests money in the business as capital.

• [4] Revenue Accounts : Revenue accounts are the accounts of income and gains. These include sales, discount received, interest received, commission received etc.

• [5] Expense Accounts : Expenses accounts are the accounts of expenses incurred and losses sufferef by the entity. These include purchases. wages paid, rent paid, depreciation charged etc.

MORE INFORMATION :

➤ Rules for Debit and Credit under American Approach or Modern Approach of classification of Accounts :

➲ Assets Account :-

• [i] When there is an increase in the Asset, it is 'Debited'.

• [ii] When there is a decrease in the Asset, it is 'Credited'.

➲ Liabilities Account:-

• [i] When there is an increase in the Liabilities, it is 'Credited'.

• [ii] When there is a decrease in the Liabilities, it is 'Debited'.

➲ Capital Account :-

• [i] When there is an increase in the Capital, it is 'Credited'.

• [ii] When there is a decrease in the Capital, it is 'Debited'.

➲ Revenue Account :-

• [i] When there is an increase in the Revenue, it is 'Credited'.

• [ii] When there is a decrease in the Revenue, it is 'Debited'.

➲ Expense Account :-

• [i] When there is an increase in the Expense, it is 'Debited'.

• [ii] When there is a decrease in the Expense, it is 'Credited'