Accountancy, asked by sumanthgowdasumi123, 5 months ago

explain the types of accounts under American syste​

Answers

Answered by loyaltyunuy
0

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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Answered by TRISHNADEVI
2

ANSWER :

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

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  • [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.

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MORE INFORMATION :

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

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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'
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