The personification of accounts is important because it allows an easier order and recognition of all accounting accounts and, therefore, a more efficient control of them.
Accounts are classified into various types depending on their accounting characteristics. We will explain each one below.
Balance accounts
- Assets
In accounting, an asset is any good of the company, whether it is tangible or intangible. Among the assets are:
Current active
It is the cash that is owned or those goods that could easily be converted into cash, such as merchandise that is in inventory to be sold. Current assets can be:
Available assets : cash in the box or money in a bank checking account. Any other asset equivalent to cash is also included here; It can be gold, foreign currency, checks, among others.
Callable asset : these are all accounts receivable, such as merchandise sold or services rendered that are in the process of being paid by the customer, promissory notes, bills or documents signed by the customer as a promise to pay, etc.
Realizable asset : it is all the merchandise inventory, the goods in stock available for sale, that is, to be converted into cash in the short term.
Fixed assets
Also called Non-Current Assets, they are all fixed, permanent assets that belong to the company and that it has to carry out its commercial activity.
This includes, for example, the land and buildings on which the company is located or others belonging to it, vehicles in the name of the company, machinery, all furniture and computer equipment, software, licenses, patents, etc. .
The company's trademark, for example, is an intangible that is part of its fixed assets. In the accounting of fixed assets, the amortizations or depreciations that the goods suffer over time must also be taken into account.
For example: land may cost more or less money than when it was purchased, a vehicle usually depreciates in value every year, etc.
Deferred assets
They are all those that are partially registered and that, once they are paid, are not refundable or recoverable.
These types of assets include, among others, rents or insurance paid in advance, advertising, company incorporation expenses, registrations, etc.
All Assets accounts are debtor in nature. This means that their balance increases when they are loaded and decreases when they are credited or credited.
- Passives
It is any debt or commitment acquired by the company, an obligation contracted in the past and that must be paid upon maturity.
Seen from another angle, it can be said that the Liability is the contribution of third parties in the financing of the company. The liability can be:
Current liabilities
They are all debts or obligations that must be paid in the short term. In accounting, short term means less than twelve months from the balance sheet date.
Current Liabilities include: accounts and documents payable, bank and other loans, mortgages, etc.
Long-term liabilities
Also called Non-Current Liabilities, they are all debts or obligations that must be paid in the long term, that is, in a period greater than twelve months.
Long-term liabilities include: long-term accounts and documents payable, social security contributions pending payment, withholdings payable, etc.
Heritage
It is the set of assets that belong to the company and its shareholders, obtained throughout the development of an accounting process.
Equity is the result of subtracting liabilities from business assets; Or in other words, the sum of the equity and the liabilities must be exactly equal to the amount that is recorded in the Accounting Assets.
The equity also includes the contributions made by the shareholders (Capital stock). The equity result shows whether the company closed its fiscal year with a profit or a loss.
The Liability and Equity accounts are creditor in nature. This means that your balance increases when they are paid and decreases when they are debited.
The demonstrative state of all these accounts is what is called Balance Sheet of the company. The Balance will be positive if the assets are greater than the liabilities. Otherwise, the Balance will be negative.
Results accounts
- Income accounts
They are those that have an impact on the increase in net worth. This includes, of course, sales of goods or services, but also commissions, rental income and accrued interest.
- Costs
They are the expenses that had to be incurred in order to produce the goods to be sold or the services to be provided by the company.
For example, raw material purchase , cost of sale, and cost of inventory.
- Expense account
They are those that have an impact on the decrease in net worth. Expenses are understood to be: salaries, commissions to be paid for sales, social security, per diem, transportation, insurance, maintenance of machinery, advertising and propaganda, and so on.
Also included here are all administrative expenses such as rentals, reserve funds, bad debts, vacations and others. Finally, financial expenses such as bank fees, taxes and interest for late payment.
When the income is greater than the expenses, it is spoken of a Profit for the company, otherwise, it is spoken of Loss.
