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Any business needs some specific accounts to assign transaction values inside them. That way they can calculate amounts of net profit or net loss. This is often known as book-keeping. There are some specific accounts like assets, liabilities, equity, income, expense etc. that are absolutely necessary and require separate entries in the ledger. They will have debit and credit sides. You will learn about their classification with Account Classification Assignment Help from us at 24x7assignmenthelp.com.
What is account classification?
Financial accounts are classified depending on their nature. You’ll learn from Account Classification Assignment Help that some financial accounts like sales, service, wages, mortgage, loan, account receivable, common stock etc. requires a classification of their own. Without a proper classification calculation of accounts is difficult and almost impossible since there are lots of transactions done during an accounting period.
Types of classification:
There are basically three types of classification of accounts that you can find from Account Classification Homework Help:
- Real: Inside a real account you’ll find both tangible and intangible things. For example, Furniture, plants, machinery, computers, cash accounts etc from a tangible real account and goodwill, copyrights, patents etc from an intangible real account.
- Personal: Inside a personal account you can name business and legal units. Accounts especially a bank account is also under it.For example, there are individuals, corporate entities, local bodies, non-profit institution, government bodies etc.
- Nominal: Under a nominal account, both temporary income account and expense account falls. For example you can name sales, purchase etc.
Further classification of accounts:
Although you have noticed from Account Classification Homework Help that classification of accounts is done by assigning them under real, nominal or personal account. But there is a method of classification that goes further into their periodicity. Their periodical appearance in a fiscal year is calculated.
- Income can be named as an immediate inflow.
- Expense can be called as an immediate outflow.
- The assets are known as inflows that have long term values. Sometimes they are defined as unclaimed income because their value doesn’t end in one single fiscal year but in future inflows too they appear to be present values.
- As an opposite position of assets, liabilities are known to be outflows that have long term values. They are defined as un-amortized expenses due to their nature of being a future outflow too. Their values don’t immediately end in a fiscal year.
Here one thing must be mentioned, since there is a separate classification done in favor of equity account, often it is known to be the cause of the dispute of equity concept.
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