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The accounts in a chart of accounts are organized
in a particular way so that financial statements can be prepared efficiently.
The five major types of accounts are as follows:
The assets, liabilities and equity accounts are
included in the balance sheet of the financial statements. The income and
expense are included on the income statement. At the end of the reporting
period, the net income or loss at the bottom of the income statement is added to
(net income) or subtracted from (net loss) the retained earnings on the balance
sheet.