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Every transaction effects at least two accounts.
Double entry accounting depends on the following equation over a time period where
A − L = I − E
It is handy to move gains from earlier years at the closing of the books into an equity account - equity accounts are actually Liability accounts.
|Account type||What it does|
|Equity accounts||Can be thought of as a Liability account and should make any balance go to zero.|
|Cost of goods sold||A special group of expense accounts|
|Other revenue||A negative expense account for things that should not be counted as income|
|other expense||A sub group of expense account.|
Stock Keeping Unit, pronounced SKŪ similar to skewer, but without the er. A SKU is identifier unique to the item for tracking in inventory. It identifies a unique item and is most often different from the model and/or part number.
|1000 - 1999||asset accounts|
|2000 - 2999||liability accounts|
|3000 - 3999||equity accounts|
|4000 - 4999||revenue accounts|
|5000 - 5999||cost of goods sold|
|6000 - 6999||expense accounts|
|7000 - 7999||other revenue (for example, interest income)|
|8000 - 8999||other expense (for example, income taxes)|