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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.
| Account number Range |
Account Type |
|---|---|
| 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) |