Types of Accounts
Welcome, the first step to personal financing is to know about the type of accounts. An account is a place for keeping track of what you own, owe, spend or receive.Basically, there are 5 types of accounts, namely:
| Account | Meaning |
| Asset (资产) | Things that you own. |
| Liability (负债) | Things that you owe. |
| Equity (权益/净资产) | Overall net worth. |
| Income (收入) | Increase the value of your account. |
| Expense (花费) | Decrease the value of your account. |
The relationship among these accounts is defined in the Accounting Equation below:
Asset – Liability = Equity + (Income-Expense)
Principle of Balance
This principle stated that for every change in value of one account in the Accounting Equation, there must be a balancing change in another.For example, the income increase your asset whereas the expense increase your liability. Both sides of the accounting equation must be balanced.
Transaction
A transaction represents the movement of money from one account to another account. Whenever you spend or receive money, or transfer money between accounts, that is a transaction.
