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New words in this lesson

Chart of accounts

The full list of a business's accounts, organized by type. It's like the list of folders every transaction is filed into.

Account type

The group an account belongs to: asset, liability, equity, income, cost of goods sold or expense. The type decides which report the account appears on and whether a debit increases it.

Balance

The amount in an account at a point in time, after all its debits and credits.

Look up any other word in the glossary

The list behind every transaction

The is the full list of a business's accounts. Every transaction is filed into accounts on this list, like documents into folders.

It's sorted by type: balance sheet accounts first (assets, liabilities, equity), then profit and loss accounts (income, cost of goods sold, expenses). A real small business often has dozens of accounts. The café's list is shorter, to keep things simple.

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Business at a glance