What is an inventory account?
that accountancy Is subdivided into Inventory and income accounts, to everyone Transactions to be recorded correctly, completely and clearly. This is because ordinary bookkeeping records of the assets And that equity as well as the Income from income and expenses in the Profit and loss statement (P&L). An inventory account and a profit account are used as part of double bookkeeping managed, with unique accounts assigned to each business transaction.
Active and passive inventory accounts Must be in the balance sheet Dip up. Passive inventory accounts are Equity and debt, active ones include the fortunes out Attachment- and Current assets. Fixed assets include, for example, buildings, machinery and vehicles, while current assets include cash balances, bank balances, products and receivables from supplies and services.
With an active inventory account, reductions in credit and increases in debit are posted. In the case of a passive inventory account, the reductions are in debit and increases in credit.
Existing account vs. income account
Bookings made via inventory accounts have no effect on a company's profit or loss. However, the goal of every company is victory to achieve what gives him Income and expenses arise. These, on the other hand, influence the equity of a company and are separated on Income and expense accounts posted. Income increases equity, expenses reduce it. They belong to income accounts and therefore represent sub-accounts of equity.
Income vs. expense account
Income comes from receivables from supplies and services, while expenses arise from production costs, which is why sales prices must always be higher than the cost of the goods. For the sake of clarity, there is various expense accounts For example, for Depreciation, consumables and salaries.
Zum Financial statements Will all Saldi who determines expense and income accounts And the Success accounts will completed via the P&L account. The profit or loss is then calculated on the Equity account in Have or should accounted for.
